Tesco Pulls An Enron

Your friendly (every) neighbourhood Tesco supermarket hates you, when you need the police, or a hospital, or safe roads, or schools they most assuredly wish to deny them by not paying their way. Good job they come across so friendly in their teevee adverts, because really they just want your money and then for you to fuck off and die (and their custard slices taste like shit).

Tesco has created an elaborate corporate structure involving offshore tax havens which enables it to avoid paying what could be up to £1bn of tax on profits from the sale of its UK properties.

The complex new structures uncovered by a six-month Guardian investigation include a string of Cayman Island companies, each named after a different colour, from aqua to violet. These are being used by the supermarket giant as it proceeds with its announced programme to sell and lease back £6bn worth of its UK stores.

The Guardian’s analysis of Tesco’s accounts over the past five years also shows that the company has paid an effective tax rate of just over 20% on the rest of its profits, at a time when the UK corporation tax rate is 30%.

· New company structures set up by Tesco to own stores that are being sold and leased back mean that 99.9% of the company that owns the stores could end up being held offshore. Tesco would be liable to pay UK tax on only the 0.1% of its profit on the sale of the stores held in the UK. Tesco’s first two property deals, worth about £1bn, have used this structure and will avoid tax on £500m of profits.

· Although its accounts for the past five years report an average rate of corporation tax of 29%, the actual rate of tax Tesco paid, according to its cash flow statement, is closer to 20%. This is on profits separate from the property deals. UK corporation tax is 30%.

· Tesco has sold its 37 stores in the first two sale and leaseback deals at twice the book value that is included in its accounts, making a profit of about £500m on the £1bn of stores sold. If it achieves the same rate of return on all its disposals as expected, its share of profits from property sales would come to about £3bn. The UK corporation tax due on this would be as high as £1bn, but the retailer could avoid paying this because of its offshore structure.

· A string of other company structures leading to the Cayman Islands have been set up and more of Tesco’s properties have already been transferred to them so that they could be quickly activated for the next tranche of store sales.

So weirdly if you went shoplifting in one of their stores and absolutely crammed your coat with stuff you’d still be nothing like the thief that the shop around you is. Not that I’m suggesting you go shoplifting in Tescos, after all why mix with such lowlife corporate crooks?

See also Korova’s posts at Mask of Anarchy on Tesco.