Formula One paid just 1 million pounds in UK tax on revenues of 300 million
London: The company that runs Formula One has avoided paying tens of millions of pounds in corporation tax by using a complex technique, paying only 1 million pounds, despite racking up annual profits of 305 million pounds last year.
According to The Independent, the company has been able to substantially reduce its tax liability by taking out loans from other companies in the same group, as part of a complex arrangement with HM Revenue and Customs (HMRC) and the interest payable on these loans is tax deductible, reducing the firm`s taxable profits.
The report said that F1, which is run by billionaire Bernie Ecclestone, made a net contribution of 945,663 pounds in corporation tax in 2011 on revenues of 980 million pounds, even though the majority of its commercial operations are based in the UK.
F1 principally makes money from three sources, race-hosting fees, television broadcasting fees and advertising and sponsorship of races and the trick to reduce its tax bill is legitimate but far more complex, the report added.
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