After Chancellor presents budget plans for tech companies, Taxman tracks US giant GE for $ 1 billion

After Chancellor presents budget plans for tech companies, Taxman tracks US giant GE for $ 1 billion

The British authorities declared war on one of America's largest companies when they attempted to confiscate $ 1 billion

The Sunday Mail may reveal that General Electric, which operates in 180 countries and employs 295,000 people, is being sued for £ 770m by Her Majesty Revenue & Customs.

The taxman claims that the industrial heavyweight industry – with interests in the energy, aerospace, healthcare and financial sectors – has been unfairly claiming tax breaks in various areas of its business in the UK over a twelve-year period. GE has announced it will fight HMRC.

Allegations: The taxman believes GE has wrongly claimed tax breaks in the UK over a 12-year period

Allegations: The taxman believes GE has been wrongly demanding tax breaks in the UK over a 12-year period

Allegations: The taxman believes GE has been wrongly demanding tax breaks in the UK over a 12-year period

Tax experts have called the dispute, which will intensify tensions between the United Kingdom and the US, a "massive dispute" sending a strong message to other large international companies in the UK.

The dispute comes at the end of a week in which Chancellor Philip Hammond revealed budget plans to attack US top executives like Google and Facebook with a new Digital Services Tax.

In a step forward for the "The Mail on Sunday" campaign, the Chancellor said that a 2 percent revenue tax that will be introduced in April 2020, unless a global tax deficit has occurred, could bring in more than £ 400 million a year Year.

HMRC informed GE that it intends to prohibit tax deductions made by its financial services company GE Capital between 2004 and 2015. In particular, the case refers to interest deductions that allow companies to recognize lower taxable profits by deducting interest payments they make loans.

Critics argue that some companies manipulate the system by lending money from their subsidiaries in low-tax jurisdictions to those in higher tax hubs with high interest rates.

They point out that by doing so, companies can reduce their overall tax bill by posting lower profits in higher tax jurisdictions.

Neither General Electric nor HMRC have provided further details on this case and the specific allegations are not yet known.

The company has announced it will deny the rejection, which admittedly could cost the company $ 1 billion.

It states: "We comply with all applicable UK tax laws and judicial doctrines and believe that the full benefit of its technical value is more likely than not."

Richard Murphy, who heads Tax Research UK, said it was "surprising" and rare that an HMRC claim would go back to 2004.

He added, "A 14-year period is not a small problem. That's a massive argument.

"The fact that the Revenue has now filed a lawsuit indicates that she has had enough – that the dispute continues so long that he now puts a mark.

"That's not his preferred approach. It is expensive and HMRC threatens to lose. It always prefers a negotiated solution. It's pretty clear that GE says it will not negotiate so bring us to court.

"The amount of money is considerable. I doubt very much that the case, if the revenues win, will use this case to prove to other companies. "

George Turner of think-tank Tax Watch UK said: "Multinationals and private equity funds have been using interest deductions for many years to defer UK profits and lower their tax bills – and the UK was one of the simplest Places to do this.

"The GE case contains a significant amount of cash, and I hope it signals that the UK government is taking this issue more seriously."

Headquartered in Boston, Massachusetts, General Electric has been operating in the UK for over 100 years. It employs around 16,000 people in these coasts.

At the end of October, HMRC filed suit against seven General Electric companies with the High Court in London, providing insights into the complex network of law firms in the firm.

The company was previously under attack for its tax practices in the United States.

The firm received a $ 14.2 billion worldwide profit in 2011 while earning $ 3.2 billion in tax credits in the United States.

Large US companies are increasingly under pressure to pay their fair tax share in the UK.

Mail on Sunday's Fair Play on Tax campaign called for country-to-country reports to prevent international companies from redirecting money between countries and leveraging loans and interest between various branches of their companies to artificially reduce their tax bill.

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