Comments on: Tescos: After meeting their tax director I’m convinced they avoided UK corporation tax, and stamp duty too

By: Tax Research UK / Tesco: tax avoiding, again (this time it’s Luxembourg)

Tax Research UK / Tesco: tax avoiding, again (this time it’s Luxembourg) — Wed, 11 Jun 2008 20:20:05 +0000

[...] Private Eye’s dig into Tesco’s tax affairs continues. In the edition published today it has revelation of another tax avoidance scheme, this time based in Luxembourg. I guess that adds variety to the one revealed a fortnight ago in Zug, or the one about which Tesco is suing the Guardian, based in Cayman. [...]

By: Tax Research UK / Tescos, supplliers of bunkum

Tax Research UK / Tescos, supplliers of bunkum — Fri, 30 May 2008 20:35:06 +0000

[...] its so called sale and lease back deals on which the Guardian reported in February and on which I commented in March. The arrangement revolves around a UK LLP (whose accounts are available here) with [...]

By: Tax Research UK / Tesco’s tax: we’ve got a right to talk about it

Tax Research UK / Tesco’s tax: we’ve got a right to talk about it — Mon, 19 May 2008 08:20:47 +0000

[...] would expect, and any company would do that. I said why and how I thought that was the case after I met and interviewed Tim Voaks, Tesco’s tax director. I might refine that blog a little based on what I now know, [...]

By: Tax Research UK / To Tesco, an apology

Tax Research UK / To Tesco, an apology — Sat, 03 May 2008 17:45:24 +0000

[...] I believe Tescos did avoid corporation tax, and largely for the reasons I have noted in this blog, although that too I would amend now, a little. I stress, this blog is based on evidence different [...]

By: Tax Research UK / Tescos sues the Guardian

Tax Research UK / Tescos sues the Guardian — Mon, 07 Apr 2008 07:19:44 +0000

[...] tax as well as stamp duty in structuring the transactions as they did, for the reasons that I gave here. And since they have said: every company seeks to operate as tax-efficiently as possible, to do so [...]

By: Tax Research LLP

Tax Research LLP — Thu, 13 Mar 2008 12:04:27 +0000

Jim. thanks

By: Jim

Jim — Thu, 13 Mar 2008 11:31:20 +0000

Richard
Price is a function of yield or years purchase (multiple of the rent). Therefore the lower the yield the higher the price i.e 5% initial yield would be 20 (100/5) times the rent; 4.5% would be 22.22 times the rent: 4% would be 25 times the rent and so on. Costs such as legals, agents, stamp duty (usually) are allowed for to arrive at the net initial yield. This is the yardstick used by the property investment market so that a very hot property, say a retail in Bond Street let to a good tenant might be a 3% (33.3) whilst a secondary or tertiary investment in a poor town might be 8 9 or 10%.
I would agree that 4.5% is a good price for the vendor and not repeatable in the current market which has seen several large deals collapse. The attractions for the purchaser would be the covenant of the tenant, the sector (supermarkets where supply is constrained), the size of the deal. I would not know if the structure of the transaction added a bit of zing to the yield but 4.5% does not look extraordinarily high to me bearing in mind the state of the market at the time.
Jim

By: Tax Research LLP

Tax Research LLP — Thu, 13 Mar 2008 11:06:48 +0000

Jim

That is what I mean

4.5% seems low to me. Would you agree?

Why would it be that low?

Richard

By: Jim

Jim — Thu, 13 Mar 2008 10:44:01 +0000

Thank you Richard. I have read page 5 and there is no mention of ‘low rental yields’. This is not surprising as it is a meaningless phrase in this context. Are you referring to ‘very attractive initial yields below 4.5%’?

By: Tax Research LLP

Tax Research LLP — Thu, 13 Mar 2008 09:50:01 +0000

Jim

See page 5 of this

http://www.tescocorporate.com/annualreview07/downloadfiles/report/02OFR.pdf

Richard