HMRC gives in again – this time to AstraZeneca

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From the Guardian:

AstraZeneca has settled a long-running tax dispute in a deal which sees HM Revenue & Customs refund tax payments that will now go to America instead.

The pharmaceutical company announced on Monday morning that US and UK tax authorities have reached an agreement over where it declares certain profits. The dispute over so-called "transfer pricing" dates back to 2002, and was the most significant of AstraZeneca's ongoing arguments with tax authorities.Under the agreement, AstraZeneca will pay out a total of $1.1bn (£689m) in taxes, substantially less than it had budgeted for. This means the company can unlock some of its outstanding tax provisions, increasing its earnings this year by $500m and raising its profit targets by almost 7%.

Its effective tax rate will also be slashed from 27% to 21%.

The deal means that AstraZeneca will receive tax refunds in several other countries, as profits are booked in the US instead. A spokeswoman confirmed that HM Revenue & Customs will hand back an undisclosed tax payment, which will then be passed on to America's Internal Revenue Service (IRS). She declined to say how much this would be, but insisted it was less than the headline figure of $1.1bn.

Throughout this period AstraZeneca was, of course, an active tax lobbyist. The AstraZeneca FD Jon Symonds, since 2007 with Goldman Sachs, did for example whilst at AstraZeneca chair the 100 Group of FTSE FDs. And just by chance whilst he was in that role he ensured that the FTSE 100 gave £5 million to fund the Oxford Centre for the Non-Taxation of Business. This was taken at the launch event:

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As Oxford noted:

At the launch reception, from left to right: Jon Symons, Chair of The Hundred Group; Dave Hartnett, Director General HMRC; Judith Freedman, Professor of Taxation Law, University of Oxford; Chris Wales, Goldman Sachs; Colin Mayer, Professor of Management Studies, Said Business School. (Photograph by Greg Smolonski).

Or as Accountancy Age put it:

The great and good of the tax world gathered to listen to Hundred Group chairman Jon Symonds and HMRC director general Dave Hartnett share a platform with a handful of handpicked and distinguished academics.

The exchange was mostly amicable ¬? Symonds and Hartnett are, after all, highly professional, polished and have worked on too many committees together to be anything other than cordial.

And yet the question remains - are such links appropriate when there is so much tax in dispute? I'm not sure. And can a company in such dispute sit on committees setting tax policy? Again, I'm not sure.

PS Accountancy Age are slightly incorrect in their reporting. Someone called Murphy asked some awkward questions at the same event, and for good reason, as history has proven.