Yoghurt giant Muller takes on HMRC over corporation tax in legal battle
The makers behind Muller Corner and Muller Rice are taking the UK tax authorities to court over a long-running dispute about corporation tax.
Muller UK and Ireland Group, Muller Dairy UK, Robert Wiseman and Sons, and TM UK Production are in a battle with HMRC over whether a company can claim tax breaks on ‘goodwill’ and ‘brands’ when it buys them from itself through a partnership.
The Scotland-based business, founded in 1947 as Robert Wiseman Dairies, was listed on the London Stock Exchange in 1994. In 2012, the company was acquired by the German dairy company Muller and returned to private ownership.
In 2013, three of the Muller companies transferred their trades and famous brands to a new partnership, Muller UK and Ireland Group. The group then tried to claim tax deductions for the ‘amortisation’ (gradual write-off) of those brands and goodwill.
However, HMRC blocked this, citing ‘related party’ rules designed to stop companies from manufacturing tax breaks through internal deals.
The UK arm of the German brand argued that, to calculate a partnership’s taxes, the law requires you to imagine the trade is being run by a “notional” UK-resident company. But HMRC ruled that if the law requires you to imagine a company is carrying out the trade, you must also imagine that the company has the same characteristics as the partnership it represents.
The yoghurt giant appealed the decision to the First-Tier Tribunal (FTT) in February 2023.
The FTT rejected Muller’s arguments. The group appealed to the Upper Tribunal, which upheld the FTT’s decision.
The case is now before Lord Justice Lewison, Lady Justice Asplin, and Sir Launcelot Henderson at the Court of Appeal for a one-day hearing on Tuesday.
Back in September, the UK and Ireland arm of dairy giant Muller was revealed to have returned to profit after recovering from a huge loss in 2023, posting a pre-tax profit of £34.3m.