Tax inquiry dogs UK Royal Mail rival TPG
TPG, the Dutch postal and logistics group planning to make deep inroads into Royal Mail’s monopoly over letters delivery in the UK, has launched an investigation into the tax affairs of a British subsidiary.
The UK unit, a holding company that is part of the TNT express delivery business, has been in dispute with the Inland Revenue since the late 1990s over the fiscal treatment of its earnings.
But TPG sources indicated that the matter was coming to a head and unlikely to be in the group’s favour, leaving it with a financial headache of up to euros 40m (pounds 27m). The IR is understood to be pressing for sums to offset a significant under-payment of tax at the TNT unit and to have warned of financial penalties and interest charges.
Officials insisted there was no question of missing monies and the investigation had been initiated by TPG’s audit committee after talks with the company’s auditors, PricewaterhouseCoopers.
“We want to be absolutely sure that in the process everything has gone the way it should have gone in terms of the information given to the IR and to our auditors,” they said. The investigation, which will hold back the fully audited 2003 accounts for weeks, unnerved investors already concerned at a steep fall in 2003 earnings from euros 1bn to euros 767m.
“This is an isolated incident in a company operating under different tax regimes in 60 countries,” a spokesman said. “But we don’t want any cloud, however little in terms of the scale of the group’s activities, left hanging over us.”
TPG rebutted suggestions that the inquiry was prompted by the need to clear the decks before talks begin over gaining access to Royal Mail’s delivery network.
The Dutch group and Deutsche Post, its German counterpart, have seized on RM’s recent deal with Business Post over access as a template for their own negotiations. The deal, the first of its kind in Europe, pays RM 13p an item for delivering bulk mail over 4,000 items.
TPG, which has secured a full licence from regulator Postcomm to operate in the British market, has said it is considering plans to build its own network – as well as piggy-backing on RM’s system.
The Dutch group, which wants to save up to euros 300m of costs this year, is also investing euros 200m in China over the next few years.
