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Cadbury’s US owners made £185m profit in the UK... and guess what they paid in tax?
THE US owner of Cadbury paid no corporation tax last year on its biggest British business – despite profits of £185million.
Mondelez UK Ltd slashed its bill to zero after raking in sales of £1.6billion. Shadow Chancellor John McDonnell said: “This is outrageous.”
THEY make Heroes but when it comes to tax it’s all about zeros...
The business that sells and distributes Cadbury products in Britain paid no corporation tax here last year even though its profits rocketed by more than 700% to £185million.
Mondelez UK Ltd – the biggest British offshoot of the US owner of chocolate giant Cadbury – managed to offset its profits to help wipe out the potential £35million tax bill.
And while the public purse missed out, the company channelled a dividend of nearly £250million offshore to its immediate parent company, headquartered in low-tax Switzerland.
Mondelez UK Ltd is one of a network of 48 British subsidiary companies of the US parent. An investigation by the Mirror can reveal these offshoots paid £5.9million combined in corporation tax last year on profits of £1.3billion.
Shadow Chancellor John McDonnell said: “This is outrageous. Time and time again we’ve warned the Government this type of behaviour is unacceptable.
“We have told them they urgently need to tighten the rules on tax avoidance.
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“This will do nothing but anger people who are going out to work every day, paying their taxes through PAYE.
“The Government has to act now to crack down on tax avoidance.”
Alex Cobham, chief executive of the Tax Justice Network, called what Mondelez was doing “a piece of financial engineering that is very sad given Cadbury’s long history of working to generate value in the communities where they work”.
He added: “Mondelez are stripping value out, by siphoning off taxable profits from the UK through large intra-group dividend payments. It is a problem with international tax rules.”
He called on Chancellor Philip Hammond to use this month’s Budget to enact powers which the Treasury already has to force multinationals to produce country by country accounts.
These would show the total profit made for all their companies in each market and the tax paid.
Our revelations will compound criticism of Chicago-based Mondelez International, which when it was known as Kraft, was controversially allowed to buy Cadbury for £11.5billion in 2010.
In 2008, shortly before it was bought by Kraft, Cadbury paid £240million in corporation tax. Things changed after Kraft won control of the business.
Around 400 jobs were lost when Kraft axed Cadbury’s Somerdale factory in Keynsham, near Bristol. Production was moved to Poland instead.
Then it axed hundreds of jobs at Bournville in Birmingham.
Mondelez has also been criticised for decisions such as reducing the size of
tubs of Heroes, and dumping the Fairtrade cocoa certification in favour of its own scheme.
Accounts for Mondelez UK, which sells other brands as well as Cadbury products, show its turnover rose from £1.64billion to £1.66billion.
Its profits leapt from £22million to nearly £185million. The surge was mainly due to £146million of dividends from two subsidiaries, coming from a coffee business in the Netherlands and the sale of its Terry’s chocolate business.
This cash offset its profits and helped cut the corporation tax – which is payable on profits – to zero. The practice is not uncommon, but experts say the tax would usually have been paid by the two subsidiaries.
Yet accounts for the two showed one paid no tax and the other just £2,000. The accounts for Mondelez UK even showed a tax credit of £320,000.
A spokesman insisted: “This is an accounting item and is not a tax or
cash credit.” Mondelez added: “In common with all global businesses, we pay corporation tax based on the laws of the countries in which we operate.
“We comply with all applicable tax legislation in the UK, as directed by HMRC and the Government. We [pay]
tax in more than 165 countries, and on a global basis pay hundreds of millions of dollars in corporate income tax annually. We are a significant contributor to the UK economy, through direct spending on employees and suppliers, and the recirculation of that expenditure in the economy. “We are investing in our business here and since 2010 are proud to have invested over £200million in UK-based manufacturing and R&D supporting our 4,000 employees in the UK.” Mondelez International also owns Kenco, Bassett’s and Oreo. Campaign group Tax Justice UK is demanding changes, such as raising corporation tax from 19% to 20%, to rake in over £23billion for the NHS.
This will anger people going out to work every day, paying their taxes through PAYE SHADOW CHANCELLOR JOHN McDONNELL ON OUR REVELATIONS