Tax avoidance, bailouts and bribery – The UK government’s Corona Corporate Finance Facility

by | Jun 6, 2020

On 04 June the Bank of England published the names of 53 companies that had outstanding loans under the UK government’s Covid Corporate Financing Facility.

The list contains a number of companies that have had links to tax havens, or have seen controversy regarding their financial affairs.

The publication of the list follows growing calls for the government to place more conditions on companies receiving state support, and the Scottish and Welsh Governments have legislated to prevent companies incorporated in tax havens from accessing funds.

We covered the issue of bailout conditionality in our recent report, Paying in Equally?, in which we suggested that conditions could be based on future tax behaviour. Others have made similar suggestions, including Glyn Fullelove, President of the Chartered Institute of Taxation, who has suggested that support to companies could be predicated on businesses committing to lower their risk rating with HMRC.

Dame Margaret Hodge MP, chair of the All Party Group on Responsible Taxation, has taken up this idea and written to the Chancellor suggesting that the government implement it.

Following the publication of the list of companies receiving support under the Covid Corporate Finance Facility, we went through the list to identify companies with links to tax havens, or that have seen other allegations poor financial conduct.

Companies with links to tax havens or tax avoidance

Overall we found 13 companies with links to tax havens, which made up 29% of the loans given.

Company Value of CCFF (£m) Domicile Parent / Owner jurisdiction Notes
ABB Finance B.V. £400 Netherlands Switzerland Companies house not up to date
Baker Hughes UK Funding Company PLC £600 UK Bermuda Ultimate holding company GE, currently in litigation with HMRC over alleged tax fraud. Immediate parent in Bermuda
Carnival plc £25 UK UK Ships registered in Panama. Carnival is two companies, one British, one Panamian.
Chanel Limited £600 UK Cayman Islands Ultimate parent company is Litor Limited, based in the Cayman Islands
CNH Industrial N.V. £600 Netherlands US/Italian corporation, incorporated in Netherlands but resident in the UK for tax purposes
Easyjet PLC £600 UK Cayman Islands Easygroup who are owned by a Cayman Islands based trust, have a 34% stake.
J.C.B. Service £600 UK Netherlands JCB parent company located in the Netherlands.
Johnson Controls International plc £370 Ireland Ireland American multinational domiciled in Ireland. Was subject of second largest corporate inversion in history
PACCAR Financial PLC £170 UK Netherlands,USA Immediate parent is in the Netherlands, and ultimate parent is in the USA
Schlumberger Plc £150 UK Netherlands Parent incorporated in Curacao
Telefónica Europe B.V. £200 Netherlands Netherlands Spanish telephone network company, registered in the Netherlands
Tottenham Hotspur Stadium Limited £175 UK Bahamas Owned by billionaire tax exile
Wizz Air £300 Hungary Jersey Hungarian airline with a holding company in Jersey
Total £4,790
All 53 companies receiving CCFF £16,250
Per cent of money going to tax-haven linked companies 29.48%

We have defined companies as having links to tax havens if they are owned by a tax haven company or a tax exile, or are incorporated themselves in a tax haven.
One of the more interesting companies on this list this is Baker Hughes, which is a subsidiary of General Electric (via a Bermuda holding company). GE is embroiled in a £1bn tax dispute with HMRC over unpaid taxes going back to 2004. The case is currently being litigated, and it was recently revealed that HMRC had changed their case to allege fraud on the part of GE. The company denies the allegation.

A number of companies are owned by parent companies in the Netherlands, or are incorporated in the Netherlands themselves. The Netherlands is both a well-known tax haven, and a major economy in itself. We counted the company if the Netherlands was being used as a conduit, with substantial operations or the headquarters of the company elsewhere.

So, for example, ABB Finance, a Dutch subsidiary of a Swiss multi-national and Telefonica, a Spanish company applying for UK government funding via subsidiary in the Netherlands, make the list, whilst AkzoNobel, which is headquartered in the Netherlands, does not.

A number of companies used tax havens as vehicles for personal holdings, or are owned by tax exiles.
For example, Chanel Limited, is owned by Litor Limited, a company based in the Cayman Islands. The Cayman Islands is also used for the vehicle to hold Sir Stelios Haji-Ioannou’s Easygroup, which in turn owns a substantial shareholding in EasyJet.

Tax haven UK costs the taxpayer

The list demonstrates that companies can qualify for UK government support, even though they have relatively little activity in the UK.

In recent years the UK has increasingly sought to set itself up as a tax haven for multinational companies. The primary attraction for companies becoming tax resident in the UK is that our controlled foreign company rules mean that UK tax resident corporations are not usually liable for UK corporation taxes on profits made outside of the UK.

This can be a particular advantage if the multinational can put profits into more traditional tax havens which don’t charge any corporation tax. Profits end up being taxed nowhere. This is not the case in other countries (such as Italy) where companies can be liable for taxes on their global profits.

CNH Industrial Limited, a US-Italian company formed as a merger between Fiat Industrial, and Case New Holland, appears to be a company that has taken advantage of the UK’s business friendly tax regime. The company is incorporated in the Netherlands but tax resident in the UK, because its Dutch parent locates its office in London.

CNH International BV does own a manufacturing plant in Essex, but it is a relatively small operation in comparison to its global footprint. In total, CNH International BV employs just over 1,000 people in the UK, out of a total of 64,000 worldwide.

According to the annual accounts of CNH International BV, and a number of subsidiary companies it has in the UK, its UK operations are loss making. As a result the company faces no tax liability in the UK on any income from either the UK or abroad.

However, its presence in the UK allows the company to access support from the UK taxpayer, and CNH International BV has borrowed £600m from the UK government, which is more than 50% of the company’s £1.1bn turnover at its Basildon plant.

Financial impropriety

Two companies stuck out as having had serious non-tax related financial issues.


ABB, a Swiss multi-national, received a £400m loan via a Dutch holding company – ABB Finance B.V.. In the UK, ABB has a company, ABB Holdings, which as of 04 July is 9 months late with filing its latest annual accounts.
ABB Holdings in turn owns ABB Limited in the UK, which reports that it had a turnover of £700m in 2018, the latest accounts that are available. This means that the UK government facility accounts for 57% of the turnover of ABB Limited. Another ABB company in the UK, ABB combined Heat and Power, is in voluntary liquidation.

Chemring Group

Chemring is a UK company operating in the defense sector. According to a press release on its website Chemring referred itself to the Serious Fraud Office in 2018, triggering a criminal investigation into bribery, corruption and money laundering. As confirmed by the SFO website, this is still a live investigation.

This research has been featured in the Financial Times, Daily Mail, Vice, The Telegraph, and The Times among others.

Correction – 06 June 2020

An earlier version of this article included British Airways in table of companies above. British Airways (BA) Limited is owned by a Jersey holding company – British Airways Number Two Limited, which is why we included the company on the list.

However, the entity receiving the government loan was British Airways PLC and not British Airways (BA) Limited. British Airways PLC is directly owned by IAG in Spain.

The proportion of loans going to tax haven linked companies was also updated to reflect this change.

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