Gatwick Area Conservation Campaign GACC s1

Gatwick Area Conservation Campaign GACC

Campaign Office 01293 863 369

Stan Hill www.gacc.org.uk

Charlwood

Surrey RH6 OEP

Press release

Tax talks threat to Gatwick runway

The EU Finance Ministers’ meeting in Amsterdam on Friday 22 April to toughen company tax rules could put a spoke in Gatwick’s second runway plans.

A new research study published today by GACC shows how Gatwick Airport Ltd earns revenues of over £630 million a year, and yet pays no corporation tax. Public attention has concentrated on Google and Starbucks, but the new study shows that Gatwick is in the same game.[1]

Written by Ian Harris, a retired City corporate bond analyst, the study reveals that Gatwick achieves nil tax by a combination of tax allowances for capital investment and deductibility of interest on debt, aided by a tangled web of inter-related company ownership in tax havens such as Luxembourg, Guernsey and the Cayman Islands. ‘I would emphasise,’ says Ian, ‘that all of this is entirely legitimate and within UK tax laws. But it is an arrangement that would not come within the scope of the average small UK business.’

The new study is not easy reading for the layman but will be of considerable interest to investors who may be asked to fund a new runway, and to the Department for Transport which is at present trying to work out whether to recommend a new runway at Heathrow or at Gatwick. ‘It would be unfortunate,’ says Ian, ‘if this mechanism was to continue to deprive the UK exchequer of a significant amount of tax revenue at a time when Gatwick hopes the government will grant it permission to build a second runway.’

Ian adds: ‘It is beyond dispute that Gatwick, earning revenues in excess of £630 million each year, and growing, pays zero corporation tax despite being extremely profitable. Yet whilst the business has recycled considerable amounts of cash into modernising airport facilities in recent years, the shareholders have still enjoyed good cash returns through both dividends and repayments of tax-efficient “debt” capital.’

Doubt is cast on the financial viability of a second runway if the Luxemburg structure and benefits cease to be feasible, owing to ongoing EU and G20 pressure on so-called tax deals.

A copy of Gatwick Airport and Tax is at www.gacc.org.uk/research-studies

For further information, please contact

Brendon Sewill, GACC chairman, 01293 863369

[1] Google etc are non-UK businesses which transfer their UK profits to lower-rate countries by paying above the odds for imported goods, patents, licences or management fees;the sort of structure GIP/GAL uses is a buy-out structure put in place for non-UK owners of a UK business. The similarity is that they both artificially reduce UK profits using a multi-national structure.