HM Revenue & Customs response to supplementary
questions submitted by Mr Don Touhig
1. Detailed references to the statutes that
prevent the Department from releasing the names of specific businesses.
HMRC's statutory obligation of confidentiality
is set out in section 18 of the Commissioners for Revenue and
Customs Act 2005.
Section 18(1) provides that Revenue and Customs
officials may not disclose information which is held by the Revenue
and Customs in connection with a function of the Revenue and Customs.
The names of the business requested are held by HMRC in connection
with our corporation tax functions.
2. Further explanation to claims in the Financial
Times article, published on 27th August, as to how J. Sainsbury
plc received a "tax credit"' by making contributions
to its pension fund in both 2005-06 and 2006-07.
The summary cash flow statement in the March
2007 published accounts of J Sainsbury plc Group reports that
£240 million was paid into defined benefit pension schemes
during the year and £110m was paid in the year to March 2006.
The summary cash flow statement also confirms that £9 million
and £3 million corporation tax was received by the group
in each year respectively. However, there is no direct relationship
between these two sets of figures, as inferred by the Financial
Times article.
Corporation tax received or paid, as shown in
a group's cash flow statements, is not its corporation tax charge
for the year. The cash flow figure represents corporation tax
paid by that group to HMRC, or other tax authorities, less corporation
tax repaid to that group by HMRC, or other tax authorities, during
that accounting period. This includes, for example, corporation
tax that may have been over or under paid by UK or overseas subsidiary
undertakings of that group in earlier accounting periods.
It is correct to infer that corporation tax
charges are reduced by tax relief in respect of employer pension
contributions. The timing of that tax relief is dictated by pension
specific tax legislation. This tax relief does not take the form
of "credits", it simply reduces the profit assessable
for tax purposes. Sainsbury's published accounts showed that after
all statutory tax reliefs, there was still a tax charge arising
on the profits reported for each year. The tax charge is reported
as an "income tax expense". This includes both corporation
tax and deferred tax, as detailed in note 8 to the 2007 accounts.
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