Further grilling for private equity bosses

Private equity chiefs in the UK will face fresh scrutiny by the British parliament today amid reports they are making large gains from firms which pay almost no corporation tax.

Private equity chiefs in the UK will face fresh scrutiny by the British parliament today amid reports they are making large gains from firms which pay almost no corporation tax.

The Treasury Committee will question four more bosses from the controversial sector, along with a City watchdog, as part of its ongoing inquiry.

And the MPs will want to probe the latest tax claims – made by the BBC.

It said Saga and the AA – two private equity-owned firms set for a merger – had paid almost zero corporation tax since being taken over more than two years ago.

Meanwhile the owners, Charterhouse, Permira and CVC, made gains of £2.5bn (€3.7bn), it said, around three and a half times the original investment.

Labour committee chairman John McFall told the BBC Radio 4 Today programme: “The question is: are the private equity companies using debt as equity?

“If they are then they are distorting the system. These are questions that are still to be answered.”

At a previous hearing, private equity leaders sought to dispel their reputation as corporate “asset strippers”, claiming that they were good for jobs and profits.

However the MPs were incredulous when none could say how much their companies paid in capital gains tax.

They denied taking advantage of a “loophole” in the capital gains tax regime originally designed to encourage new, start-up companies.

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