Rolls-Royce hits back after accusation on tax bill
ROLLS-ROYCE has defended itself after accusations the company did not pay any UK tax on its profits last year.
According to research published at the weekend by the Mail on Sunday, Rolls-Royce, which is Derby's largest private-sector employer, was one of 12 large companies that did not pay any corporation tax, which is a tax on profits.
The research relates to Rolls-Royce's 2011 results, where it made £1.1 billion.
But the company, which has its civil aerospace and nuclear divisions in Derby, said 85% of its profits were made overseas – rather in the UK.
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It added that the firm was spending "hundreds of millions of pounds" on research in the UK, which had allowed it to reduce its tax bill.
A spokesman said: "Last year alone, we invested £919 million in research and development, the majority spent in the UK. This reduced our tax liabilities."
The research, which looked into the accounts of all FTSE 100 companies, claimed that instead of paying any corporation tax, Rolls-Royce, which employs around 12,000 people in Derby, was one of six firms to receive a tax credit.
Tax credits are designed to encourage companies to invest in their businesses.
The size of Rolls-Royce's tax credit was £2 million.
Derby North MP Chris Williamson said: "All companies making a profit in the UK have an obligation to pay their taxes.
"The infrastructure that the government funds, which supports their success, needs to be paid for.
"There is no suggestion of any wrongdoing by Rolls-Royce but greater clarity on how company accounts are reported would make stories like this less likely to gain momentum."
The debate about how much tax large firms pay on their profits in the UK first emerged when it was revealed Starbucks, Amazon and Google had avoided tax.
Juliet Hogsden, a lecturer in financial accounting and taxation at the University of Derby, said: "Companies like Rolls-Royce are very important to our economy.
"The tax credit system helps support and encourage their innovation, which they have to do to keep ahead of the competition.
"In the UK, we need to provide a competitive environment for companies like Rolls-Royce – or risk losing them to other countries, which would have serious implications for our economy.
"Companies like Rolls-Royce still pay national insurance and VAT, so it would not be fair to say the firm has paid no tax."