Outlook: Tax loopholes
Tuesday 02 February 1999
What was a dark corner of the tax world was suddenly bathed in light, when BP and Amoco escaped paying $800m in duty during their merger last year by issuing new shares as foreign currency bearer shares instead of American Depositary Receipts, through which US investors usually deal in UK equities. The saving arose because the bearer shares were made exempt from the 1.5 per cent stamp duty reserve tax in 1989 in order to assist companies wanting to borrow overseas.
The Revenue says that, while this purpose will continue to be allowed, it has cracked down on transactions which the legislation was not designed to cover. However, though the ruling applies from midnight last Friday, it is apparent that it has failed to stop similar tax savings by two other high-profile cross-border deals involving UK companies - the $35bn merger of pharmaceutical company Zeneca and its Swedish rival, Astra, and Vodafone's $62bn purchase of AirTouch.
In taking this swift action, Patricia Hewitt, Economic Secretary to the Treasury, is probably on to a winner. Though the tax hauls are large, the sums are unlikely to be enough to - by themselves - to stem the tide of cross border mergers.
Hence, the Chancellor can look forward to a steady and easily collected revenue flow - which is presumably why the Conservatives never got around to acting on the plan announced in 1990 to abolish stamp duty on shares and securities all together. Some globally-minded chief executives may complain it puts the UK at a disadvantage. But if a merger can only be made to work because of its tax efficiencies, then it is almost certainly not worth doing in the first place.
- 1 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 2 Ben Affleck asked TV chiefs to hide slave-owning ancestry, new hacked Sony emails published by Wikileaks claim
- 3 Driving while dehydrated can be just as dangerous as drink driving, study suggests
- 4 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
- 5 One Direction: Louis Tomlinson launching his own record label, has already 'signed two acts'
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Professional big game hunter Ian Gibson crushed to death by elephant during hunt
Driving while dehydrated can be just as dangerous as drink driving, study suggests
Ben Affleck asked TV chiefs to hide slave-owning ancestry, new hacked Sony emails published by Wikileaks claim
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...