PFI firms based here in the spotlight over tax

THREE PFI companies based in Guernsey are in the spotlight after claims they have made more than £1bn. in profit between them while paying little or no corporation tax either here or in the UK.

Policy & Resources vice-president Deputy Lyndon Trott has defended the presence of PFI companies in the island. (Picture by Steve Sarre, 20339946)
Policy & Resources vice-president Deputy Lyndon Trott has defended the presence of PFI companies in the island. (Picture by Steve Sarre, 20339946)

They feature in a list of the top five offshore private finance initiative companies, who own public buildings in the UK that include schools, hospitals, police stations, court buildings and libraries.

Research by the European Services Strategy Unit has been seized on by campaigners in the UK with Labour Shadow Chancellor John McDonnell having already said it would axe PFI deals.

European Services Strategy Unit director Dexter Whitfield said five offshore PFI funds made profits of £1.83bn over the five-year period ending in April 2015, but paid little or no corporation tax. Annual average returns on their PFI investments were as high as 28%, he said.

Policy & Resources president Lyndon Trott defended their presence in the island and stressed the wider impact they had.

‘Guernsey is a leading international finance centre, a significant feeder of funds and business to London and part of its overall product set,’ he said.

‘This is reflected in that fact UK investment management fees, generated from Guernsey funds, totalled circa £1bn in 2014.

‘In the same period UK investors invested circa £36bn into Guernsey funds, facilitating their ability to obtain exposure to global alternative assets.

‘Most Guernsey-domiciled funds are exempt, for tax purposes, having paid an annual fee of £1,200 to the Income Tax Office.

‘This exemption includes a requirement that relevant support services (managerial, secretarial and, where appropriate, custodial) are provided by third parties, regulated in Guernsey. The decisions are taken by real people, making real decisions in real time.’

Full story in today's Guernsey Press

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