AstraZeneca agrees to pay £500m in HMRC settlement

ASTRAZENECA has paid Her Majesty’s Revenue and Customs (HMRC) £505m to settle a tax dispute.
The Anglo-Swedish drugs company owes the government over so-called transfer pricing – the price at which a group sells goods or services from one section to another.

Astra will pay £350m next month and a second installment of £155m in March next year.

The tax claims go as far back as far as 1996.

HMRC is cracking down on internal transfers of expenses or profits.

The compamy said in a statement: “AstraZeneca has provided in its accounts for the outcome of this issue, at the heart of which are complex transfer price considerations that have taken many years to resolve.”

Following the settlement the group tax rate that AstraZeneca will pay this year will be about two percentage points lower than previously expected.

The company in turn raised its earnings per share forecast for this year from between $5.75 (£3.73) and $6.15 to $5.90 to $6.30.

AstraZeneca, the UK’s second largest drugmaker by sales after GlaxoSmithKline, was formed in 1999 with the merger of the Swedish-based Astra AB and the UK-based Zeneca group.

In June last year Dixons Store Group International (DSGI) Europe’s second biggest electronics retailer, paid HMRC £52.7m to settle a lengthy dispute over transfer pricing. It was lower than many had expected. In 2008 drinks giant Diageo settled with HRMC for an undisclosed amount over transfer pricing.

INTERNATIONAL law firm Freshfields acted as the adviser to AstraZeneca on the legal aspects of the deal.

Freshfields has been acting on behalf of AstraZeneca since 2007. Philip Croall was the litigation partner leading on the work.

The company advises on business law throughout Europe, the Middle East, Asia and the US. It employs more than 2,400 lawyers in 27 offices around the world. The company deals with national and multinational corporations, financial institutions and governments.

Freshfields has also been appointed as the legal services provider to the London Organising Committee of the Olympic Games and Paralympic Games (LOCOG). The company also advised the London Stock Exchange Group on the creation of a new pan-European trading venture through a merger of the businesses of Turquoise Trading Limited (Turquoise) and Baikal Global Limited (Baikal). The transaction completed earlier yesterday following Financial Services Authority (FSA) and Office of Fair Trading (OFT) approvals.

Meanwhile Deloitte’s transfer pricing partner Mark Atkinson led a team dealing with the accountancy issues surrounding the AstraZeneca agreement.

The company’s corporate tax team says it “can assist your organisation across all aspects of tax and work with you to put in place sustainable tax solutions that are aligned with your wider business agenda and strategy.”

“We can help you respond effectively and efficiently to today’s dynamic environment whatever your size, location or need,” it adds.

There are 11,000 staff worldwide.