Heathrow disputes corporation tax claims

Heathrow disputes corporation tax claims

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Heathrow has disputed newspaper claims that it only paid £24 million in corporation tax in almost a decade despite handing its owners £2.1 billion in dividends over four years.

A report in the Sunday Times quoted Margaret Hodge, chairman of the all-party parliamentary group on responsible tax, as saying: “Heathrow makes money out of British people travelling and it’s about time they accept the responsibility that they should also contribute to the pot.

“If people are paying massive dividends and not paying tax, this smells wrong.”

However, Heathrow, which is vying with rival Gatwick for government approval to expand, said it was a regulated entity “that operates not only within the tax laws but also within the spirit of them”.

A spokesman added that the airport is also one of the largest business rate payers in the UK, paying around £1 billion since 2006.

He added: “Corporate tax has been low to date because the government offers tax breaks to companies to attract investment in building or upgrading British infrastructure - that means we have around £1 billion of deferred tax on our balance sheet which will go to HMRC in the coming years.

“The government’s approach has seen Heathrow invest £11 billion over the course of a decade to transform the airport into the best airport hub in Europe.

“Against that investment, our shareholders have made only a modest return - essentially half being from the sale of assets, most of which were instructed by the Competition Commission, and the other half a return on the equity they have put into the company.

“Unlike other major corporates, as a regulated entity, our return on capital is set by the regulator.

“Heathrow contributes fairly to the UK public purse and the costs of investments are in fact spread over several decades through passenger fees – the same financing model used for building Terminals 2 and 5 and approved by the regulator applies equally to a third runway.

“Our passengers are choosing Heathrow and enjoying the benefits of major investments now – that’s why our service scores are at their highest, we have record passengers and we’re voted the best airport hub in Europe.”

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