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Broadcast company Arqiva defends tax record

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‘We are in constant dialogue with HMRC’

Arqiva, the provider of transmission services for BBC radio and the UK’s terrestrial TV broadcasters, has defended its tax record after The Sunday Times reported that it had paid no corporation tax for the past four years ‘despite earning hundreds of millions of pounds’.

Under the headline ‘Broadcast giant gives taxman slip’, the paper said a borrowing ‘binge’ had left Arqiva ‘saddled with about £4bn of debts’. The interest payments ‘eliminate tax liabilities’, it added.

Annual interest payments of more than £350m had pushed Arqiva ‘deep into the red’, and the company would be able to use the losses to reduce future tax bills, in what the paper called a ‘legitimate accounting manoeuvre’.

Deductions for allowable interest, and the mandatory offset of trading losses incurred in earlier years, are well-established features of corporation tax law.

An Arqiva spokesman said today: ‘Arqiva is a privately funded UK organisation based and operating substantially within the UK. It is a fact that we haven’t paid corporation tax since 2004. Any tax liabilities that would normally have been accrued have been more than offset by the capital allowances arising from the significant investment in the UK’s Digital Switch Over programme on some £630m.

‘In addition the costs of servicing the debt incurred to privately fund the DSO is also allowable for tax purposes, as is appropriate. We are in constant dialogue and working reviews with HMRC and our tax liabilities and offsets are fully endorsed and authorised up to June 2010.’

He added: ‘Arqiva’s accounts and practices are audited, open and transparent. Our shareholders have not taken distributions or interest on loans since 2009 in preparation of the refinancing of our corporate debt. We do not accept any inference that we enter into practices that mean we avoid our statutory legal duties in paying tax to the UK, either corporately or as an employer for our 2,000 employees.’

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