Accenture UK profits hit by charge over tax probe

Accenture UK profits hit by charge over tax probe

Accenture’s UK profits nearly halved last year after the US-listed consultancy was forced to account for a £77m payment to HM Revenue & Customs following a probe into its tax affairs over an eight-year period.

The charge meant that even though Accenture’s UK revenues and profits before tax increased in 2017, net profits fell from £125m to £67m, according to filings submitted to Companies House.

Accenture, which employs 442,000 staff across 55 countries, said the HMRC probe related to the period from 2009 to 2016. “The discussions are related to a transfer pricing inquiry of routine transactions in the period,” it added.

The tax charge is the latest in a series of tax-related controversies for Accenture, which provides technology and IT advice to some of the world’s largest companies and organisations — including HMRC.

The consultancy’s approach to tax drew widespread criticism in 2012 after it emerged its UK tax bill for the previous year was just under £3m on profits of £82m — an effective tax rate of 3.4 per cent.

Margaret Hodge, the Labour politician and then chair of Britain’s public accounts committee, said she would press HMRC to investigate why Accenture — an important supplier of IT services — had such a low tax bill.

In 2010 Accenture paid tax of £2.9m on profits of £123m, and in 2009 it paid £2.8m tax on profits of £64m — effective tax rates of 2 per cent and 4.3 per cent respectively.

HMRC said: “We do not comment on identifiable taxpayers. We make sure that large businesses, just like everyone else, pay all the taxes due under UK law.”

Accenture said: “Between 2007 to 2011 Accenture’s UK tax payments were reduced by contract losses brought forward from 2006, which are not related to the ongoing HMRC inquiry.”

The consultancy disclosed in 2016 that it was under investigation by Swiss authorities over the tax treatment of an intercompany transfer of intellectual property from 2010. The company’s US annual report said the matter was resolved in 2017 and resulted in a payment for “prior year taxes”.

Accenture, which was spun out of the now defunct accounting firm Arthur Andersen in 1989, shifted its place of incorporation from Bermuda to Ireland in 2009.

It said at the time it was aware of “criticism of and negative publicity regarding” companies that were incorporated in countries that did not have tax treaties with the US, including Bermuda.

The company’s most recent US annual report stated that its incorporation in Ireland may also trigger “criticism and negative publicity”.

It added that the overall tax environment “has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions”, citing the European Commission’s focus on state-aid rules and the preferential tax treatment some companies have received as an example.

Accenture’s disclosure about the UK tax charge comes a few months after it emerged that Apple, the technology group, was forced to hand over additional payments of £81m and £136m to HMRC.

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