UK tax authority accuses General Electric of fraud in $1bn dispute


The UK tax authority has accused General Electric of fraud in a $1bn dispute over tax deductions claimed by the industrial conglomerate going back 16 years.

HM Revenue & Customs launched a claim against GE in 2018 arguing interest deductions claimed between 2004 and 2015 by six of its group companies, including financial services unit GE Capital were not correct.

This week it emerged in a court hearing that HMRC has applied to change its case to allege that GE made “fraudulent misrepresentations” to the tax authority.

GE, which has a market value of $61bn, said in its written arguments ahead of the hearing that for HMRC to allege fraud against a “multinational the size of GE and the professionals involved is a very serious thing”, according to trade publication Law360.

Tuesday’s hearing was to examine an application by GE to obtain documents from HMRC relating to the company. The judge denied GE’s request pending a further hearing on HMRC’s application to amend its claim against the company.

HMRC intends to allege that GE double-claimed tax relief in both the UK and Australia on interest for a loan used to acquire an Australian financial services business. The agency has claimed that the GE companies made misrepresentations to it when they were granted the tax break in 2005. GE denies that there was any misrepresentation.

GE said in a filing to the Securities and Exchange Commission in 2018 that the potential impact of the claim was about $1bn, excluding interest and penalties, but that it would contest HMRC’s decision to rescind the tax relief. GE has launched a countersuit against the tax authority in an attempt to bring an end to the proceedings.

READ  Wall Street hits new highs in strongest week since August

GE said: “We comply with all applicable tax laws and judicial doctrines of the United Kingdom and believe that the entire benefit is more likely than not to be sustained on its technical merits.”

HMRC said: “Due to taxpayer confidentiality, we are unable to comment on an identifiable taxpayer or business, or on an ongoing case.”

HMRC has taken an increasingly hard line on tax evasion and avoidance by large multinationals. In 2018 it said it had secured more than £9bn in additional tax revenue from the “largest and most complex businesses” that would have “otherwise gone unpaid”.

GE is one of many companies reeling from the coronavirus crisis. This month it cut 10,000 jobs in its aviation division to cope with an unprecedented slump in demand.



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here