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."
11 Comments
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by Http_404
Wednesday, March 06 2013, 10:54PM
“I remember that claim too Hotlush”
by Hotlush
Wednesday, March 06 2013, 10:25AM
“@RightWing_; Remind me, John, didn't you tell us part of your job was advising on how to "minimize tax exposure"?”
by RightWing_
Tuesday, March 05 2013, 11:42PM
“by make_redgreen
I find taxation avoidance/avoiders to have the moral high ground in the UK"
You get a say in where its spent by electing the right government.
There is no "moral high ground" for tax avoiders/evaders. If they are not willing to pay their fair share in tax then they have no right being here. In fact I would put them alongside benefit scroungers, as low life parasites.”
by make_redgreen
Tuesday, March 05 2013, 6:43PM
“I sort of agree RightWing - if our taxation system was fair and just, as well as just where that taxation was spent, or indeed not spent.
As an indirect, forced shareholder of a number of banks, I find taxation avoidance/avoiders to have the moral high ground in the UK. Iceland tax dodgers on the other hand should hang their heads in shame.”
by RightWing
Tuesday, March 05 2013, 3:49PM
“by make_redgreen
"Ask yourself, if you could find a way not to pay tax, would you?"
I could find many ways not to pay tax, - but I chose not to use such tactics as whether they are legal or not, they are immoral.
Rolls Royce operates in the UK, it makes vast sums of money from defence contracts paid for by UK taxpayers, and it has a moral duty to pay it's fair share of UK taxes.”
by make_redgreen
Tuesday, March 05 2013, 1:45PM
“Ask yourself, if you could find a way not to pay tax, would you?”
by RightWing
Tuesday, March 05 2013, 10:33AM
“There is a vast difference between what is "legal" and what it morally acceptable.
Rolls Royce has deliberately structured is business so that profits are taxed in foreign countries at lower rates than those applicable in the UK. At best this is sharp practice, at worst un patriotic.
Perhaps the government should reconsider who it places defence contracts with.”
by AlvastonW
Tuesday, March 05 2013, 10:21AM
“So that is how they pay directors and the executive managers such high wages and bonuses. It also explains why the want the work force to work longer hours for less pay, to make some overtime compulsory and at single time, also to put you on notice to attend as and when they want. Obviously knew this was coming so trying to claw money back from the working man to pay any unexpected tax bill. Rolls Royce was a people company now its an exploiting company.”
by mark_sinfin
Tuesday, March 05 2013, 10:10AM
“But google and starbucks are foreign companies who didnt pay tax in the UK on the stuff they sold over here. Rolls Royce are a british company who paid tax in the countries they sold their products in you cant have it both ways.”
by Spring__Onion
Tuesday, March 05 2013, 9:10AM
“Even if it is "legal", it is unpatriotic and RR should be ashamed of themselves for profiting from their so-called 'Britishness'.
RR are now down there in the gutter with Google and Starbucks.”