Jessica Fino 11 May 2017 04:16pm

Diageo ordered by HMRC to pay back £170m

The alcoholic beverages company says it has been told by the Revenue it must pay back additional tax and interest as part of the new diverted profits tax regime

Diageo said that HMRC intends to issue preliminary notices which will require the company to pay approximately £107m in aggregate for the financial years ended 30 June 2015 and 30 June 2016.

However, the owner of Smirnoff and Guinness said it does not believe that it falls within the scope of the new regime and will challenge HMRC’s order once it receives it.

The statement said, “In order to do this, it will be necessary to pay the full amount assessed up front and then continue to work to resolve this matter with HMRC.

“The payment of this sum is not a reflection of Diageo’s view on the merits of the case and, based on its current assessment, Diageo considers no provision is required in relation to diverted profits tax.”

Diageo said the payment is not expected to change its tax rate before exceptional items for this year, which will be approximately 21%.

An HMRC spokesperson said, “HMRC makes sure all taxes due are paid. We don’t discuss identifiable taxpayers or businesses.”

The diverted profits tax regime, also known as the “Google tax”, was introduced in April 2015 and levies a 25% charge on taxable profits that have been diverted from the UK.

The tax structures of multinationals based in the UK have come under increasing public and political pressure in recent years.

The UK government and Google received fierce criticism after making a deal which would see the multinational pay only £130m back in tax covering a 10-year period.