Nando’s, the makers of flame grilled peri peri chicken in over 25 countries, has denied claims that hides money in complex financial structures around the world to avoid paying corporate tax in the UK.
In an article last week (found here) British newspaper The Guardian accused Nando’s of using “a battery of offshore techniques” and “accounting devices” that involve “companies in Malta, Guernsey and the Netherlands, to legally reduce its UK corporation tax bill by up to a third.”
The article also goes on to suggest Nando’s majority shareholder Dick Enthoven is also guilty of tax avoidance in the UK. “Profits finally fetch up in Enthoven’s Taro III Trust. It is based in Jersey and has been operated by Kleinwort Benson. This trust, not liable for UK tax, contains no less than £750m and possibly much more.”
There are some 270 Nando’s in the UK and Northern Ireland, which are run by MD Robby Enthoven, son of Dick Enthoven. Dick opened the first UK Nando’s in Ealing Common, west London, in 1992, followed by a second branch in Earl’s Court. The UK company is owned by the Enthoven family-controlled investment company Capricorn Ventures International.
Tax avoidance is a hot topic in the UK, with both companies and wealthy individuals accused of exploiting loopholes in UK tax laws to reduce their tax bills. Late in 2012 the head of Google UK and top managers from Starbucks and Amazon appeared before the UK parliament’s Public Account’s Committee on the issue of tax avoidance.
The executives confirmed they used favourable European tax jurisdictions for their UK businesses.
Last year Barclays announced it would close its controversial tax planning business, which was part of the structured capital markets division. The division was accused of orchestrating tax avoidance on an “industrial scale”, according to the Guardian. This one of several areas that was reviewed by incoming CEO by Anthony Jenkins to assess if the bank’s businesses both ethical and profitable.
Barclays will continue to offer straightforward tax planning to customers, but will no longer devise schemes purely intended for this purpose.
The Invicta Film Partnership was one such scheme, though Barclays did not necessarily devise it. The way it works is investors put a lump sum into the fund, which is used for British film productions. The full investment is put down as a loss and 40% can be claimed back from Her Majesty’s Revenue and Customs. The UK government has shut down some of the more aggressive schemes.
The Guardian article says that the tax structures used by Nando’s significantly reduce the amount of tax it and its controlling shareholder pays, compared to a conventional onshore British operation.
However in a statement emailed by the company’s public relations firm and found here, Nandos points out that it paid £12.6m in tax on a profit of £58.2m. This equates to a tax rate of 23%, which is the headline rate of UK corporate tax.
“Serving chicken in so many different places does make our parent group’s financial structure complex, but we have always been open and honest about the tax we pay in the UK.
“In addition to the tax we pay, we employ 11,000 people in this country and are growing all the time, creating new jobs and supporting more and more UK businesses as we go,” the statement reads.
The company has invested heavily in its staff, and many franchisees are former employees. In 2010 Nando’s was voted the Sunday Times (UK) Best Place to Work.
However no one is disputing the tax paid on profits. The issue is accounting for revenue – and this is what is getting the British press riled up.