Archant faces another HMRC investigation over its tax affairs
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Version 0 of 1. Archant, the regional publisher already facing a £14.8m tax bill, is under investigation by HMRC for £6m more of unpaid tax. The company’s chairman, Simon Bax, revealed the inquiry into potential tax avoidance by Archant in a letter to shareholders. It centres on a “legal reorganisation” carried out by the Norwich-based group in 2011 when some 40 trading companies were reduced to three. Bax wrote: “In the event that HMRC were to prove that the company had a tax avoidance motive in putting this structure in place... there could be adverse cash outflow of up to £6m”. He added: “I should remind shareholders that your company has never acted to illegally avoid tax”. Archant has been locked into a dispute with HMRC since December 2012 over unpaid taxes, which led the company to suspend its dividend payments. But the tax headache was only one of the “critical matters” in the 2014 company accounts mentioned by Bax in his letter dated 18 March. He also referred to “a large adverse tax movement of £24m in the company’s pension scheme deficit” due to “volatility” in the gilts market. It means that Archant’s net assets have been reduced to levels that that could lead, according to Bax’s letter, to a revision of the company’s credit rating. Furthermore, it could lead to the company being required to pay additional pension protection fund (PPF) fees. It is already slated to pay a £700,000 increase in the levy and Bax revealed that the company has instituted a review of its pension strategy. Archant’s pension problems are similar to those facing many companies, including other newspaper publishers. As for the dividend, Bax said it remains a “key priority of the board” to reintroduce payments, which may be possible following a review later this year. On what he called “a positive note” and “a huge milestone for the company”, he pointed out that Archant, “for the first time in 12 years”, has no bank debt. Archant, the eighth largest regional publisher by weekly circulation, publishes four dailies, including the East Anglian Daily Times and Eastern Daily Press, plus some 60 weeklies. An Archant spokesman said the company was confident that the new tax inquiry would not find it liable to make an additional payment. “The business is strong and we are very positive because of having cash in the bank”, he said. He also pointed out that Bax’s letter indicated that he was an “engaging communicator” who had explained the details in a way that all shareholders could understand. Bax, the former former Pixar and 20th Century Fox chief financial officer, was appointed as Archant’s chairman in April 2014. |