Diageo to Dispute HMRC's Preliminary Notices of Assessment
May 10 2017 - 11:06AM
Dow Jones News
By Razak Musah Baba
LONDON--Diageo PLC (DGE.LN) said Wednesday it will oppose an
additional 107 million pounds ($138.6 million)in taxes and interest
if imposed by the U.K. government.
Earlier this year, the alcoholic beverages maker said it had
been discussing its transfer pricing position and related issues
with HM Revenue & Customs, the U.K. tax authority. For taxing
purposes, transfer pricing occurs when two units of the same
company trade with each other.
Diageo said it has learned Wednesday that HMRC intends to issue
preliminary notices of assessment under the new diverted profits
tax regime, which came into effect in April 2015.
Diageo said it understands this will require Diageo to pay
additional tax and interest of GBP107 million in aggregate for the
financial years ended June 30, 2015 and June 30, 2016.
Diageo said it doesn't believe that it falls within the scope of
the new diverted profits tax regime and will challenge the
assessments when they are received. In order to do this, it would
be necessary to pay the full amount assessed up front and then
continue to work to resolve this matter with HMRC, it said.
Diageo also said this issue doesn't change its expectation that
the tax rate before exceptional items for the year ending June 30,
will be 21%.
Shares at 1505 GMT down 14 pence, or 0.6%, at GBP22.78, valuing
the company at GBP57.33 billion.
-Write to Razak Musah Baba at razak.baba@wsj.com; Twitter:
@Raztweet
(END) Dow Jones Newswires
May 10, 2017 11:51 ET (15:51 GMT)
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