The defence to property group has at last agreed to repay the famous inducements with which Lord Young clinched the sale of the car company in 1988. But even after five years there is still some confusion over how much is involved.
BAe announced yesterday that it had paid the Government a total of pounds 57.6m. That sum is made up of pounds 11m in BAe's own costs that the taxpayer unwittingly met, the pounds 33.4m BAe saved in interest charges by being allowed to defer payment for Rover for two years, and a further pounds 13.2m in interest on those two sums up to yesterday.
All quite simple. Except that BAe and the Government now contend that BAe is eligible for tax relief on the accumulated interest it is now paying. At 33 per cent this relief would be worth pounds 15.4m - hence the net cost to BAe is only pounds 42.2m.
While the tax position is being clarified the DTI and BAe have agreed to place the pounds 15.4m in two separate DTI accounts, accumulating interest of course. If BAe is eligible for tax relief then the DTI will pocket the pounds 15.4m. If it is not, then the money will be credited against BAe's tax liability.
In the meantime there is the question of who gets the interest on the interest on the interest. That, says BAe's finance director, Richard Lapthorne, will be the DTI's . . . if anyone is interested.Reuse content