SUPERMARKET giant Tesco has created an elaborate corporate structure involving offshore tax havens which enables it to avoid paying what could be up to £1 billion of tax on profits from the sale of its UK properties, it was claimed today.
The complex structures are said to include a string of Cayman Island companies, each named after a different colour from aqua to violet.
Tesco has begun a programme of selling and leasing back UK stores, providing the company with a gain of up to 6bn, which would normally be liable to tax.
But the first two deals – worth 445 million and 650m – are said to have used the companies set up in the Cayman Islands, where the rate of corporation tax is zero, allowing Tesco to avoid tax on 500m profit.
The supermarket chain is not alone in such arrangements. Nearly a third of the UK's 700 largest businesses paid no corporation tax in 2005-06, and another third paid less than 10m each.
Lucy Neville, Tesco's executive director of corporate and legal affairs, defended the offshore structures, saying it was the company's duty to shareholders and customers to operate tax-efficiently.
She added: "Tesco is one of the UK's largest taxpayers."