Kuehne+Nagel shrugs off HMRC investigation into £17m corporation tax saving from network fee charges

A network fee charge which has saved Kuehne+Nagel Limited over
£17m in corporation tax over six years is under investigation by
HMRC, according to the company’s latest annual results.
The investigation, revealed in K+N’s annual accounts for the year
to 31 December 2018, was triggered following an earlier inquiry by
HMRC in 2015 into the company’s payment of a trademark fee.

This latest inquiry centres around a network fee charge which
K+N pays to Kuehne + Nagel Management AG, a company registered in
Switzerland.

In the notes to K+N’s 2018 annual accounts the company said
that the network fees “have been booked in the appropriate
accounting years and treated as being allowable deductions for
corporation tax. This has reduced the cumulative corporation tax
charge over these six years (2012 -2018) by £17,497,000.”

It added that HMRC is “currently undertaking an enquiry into
the network charge concept covering the subsequent years, and as
yet has not declared their view of the company’s treatment, or
issued tax assessments to date.”

Despite the investigation K+N said it has made no further
corporation tax provision in the financial statements in respect to
those years as the directors and the company’s advisors “feel
that the network charge concept position is robust and
appropriate.”

K+N’s latest annual results also reveal that on 1 February
2018 the company lost its appeal in the European Court of Justice
against a “substantial fine” incurred in 2012 following an
anti-trust investigation into K+N and a number of other freight
forwarding firms.

Since the fine was paid in July 2012 the company said it had
made no provision in its latest financial statements.

The company’s results also reveal a 7% increase to £1.58bn
(2017: £1.47bn) and a 21.6% leap in pre-tax profit to £48.8m
(2017: £40.1m) boosted by the company acquiring the remaining 50%
share of joint venture business K+N Drinkflow from Heineken UK in
February 2018.

The logistics company’s international freight forwarding
division provided the lion’s share of the total turnover, up from
£936m in 2017 to £1.03bn in 2018, despite “more uncertain and
changeable economic conditions throughout 2018.”

K+N’s contract logistics division also boosted turnover in the
period to £551.3m (2017: £541.3m) which the company attributed to
organic growth and new business wins in the period.

The company added that it “continued to be a “strong
presence” in the UK logistics market and said it is anticipating
“another successful year” in 2019.

The post
Kuehne+Nagel shrugs off HMRC investigation into £17m corporation
tax saving from network fee charges
appeared first on Motor Transport.

Source: FS – Transport B.
Kuehne+Nagel shrugs off HMRC investigation into £17m corporation tax saving from network fee charges



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