Capita Boss Unworried By ECJ’s VAT Ruling

by Robert Lee, Tax-News.com, London

08 March 2005

UK outsourcing firm Capita Group believes that last week’s ruling by the European Court of Justice that value added tax must be charged where insurance-related back office functions have been outsourced is unlikely to affect the firm’s future growth.

In an interview published by Reuters, Capita’s Chief Executive, Paul Pindar explained that while the firm was disappointed with the ECJ’s decision, he saw no evidence that the VAT issue would unduly affect the company’s performance.

"It would be naive of people to say we're indifferent to this. We would prefer there not to be the VAT issue," he noted.

However, he went on to add: “But do I believe it will be a dampener on business going forward? The honest answer is I don't and I haven't seen any evidence of it."

"The issue is not a 17.5% issue," observed Mr Pindar, adding that: "because of the nature of the services being provided and the fact that some of them are partially exempt anyway, the addition to the cost base of the companies concerned is more likely to be in the 10% to 12% bracket."

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