IPF shares plummet as Polish tax reforms threaten to increase its bill

 
Lucy White
POLAND-ARCHITECTURE-WARSAW-SKYLINE
IPF shares were down more than 10 per cent (Source: Getty)

International Personal Finance (IPF), a consumer credit business, stood as the FTSE's biggest faller this afternoon as it warned of the impact of proposed corporate income tax reforms in Poland.

IPF, which started life as the overseas operations of Provident Financial before separating in 2007, said that if it did not take mitigating action then its tax bill would be hiked by £12m to £14m.

The imminent reforms would also result in a one-time accounting charge of up to £30m from the write-down of a deferred tax asset, it added, if it did not make alternative arrangements.

Read more: International Personal Finance's shares tank on profit dip and fear of FTSE 250 demotion

“The proposals may be enacted in their current form or modified through the Polish legislative process, and the company will continue to make the case for their appropriate modification,” read IPF's statement.

Based on a draft published on Monday, the reforms suggest that tax deductions which IPF formerly received for “expenses linked to certain intra-group transactions” will no longer be allowed.

The company, which operates in eastern Europe and Mexico, is currently working to establish how it could change its business operations to mitigate the impact of this change.

Shares were down more than 10 per cent at around 2pm, recovering slightly from a fall of around 18 per cent at the open.

“In conclusion, this is yet another unfortunate blow to the investment case for IPF caused by external events which are outside of management’s control,” said analyst Gary Greenwood at Shore Capital, reiterating a “hold” rating.

“The Polish business remains profitable and, for now, management states that it has no intention of walking away from this market.”

Read more: No let up in consumer credit growth as the Bank of England eyes risky lending

Provident suffers too

IPF's former parent, Provident Financial, was also among the FTSE's biggest fallers today as its shares were 4.76 per cent at 2pm.

Analyst Justin Bates at Liberum said this could have been prompted by IPF's fall acting as a reminder that the regulatory environment is tough for consumer credit businesses.

However, it could also have been a correction following Provident's relatively strong stock market run yesterday, he added.

Read more: Provident Financial announces exec shake-up and consumer credit review

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