News Column

Hewlett Packard tax dodge

July 14, 2014

By Peter Campbell, Daily Mail, London

July 14--Hewlett Packard used a network of European holding companies to try to avoid millions in UK tax.

Within months of buying Autonomy, the US computer giant loaded the British software maker up with colossal debts by taking loans from subsidiaries based in Belgium and the Netherlands.

Under the arrangement large interest payments worth almost pounds sterling 100m a year would have flowed from the UK to the low-tax country.

The scheme was unwound late in 2012 when HP took a pounds sterling 5bn writedown on the company that it paid pounds sterling 7.1bn for in 2011. But accounts filed last week show for the first time the structure that HP used when making the acquisition which accountants who studied them said were intended to provide it with years of tax deductible interest payments, potentially saving it tens of millions of pounds in tax.

When HP snapped up the software giant, it created Hewlett-Packard Vision Limited, which is registered in the UK but is owned out of Luxembourg, to handle the deal.

Accounts showed that, in January 2012, this entity borrowed pounds sterling 4.5bn from an HP financing company based in Belgium.

The loan, at a rate of 2.0336pc interest, would yield the Belgian lender pounds sterling 91m a year in tax deductible interest payments annually.

Between January and October HP Vision Limited claimed more than pounds sterling 10m in tax relief from the payments.

Once the company took the writedown in October that year, HP repaid the loan but only after receiving a pounds sterling 4bn payment from another HP subsidiary based in Luxembourg.

HP Vision Limited now has a smaller loan worth pounds sterling 142m from a different Dutch holding company, with interest of 4.5pc.

HP last night said it had not broken any laws and 'adheres to the highest ethical standards'.


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Source: Daily Mail (London, England)

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