Glencore Seeks ‘Google Tax’ Appeal at Second-Highest U.K. Court

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By Ben Stupples

Glencore Plc, the mining conglomerate and world’s largest commodities trader, is planning to appeal the U.K. High Court’s refusal to grant it permission to apply for judicial review of a 21.3 million pound ($27.5 million) “Google tax” charge.

The Switzerland-based company, run by billionaire Ivan Glasenberg, is seeking permission to apply for judicial review of a 2016 decision by the U.K.’s tax authority to impose a diverted profits tax charge on a local subsidiary.

The High Court dismissed Glencore’s application for permission to apply for judicial review of the DPT assessment in a June 29 decision. It also refused permission to appeal from that decision.

In a July 10 emailed statement, a Glencore spokesman said the company is “disappointed” with the High Court’s ruling. Glencore also sought permission to dispute it at the Court of Appeal, the U.K.’s second-highest court, he added.

U.K.'s Google Tax

Known as the Google tax, the diverted profits tax was introduced in 2015 amid concern that Google parent Alphabet Inc. and other global tech companies were engaging in aggressive tax planning to shift profits to offshore havens. It allows a 25 percent levy—higher than the country’s 19 percent corporate tax rate—on any profits that Her Majesty’s Revenue and Customs decides have been improperly moved out of the U.K.

Related to its accounts from April to December 2015, Glencore’s year-long dispute with HMRC comes as other multinationals with U.K. operations battle with the tax authority over the DPT.

Diageo Plc, the London-based alcoholic beverage company behind brands such as Johnny Walker and Smirnoff, said May 10 it had received a DPT notice from HMRC that sought to recoup 107 million pounds.

London Stock Exchange Group Plc, Europe’s second-largest stock exchange, warned March 3 it has an accounting provision of 4.5 million pounds due to “uncertain tax positions” that included the tax.

Diageo, one of the world’s biggest distillers, said May 10 it “does not believe” it falls in scope of the DPT. To challenge HMRC’s assessment, the company will have to pay the assessed total and then work with the tax authority to resolve the issue. The company has made “no provision” for the tax, it added.

Preliminary Notice

U.K. citizens and entities seeking judicial review—the process when a judge assesses the lawfulness of specific decisions—have to seek permission to apply before they can request it.

Glencore received a preliminary notice from HMRC about the DPT in September 2016, seeking to recoup a total of 21.3 million pounds. After various exchanges of emails and letters, the company contacted HMRC three months later, disputing the DPT calculations and asking for a judicial review.

The High Court rejected Glencore’s request partly because HMRC has re-opened discussions with the company, Mr. Justice Green said in his ruling on Glencore Energy U.K. Ltd. HMRC will either amend or revoke its DPT charge if the subsidiary provides evidence that “satisfies” the authority, he added.

HMRC does not comment on individual taxpayers, a spokesman said in a July 10 emailed statement on Glencore’s case. The DPT is expected to bring in 1.35 billion pounds by 2020, he added.

Return to Good Times

As Glencore’s CEO, Glasenberg has turned the businesses around since a crisis in 2015 forced the company to raise $2.5 billion through a share sale.

At the time, fears over the company’s debt levels prompted investors to dump shares amid a prolonged downturn in the commodities market. Two years later, Glencore has reduced its worrying debt levels in half through asset sales, cost-cutting, and a rebound in the price of metals.

Glasenberg, 60, has a net worth of $4.8 billion through his 8.4 percent stake in Glencore, according to the Bloomberg Billionaires Index, a daily rich-list ranking.

To contact the reporter on this story: Ben Stupples in London at bstupples@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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