Asda and Morrison, who are both owned by private equity, did not pay any corporation tax last year.
Before the private equity takeover, the supermarkets paid on average £200 million in corporation tax each year. By comparison Tesco paid £247 million in corporation tax last year and Sainsbury’s £120 million,
Asda and Morrison have no profits as they are paying off the interest payments on their new debt, which has been loaded onto the balance sheet.
Professor Richard Murphy said private equity companies should not be allowed to offset interest against profits when buying companies. He believes you should only be allowed to offset interest against profit if the expenditure benefits the company. “Why is the government effectively giving an enormous subsidy to the owners?” he asked.