The United Kingdom’s tax authority, Revenue and Excise Customs (HMRC), was accused General Electric (NYSE: GE) in a court filing misleading the tax body over a 2005 transaction the company was made with an Australian subsidiary, according to a Bloomberg report.
HMRC said that GE intentionally obscured Australian investment objectives during the 2005 tax settlement talks, called its actions “deliberate” and said GE provided information “simplified” and “misleading”, the report said. The findings against GE could cost the company $ 1 billion, according to British authorities.
The investment is reportedly an internal GE Capital refinancing operation, in which GE moved as much as $ 4.9 billion among subsidiaries in the United Kingdom, Australia, Luxembourg and the United States. According to the report, HMRC lawyer Philip Jones said in court that “All of this was established as a tax scheme, to get tax benefits.”
GE has denied the misstatement of the transaction. It was said that HMRC had referred the dispute to fraud investigators twice before, and no basis for the investigation was found.
In its financial statement notes on GE’s fourth quarter 2018 filing, it said there was a potential impact of around $ 1 billion if the tax authorities prohibited the deduction, but it intended to oppose any rejection. “We comply with all applicable tax laws and British judicial doctrines and believe that all benefits are more likely than unsustainable in their technical capabilities,” the company said.
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