The UK’s Customs & Excise is thought to have excused MG Rover from paying any interest on its deferred tax bill in a further indication that the government is bending over backwards to let the Chinese takeover of MG Rover succeed, the Daily Telegraph reported on Saturday.
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The paper noted that Gordon Brown revealed earlier this week that Customs was prepared to defer MG Rover’s VAT (UK value added tax, normally charged at 17.5%) payments.
Noting that companies normally pay interest on any deferred VAT payments, at a rate ranging from 2% to 15%, the Daily Telegraph said industry sources had said that, in MG Rover’s case, Customs had agreed that the cash-strapped car maker would pay no interest on the overdue VAT payments.
Experts reportedly said this was rare. One told the Daily Telegraph: “The only legal basis is if there is a reasonable excuse. Inability to pay is not an excuse. It has got to be ‘I am just about to post my VAT return and my granny has died.’ Something unforeseen.”
Industry sources told the UK daily that MG Rover had paid little or no VAT since November – the dispensation is likely to run to the end of April when the joint venture is due to be signed off. Analysts reportedly believe that by then MG Rover’s unpaid VAT bill could be about £14 million, with an extra £1 million technically due in interest.
A spokesman for MG Rover told the Daily Telegraph: “We are not going to make any comment on our dealings with the taxman.”
However, an insider told the paper: “My understanding is that we will be paying interest on the tax deferral.”
A Customs spokesman declined to comment to the Daily Telegraph on MG Rover’s case or on how the system works. He reportedly said: “We deal on a case by case basis. In general we work to help businesses meet their VAT requirements and we want to help them to pay their VAT. If VAT has accumulated than we will want to ensure that it is paid as quickly and as speedily as possible.”
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