pounds 270m tax demand 'will ruin Anchor'

A pounds 270m bill from Customs and Excise is threatening to ruin the dairy firm Anchor Foods, a court was told yesterday.

Legal actions had turned the New Zealand company, a household name and a stalwart of the supermarket chilled cabinet, from a profitable business into a loss maker.

Anchor is alleged to have arranged a deal with another New Zealand company to transfer its business for pounds 9m in an attempt to avoid the import bill.

Yesterday Customs sought to freeze Anchor's assets so it could recoup the duties. Anchor is challenging the pounds 270m bill at a VAT and Duties Tribunal.

Mr Justice Neuberger, a High Court judge, was told that the move to try to freeze Anchor's assets would "impact on the entire New Zealand dairy industry".

David Pannick QC, representing Anchor, said the company had had to sell its assets so the business could continue in "a proper and efficient manner". Anchor had agreed to transfer its business to an associated company, New Zealand Milk, for pounds 9m but Customs claimed this was a "gross undervaluation" designed to leave behind the duties debt.

Richard McCombe QC, for the Customs Commissioners, told the judge: "The company only seems to make a profit of less than half a per cent before tax. How does it not make a profit when it is known to have 30 per cent, by far the largest share, of the UK dairy produce market?" He said the sale of Anchor's business to NZM would leave behind "only the debt owed to Customs. The proposed transfer appears to have no commercial purpose other than to rid the business of that debt."

Mr McCombe said Customs feared that there was a "real risk" that Anchor's assets may be dissipated before the money could be recovered. He said Anchor had been valued at between pounds 30m and pounds 100m.

The case continues.