The Sunday Times reported (6 October 2013) that following its flotation on the London Stock Exchange, Royal Mail ‘may pay no tax in Britain for the next five to ten years after building up a £2.8bn backlog of tax credits’, with the ‘tax credits’ in question being carried-forward unrelieved losses and capital allowances.
According to the Royal Mail share prospectus for the IPO: ‘the net deferred tax credit of £284m in the income statement in 2013 includes £290m relating to UK tax, mainly to recognise the future tax reliefs associated with carried forward tax reliefs (including capital allowances) of approximately £2.8bn. These tax reliefs have accumulated because the UK businesses had not generated sufficient profit in prior years to utilise the potential deductions. As a result, these tax reliefs will be carried forward and may be utilised in the future ... The directors expect the UK businesses will continue to generate taxable profits.’
Chief executive Moya Greene has been credited with turning the business around from being a loss-making one to a healthily profitable one: in the year to the end of March 2013, Royal Mail posted pre-tax profits of £320m, with £214m of those earnings from the UK.
The newspaper notes that ‘there is no suggestion of any wrongdoing’, but reports that the revelation of such a large deferred tax asset has ‘stoked the row over the privatisation of the state-owned postal service, with accusations that the taxpayer is losing out.’ The share offer closed on Tuesday 8 October, and full trading begins on Tuesday 15 October.
The Sunday Times reported (6 October 2013) that following its flotation on the London Stock Exchange, Royal Mail ‘may pay no tax in Britain for the next five to ten years after building up a £2.8bn backlog of tax credits’, with the ‘tax credits’ in question being carried-forward unrelieved losses and capital allowances.
According to the Royal Mail share prospectus for the IPO: ‘the net deferred tax credit of £284m in the income statement in 2013 includes £290m relating to UK tax, mainly to recognise the future tax reliefs associated with carried forward tax reliefs (including capital allowances) of approximately £2.8bn. These tax reliefs have accumulated because the UK businesses had not generated sufficient profit in prior years to utilise the potential deductions. As a result, these tax reliefs will be carried forward and may be utilised in the future ... The directors expect the UK businesses will continue to generate taxable profits.’
Chief executive Moya Greene has been credited with turning the business around from being a loss-making one to a healthily profitable one: in the year to the end of March 2013, Royal Mail posted pre-tax profits of £320m, with £214m of those earnings from the UK.
The newspaper notes that ‘there is no suggestion of any wrongdoing’, but reports that the revelation of such a large deferred tax asset has ‘stoked the row over the privatisation of the state-owned postal service, with accusations that the taxpayer is losing out.’ The share offer closed on Tuesday 8 October, and full trading begins on Tuesday 15 October.
