General Electric tax fraud allegations revealed

by | Aug 4, 2020

A new report published by TaxWatch today reveals the serious allegations of fraud being levelled against a major US corporation by HMRC.

The full report, titled “Around the world with $5bn: General Electric and the Australian arbitrage” details how General Electric moved $5bn between the US, Luxembourg, the UK and Australia in just four days as part of a complex “hybrid arbitrage” tax avoidance scheme, that allegedly generated a tax benefit for GE in the UK of up to £760m over a period of 10 years. The report is based on a series of court documents that have emerged as part of the dispute between the company and the tax authority.

According to HMRC’s claim, GE were only able to gain the tax benefit after they knowingly withheld information from the tax authority in an attempt to defraud the British taxpayer.

This included deleting key passages from the minutes of a board meeting in order to hide the true extent of the tax avoidance scheme.

GE strongly denies the allegations, and says that the entire scheme was presented to HMRC in discussions with the tax authority at the time.

HMRC’s allegations of fraud were made as part of a recent amendment to ongoing litigation between the tax authority and GE. GE sought to challenge HMRC’s right to amend their case to include allegations of fraud.

A recent High Court Judgment by Mr Justice Zacaroli confirmed that two of HMRC’s allegations of fraudulent misrepresentation had no chance of being proved, in part because of the time that had passed since the acts took place. A third allegation, fraudulent misrepresentation on the basis of knowingly failing to disclose relevant documentation, was allowed to proceed to a full trial. The case is scheduled to be heard in court in 2021.

The full report can be found here.

This research was featured in the Financial Times, Accountancy Daily, and the Australian Financial Review among others.

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