Camelot disputes £10m tax avoidance claim
National Lottery operator refutes claims made by The Independent that it exploited a loophole to reduce due tax
Camelot is disputing claims that it avoided paying approximately £10m in corporation tax by exploiting a legal loophole.
The Independent newspaper has reported the National Lottery operator saved the sum in successive financial years starting 2010-11 through interest on loans taken from its Canadian owner, the Ontario Teachers’ Pension plan, via the Channel Islands Stock Exchange.
Interest of £38.7m on £172.6m owed to the parent company had been charged, resulting in the company declaring a tax credit of £10.3m for 2012 and £5m for 2011.
It is not clear by what amount Camelot was able to reduce its tax bill due to the operator’s refusal to disclose how much interest Her Majesty’s Revenue & Customs (HMRC) deemed suitable for tax relief.
Camelot has refuted the allegation, claiming that it fully complies with all UK regulatory, tax and legal requirements and remains a significant UK tax payer.
“In the period reported by The Independent, Camelot paid UK taxes well in excess of £1.5bn. This figure included lottery duty, corporation tax and (non-recoverable VAT),” a company statement added.
The loophole, known as the quoted Eurobond exemption, has been exploited by more than 30 other major companies, costing the UK government an estimated £500m.
HMRC had considered closing the loophole, with The Independent also reporting that it decided not to after lobbying from accountancy and finance firms. HMRC was unable to comment.