I’m not an accounting expert, by any means, but I think The Guardian has the wrong end of the stick again here.
More than 50 PFI schemes have now been included in portfolios held in Channel Islands tax havens by three major PFI investment companies, HSBC Infrastructure, 3i Infrastructure and Babcock and Brown Public Partnerships.
Once the buildings have been completed, up to 90% of the ownership of the UK-registered company running the PFI is transferred to the companies which are based in the tax havens. This means that the income and profits from running the PFIs will be free of UK tax for up to 40 years, depending on the duration of the PFI.
I don’t see how transferring ownership of a UK registered company offshore reduces a tax bill. Any profit that the UK company makes is taxed here in the UK, before any distribution or earnings to the owners. Now, a capital gain created by selling the shares of the offshore company would be tax free: but any capital gain created before the transfer would lead to a tax bill at the time of transfer, wouldn’t it?
Now I can think of ways in which an offshore company could be used to dodge tax: use the offshore company as a bank, load up the UK PLC with debt borrowed, and thus convert profits into an interest stream, that interest stream then being untaxed in the haven.
Maybe that is what is going on, but if it is, why doesn’t The Guardian tell us so? Do they actually know? Or have they just grasped this "offshore" bit and assumed that it’s all a grand tax cheat?
Prem Sikka, professor of accounting at Essex University, said yesterday that the latest revelations should be the subject of an inquiry at Westminster.
Prem is, as we know, a mate of Richard Murphy. Still the same people behind all of this then.