Arqiva to face special revenue tax?

Arqiva hasn’t paid UK corporation tax since 2004, and British newspaper The Sunday Times accused the UK transmission company of having successfully given the UK taxman “the slip”. Arqiva has a British monopoly on terrestrial television signal distribution, and additionally uplinks over 500 channels to orbiting satellites. Now it might find itself included in a new ‘Revenue Tax’ being proposed by some parliamentarians for inclusion in the upcoming UK budget.

Arqiva is the end-result of the merging of National Grid Wireless and the transmission business of NTL in September 2008. It owns more than 16,000 radio, cellular and TV transmission sites.  It transmits all of the BBC, ITV and Channel 4 signals, for example. It is also a shareholder in the for-profit YouView broadband project.  Arqiva Holdings Ltd had 2012 revenues of more than £830 million ($1.3bn). Last year (2012) it generated gross profits of £517 million, operating profits of £266 million and EBITDA of £402.7 million.

One week ago the news emerged that the heavily indebted business is raising £780 million of further shareholder capital, and restructuring loans and other financial obligations worth £3.7 billion.

In a January 20th news report the UK’s Liberal-Democratic Party, and part of the government ruling coalition, is said to be drawing up plans for what has been called a ‘Starbucks’ revenue tax, which would include other leading companies such as Amazon, Google and others who generate huge revenues out of UK customers yet – for assorted reasons – pay little or no company income tax.

Arqiva, like the others mentioned, insists it wholly complies with UK taxation law. In a statement given to a UK specialist publication, ‘Tax Journal’, an Arqiva spokesperson defended its tax record.  “Arqiva is a privately funded UK organisation based and operating substantially within the UK. It is a fact that we haven’t paid corporation tax since 2004. Any tax liabilities that would normally have been accrued have been more than offset by the capital allowances arising from the significant investment in the UK’s Digital Switch Over programme on some £630 million.”

The spokesman said that Arqiva had been in discussion with the UK tax authorities, “and our tax liabilities and offsets are fully endorsed and authorised up to June 2010.  The statement continued, saying:  “We do not accept any inference that we enter into practices that mean we avoid our statutory legal duties in paying tax to the UK, either corporately or as an employer for our 2,000 employees.”

Arqiva has enjoyed an Ofcom-approved monopoly in TV transmission since 2008 and works with an independent adjudicator to oversee fair pricing.

Arqiva main shareholders are Canada’s Pension Plan Investment Board (48 per cent) and the largely Australian-based Macquarie European Infrastructure (25 per cent) investment fund as well as another 7 per cent also bearing the Macquarie name. Australia’s Industry Funds Management (IFM) has almost 15 per cent and Motor Trades Association of Australia (MTAA) holds 5 per cent.

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