Tax Victory for Morrisons

Source: Accountancy Age 27 Sept 2007

A big tax win has seen Morrisons slash its effective tax rate to 15%, the company has said

Morrisons declined to say what its successful tax wrangle was about, indicating only that HM Revenue & Customs had closed some enquiries going back several years, and that a ‘significant amount of corporation tax’ was recoverable.

Normally, the company would record a six-month finance charge of around £30m, but this half-year claimed a credit of £2.4m as a result of the tax boost and other changes.

The reduced corporate tax burden gifted to large UK corporates by the government in the last budget also contributed to Morrisons good fortunes, leading to a large release of deferred tax following the change in rate of UK corporation tax from 30% to 28%.

Overall, the net finance credit of £2.4m reflected the impact of a reducing pensions deficit, the one-off interest benefit on repaid corporation tax and low levels of net debt ahead of the full roll out of the group’s investment programme.

Morrisons added that the victory was a one-off and expected to see the net finance cost returning to normal levels in the second half of the financial year.