Distillery giant Diageo to fight £107m ‘diverted profits’ tax bill

The international drinks giant has been asked to pay the money under the new Diverted Profits Tax laws designed to crack down on companies hiding profits offshore.

Diageo’s dispute centres on profits that HMRC claims had been moved between the UK and the Netherlands.

Although the firm will have to pay the £107 million under the terms of the diverted profits rules which were brought in 2015, it said it intends to challenge the assessment and will work with HMRC to resolve the issue.

The new laws stipulate a 25 per cent charge on taxable profits that have been diverted from the UK.

The firm claims the tax – levied in response to complaints about companies such as Google and Facebook – has been wrongly applied in its case and insists it will fight to have the money returned.

Diageo said: “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.”

The company does not expect the situation to have an effect on its tax for the current financial year to June, and expects the rate to be 21 per cent.