MPs Question C&W Tax Settlement

by Robin Pilgrim, LawAndTax-News.com, London

02 April 2003

The Treasury Select Committee may call Inland Revenue chairman, Sir Nicholas Montague to appear before it with regard to the recent settlement of Cable & Wireless's tax liability.

The telecommunications giant had been forced to ring-fence £1.5 billion to cover a potential tax bill resulting from the sale of its 50% stake in T-Mobile (then One2One) to Deutsche Telekom in 1999.

However, it emerged late last month that C&W would be paying the Inland Revenue just £380 million to cover this and various other unspecified tax liabilities dating back over 10 years.

According to reports in the UK media, shadow Treasury Minister for the Liberal Demoncrats, Norman Lamb has written to the Inland Revenue chief and Chancellor Gordon Brown calling for an explanation:

'I would like to know whether this is a done deal or whether we can re-open the case,' he revealed, continuing: 'We need reassurance about this settlement in the light of the £1.5 billion originally ring-fenced by the company to cover it.'

'Such a wide discrepancy raises a lot of doubt about the ability of the Revenue to clamp down on tax avoidance at a time when the public finances are being stretched by the war in Iraq.'

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