LONDON Dec 19 Imperial Tobacco said it
paid around 170 million pounds ($279 million) in UK corporation
tax in its 2013 financial year, more than its total UK tax bill
for the previous seven years, after settling a dispute with the
Public frustration at government austerity measures and
revelations of corporate tax avoidance in the past two years
have led to pressure on the tax authority, Her Majesty's Revenue
and Customs (HMRC), to take a tougher line with big companies
Imperial Tobacco, the world's fifth-largest tobacco company
by market capitalisation, declined to give details of what it
described as "a confidential and closed matter."
"Imperial Tobacco Plc pays UK corporation tax in accordance
with UK taxation rules," a spokesman said.
HMRC declined to comment on the deal, citing rules on
Corporation tax is the UK version of corporate income tax.
Imperial Tobacco referred to tax settlements in its annual
report but had not previously revealed the HMRC deal.
Eddy Hargreaves, analyst at Canaccord Genuity who covers
tobacco and consumer goods producers said Imperial Tobacco's tax
arrangements were unlikely to be very different to its rivals
and said all companies seek to minimise their tax bill.
Imperial would not confirm the period that the settlement
related to, nor its size. The settlement could be less than the
170 million pounds paid, because that figure may include the
company's 6 million pound tax charge for its 2013 financial year
The value of the settlement could also be much higher than
170 million pounds, if it was partly offset by utilising some of
the large tax credits the company built up in previous years.
Between 2008 and 2012, Imperial reported a net tax credit of
115 million pounds.
In contrast, between 2003 and 2007, Imperial Tobacco
reported annual UK tax payments of between 100 to 150 million
pounds. However following the acquisition of Spanish cigarette
maker Altadis in 2008, the company's UK tax payments dried up.
The company borrowed billions of pounds to pay for Altadis.
Most of this was borrowed in Britain and the interest is
deductible for UK tax purposes, the Imperial Tobacco spokesman
Many countries have strict limits on the amount by which a
company's taxable income can be reduced by interest payments but
Britain has almost no limit.