Is this Tunstall’s ‘taxgate’? Maybe not.

[grow_thumb image=”” thumb_width=”170″ /]On Monday, The Independent, one of the UK’s major national papers, turned its attention in a ‘Tax Special Investigation’ to nine healthcare companies which are using a corporation tax reducing scheme, the ‘Quoted Eurobond Exemption’, where they pay loan interest at high rates to their parent companies through a mechanism via the Channel Islands Stock Exchange, rather than their owners further investing by taking additional equity. (How it works–infographic from The Independent)

One of the companies the article focused on was Tunstall and its owners Charterhouse and Bridgepoint. Tunstall’s profits–like the other healthcare companies profiled, Partnerships In Care, Independent Clinical Services, Priory Group, Acorn Care, Lifeways, Healthcare At Home, Spire Healthcare and Care UK–come largely from the public sector and, by using this means to pay less tax, less money is recycled back to the Treasury. The article estimates the amount for each company which would have been paid had this tax exemption not been in place. This Editor notes that a number of the companies profiled have had significant inspection problems and numerous complaints–Tunstall is not one of them, but it is the second largest ‘tax avoider’ (after Spire) listed.

There seem to be three ways to regard this:
1) it’s a commendably clever contrivance
2) it’s a suspiciously shady stratagem
3) it’s a non-story because it is something imposed on Tunstall by its owners

Whatever it may be, we are left wondering if Tunstall’s customers benefit in any way from this tax saving. We will be interested in our readers’ views.

Independent article: Tax Special Investigation: Firms running NHS care services avoiding millions in tax It is equally popular with well known high street (US=Main Street) retailers and restaurant chains: Eurobonds scandal: The high street giants avoiding millions in tax   

Editor Donna’s POV: There is nothing like the Law of Unintended Consequences! The HMRC exemption is 30 years old and was designed to stimulate foreign investment into the UK, which it has done commendably. (Read the ‘high street’ article.) Being an American, I don’t like taxes per se and find any relief a positive note; we have our own Internal Revenue Service (IRS) to deal with (now an enforcer on Obamacare via an odious taxpayer penalty scheme.) However, this American has a problem when this type of exemption is used for so many primarily public funded companies. It’s like a circular firing squad–the choice is to pay higher tax to the government on revenue received from the government, but if you use the loophole the loan interest (debt service) goes to your owner or VC, they profit and you pay less tax or even get a refund. If the companies pay the higher tax, the companies may have less money to provide public services and also are less attractive to investors, thus curtailing growth and development! Another downside is that it discourages the owner from taking further equity in the company, and the high debt and debt service make the company look less attractive to local authorities. Other objections: Is it inherently unfair to those many healthcare companies which don’t have funding channeled through this exemption, and which pay their taxes straight up? And as we in the US have experienced, does this all get passed along as inflated prices? It’d seem to me that perhaps the better idea would be dismantle the circle– to lower the tax on what is derived from publicly funded revenues, then decrease or eliminate the exemption for that portion of their revenues. Or does that open up another can of worms? (Disclosure: Editor Donna is not a tax expert nor does she play one on television.)

Categories: Latest News, Opinion, and Soapbox.


  1. Harry Gordon

    It is unacceptable that a company whose primary income is derived from public sector organisations, is comfortable to then construct ways to reduce it’s contribution towards the legitimate social fund. whilst it is easy to deflect responsibility towards the parent company it is us as the end customer who suffers most. My organisation has lost over 400 staff due to government cuts and this company is happy to “legally” shave 16 million off its tax bill. Disgusting.


    I think what comes out the common purse should go back into it in terms of tax etc. Think of it as a “well” the water is being taken out to help grow crops in other countries, never good business sense as one day it will run dry and there will still be mouths to feed! UK is built on 2 strong pillars, Health and Education and within 5-10 years both will be in the majority delivered by the private sector who’s corporate offices will sit outsude the UK.