Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
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.
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.
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.
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 firstname.lastname@example.org
To contact the editor responsible for this story: Penny Sukhraj at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)