Sale of Go will land Cassani with £4.2m tax bill

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The Independent Online

Barbara Cassani, the chief executive of Go, is facing a £4.2m tax bill because of the decision by the low-cost airline's majority shareholder, 3i, to sell the business to easyJet rather than float it on the stock market.

Ms Cassani has a 4 per cent shareholding in Go which was worth £4m when the airline was bought out from British Airways last June but which will be valued at up to £18m when the sale to easyJet is completed. The deal is expected to value Go at between £400m and £450m compared with the £100m that BA received.

Because Ms Cassani has owned the stake for less than a year, she is liable to pay capital gains tax on the £14m profit she will make at the full 40 per cent rate. Had she owned the shares for between one and two years, she would pay tax at 20 per cent. Had she retained her shares for two years or more she would have paid tax of just 10 per cent or £1.4m under new government rules introduced to encourage entrepreneurs to invest in start- up companies.

The tax position of 3i is not affected as companies do not qualify for the so-called CGT "taper" reliefs which have been brought in by the Chancellor in successive Budgets. These have brought the qualifying period for the 10 per cent tax rate down progressively from 10 years to four years and now two years.

In a recorded message sent to Go's 750 staff last Friday, Ms Cassani said she was "extremely despondent that Go will no longer be an independent company". She told fellow employees that she had tried to persuade 3i not to sell out and stick to the original plan to float the business but "the offer from easyJet was just too attractive".

A spokesman for the airline said he could not comment on Ms Cassani's tax affairs but he was certain she had not opposed the sale to easyJet for tax reasons.

The deal, which is being financed by a easyJet rights issue, had been due to be officially confirmed today but an announcement has been delayed until later in the week. Stelios Haji-Ioannou, easyJet's founder and owner of a 29 per cent stake, will not take up his rights but is expected to raise money by selling them in the market.

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