Tesco uses offshore havens to avoid up to £1 billion tax

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."