It appears that major international companies that supply some of Britain’s most popular meat brands, including KFC, Nando Chicken and the Sainsbury organic group, have been using offshore companies allowing them to avoid paying millions of pounds in UK tax.
An investigation by Guardian and Lighthouse Reports has found that two companies – Anglo Beef Processors UK and Pilgrim’s Pride Corporation (owned by Brazilian beef giant JBS) – appear to have reduced their tax bill by structuring their businesses and loans in a way that allows them to take advantage of different tax regimes, while One expert described it as “severe tax evasion”.
These practices are not illegal, but they have proliferated over the past two decades as multinational companies and their accountants have discovered opportunities to lower their tax bills. Many argue that complex financial structures can allow some companies to avoid paying their money fair share of taxes. This, they say, leads to lower incomes for national governments as taxpayers are forced to put up with the tab.
In this case, the meat companies in question have subsidiaries in the UK, the Netherlands and Luxembourg, which have different tax regimes. By lending money from a company in one country to a related company in the other country, and then borrowing it back at a different interest rate, companies can legally and drastically reduce their tax bills.
A tax expert suggested that the strategies used by Anglo Beef Processors UK and Pilgrim’s Pride Corporation amounted to “aggressive tax avoidance” and, while not illegal, “contradicts good corporate citizenship and the public, who are the clients of all these meat companies.” , she do not like that. “
The Guardian and Lighthouse Reports estimated that the two meat companies appeared to have avoided paying taxes of more than £160m.
Both companies said they comply with taxes in all jurisdictions in which they operate.
The UK’s largest beef producer
Anglo Beef Processors UK (ABP UK) operates the UK beef operation of the ABP Food Group and is the largest producer of beef in the UK. It is a major supplier of meat to UK supermarkets with its own brand name products.
ABP UK appears to have transferred the interest payments to another company in the ABP Food Group – Netherlands-based Trojaan Investing BV, according to publicly available Trojaan annual reports published by the Dutch business registry.
Trojaan Investing BV describes itself in its annual reports as a finance company and says it is part of the ABP Food Group. Its reports also say the company has no employees.
His 2017 annual report detailed a £63 million loan granted to ABP UK at 5% interest and due to be repaid in December 2022. This equates to £3.15 million in interest that ABP UK pays annually to Trojaan, which can be deducted from its tax bill in the Kingdom United.
The report shows that Trojan has taken out interest-free loans from other group companies based in Ireland and Jersey.
According to its annual reports between 2013 and 2017, Trojan made €118m (£103m), almost all of which was from interest on loans to other group companies owned by ABP Food Group. Between 2013-17, its reports appear to show that Trojan paid €1.1m (£960,000) in taxes, with an average effective tax rate of 0.9%.
As an unlimited company, ABP UK is not required to provide public accounts.
An ABP spokesperson said: “We have been and remain tax compliant in all of the jurisdictions in which we operate. We have no further comment.”
The largest meat company in the world
Pilgrim’s UK and Moy Park – both part of US-based Pilgrim’s Pride Corporation – currently control 25% and 30% of the UK pork and poultry markets respectively, according to their websites, and both are owned by the world’s largest meat producer. The Brazilian beef giant JBS.
The British holding company of Pilgrim’s UK and Moy Park – called Onix Investments UK Ltd – appears to have made interest payments totaling $172.8m (£147m) to a Luxembourg-based group company called Sandstone Holdings over four years between 2017 and 2020. According to publicly available annual reports submitted in Luxembourg.
According to its annual reports, Sandstone Holdings appears to be lending money to Onix at 6% and 7.5% between 2017 and 20And the But he appears to be borrowing money from other companies owned by the group without interest.
Sandstone Holdings reported $160m (£141m) in profits between 2017 and 2020 and appears to have paid $299,000 (£220,000) in taxes, the company reports, with an average effective tax rate of 0.19%. Sandstone Holdings had no employee costs in that period, indicating that it did not employ anyone.
In response to the use and deduction of interest payments for offshore companies by ABP UK and Pilgrim’s Pride Corporation, Reuven Avi-Yonah, Professor of Law at the University of Michigan Law School, suggested that “there is no doubt that this is also aggressive tax evasion”.
Avi Yuna, who is also a former adviser to the Organization for Economic Co-operation and Development (OECD) said.
Alex Cobham, CEO of the Tax Justice Network, suggested, “This gives the whole appearance of tax evasion, designed to prevent advertising and taxation of profits in the location of the primary real activity—that is, where the profits actually originate. What I might consider offensive is not necessarily illegal, and with That, like the shortcomings of international tax rules.”
A spokesperson for JBS USA and Pilgrim’s said: “Pilgrim’s and its subsidiaries work to ensure compliance with all tax laws and regulations in the countries in which the companies operate, as well as an open and transparent approach to dealing with tax authorities.
“In the UK, Pilgrim’s has invested nearly £2 billion since 2017 in acquisitions and capital expenditures, and is focused on continuing investment in the region.”
Sign up for Monthly update of farmed animals For a roundup of the biggest agriculture and food stories around the world and keep up with our investigations. You can send your stories and ideas to us at Animalsfarmed@theguardian.com