UPDATED: Isle of Wight MP Bob Seely has once again written to Wightlink’s Chief Executive, this time quizzing the company over why they have not paid corporation tax in this country despite racking up a profit of almost £22million last year alone.
In the past 2 years the cross-Solent operator has not paid any corporation tax on the profits it has made, leading Mr Seely to question the structure of the company and its tax and corporate governance.
Earlier this week Island Echo reported on the news that the cross-Solent operator could be sold to the firm behind the Yo Sushi chain. Mr Seely has made it clear that he wants Wightlink to be bought by someone willing to invest in the long-term, not an ‘asset-sweater’.
Bob has said in his letter to Wightlink’s Keith Greenfield:
“Wightlink appears to pay no tax on its earnings. Equally, the holding companies do not seem to pay any tax either. Wightlink appears to be making a good profit paying shareholders — a dividend of £14 million. When would Wightlink or its shareholders expect to start paying UK tax on its earnings?
“Wightlink’s immediate holding company, Arca Top Co, while registered in the UK, is controlled from Luxembourg and its parent company is registered in Guernsey. If this is correct, why is Wightlink’s corporate structure offshore? Has this structure been put in place to minimise tax liabilities? What benefit is there for the Island in this arrangement? What benefit is there for the UK taxpayer?
“If Wightlink was sold and took on more debt, would it have to make even more profit to pay its shareholders?”
He has gone to say:
“I understand a buyout firm is amongst the frontrunners to purchase the company. If this organisation takes the same attitude as previous owners and seeks to asset-sweat Wightlink rather than develop a long-term plan, I will be opposing the sale and highlighting my reasons for doing with the new owners and with government. What assurances will you give that any new owners will act in a responsible way and see Wightlink as a vital public service?
“Prices for the business seem remarkably inflated. I assume this is due to profit forecasts which make Wightlink highly attractive, that it is in effect a duopoly and, if you live in some parts of the Island, an effective monopoly.
“Wightlink’s possible sale seems a good opportunity to highlight a number of issues that concern me about Wightlink’s social responsibility in relation to your profits and corporate structure.
“I appreciate what you and your management team have been trying to do in forming a better relationship with the Island. My issue is not with you, or your team, but with the owners and the ownership structures.”
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There could be a whole variety of legitimate explanations for the lack of corporation tax. Wightlink have not yet given their reasons but say they will respond to Mr Seely’s letter.
It was only a few weeks ago that Wightlink had to respond to another letter from the MP when he raised questions about the certification of St Clare – questions that Wightlink refused to provided answers to when posed by Island Echo.
UPDATE – A spokesperson for Wightlink has today said:
“No corporation tax has fallen due for Wightlink as a result of the high levels of investment it makes in building new ferries and improving facilities for customers. This applies to any company which reinvests its profits to renew its assets.
“Wightlink has recently invested £45million in its new flagship Victoria of Wight and modernising port infrastructure on the Portsmouth to Fishbourne route.
“Wightlink makes and declares all its profits within the UK.”