The National Union of Journalists is demanding urgent talks with regional newspaper group Iliffe News & Media after it emerged the company hid more than £50m in profits in part to make it harder for the union to press for higher wages.
A tax tribunal recently ruled over a plan by the group to conceal profits in the years 2003-2005, with internal memos revealing the scheme was partly driven by a desire to reduce journalists’ wage demands and deter rivals from launching new titles.
The First-tier Tribunal has ruled that the company was wrong to claim a tax deduction on payments made by subsidiary companies for the use of their own newspaper mastheads on titles such as the Cambridge News.
Iliffe, which was recently acquired by the Local World consortium, is now facing the prospect of a claim from the Government over tax deductions claimed on payments totalling £51.4m.
Barry Fitzpatrick, the NUJ deputy general secretary who was the union’s national negotiator during this period, said: “We are appalled by these revelations which bring into question whether our members can trust anything that this company says during negotiations, particularly as we are now in talks over a ‘transfer of undertakings’ transfer as our members move to work for Local World.
“I am writing to Graham Judge at Iliffe, to ask for an explanation of this disgraceful behaviour.”
A 2003 email from Tony Morton, finance director of Iliffe parent company Yattendon, to accountants Ernst and Young said: “What we would like to do is to be able to reduce reported profits in the newspaper subsidiaries, since the levels of profit become common knowledge and could lead to union claims.
“They are also highlighted in a publication called the UK Press Directory, which lists companies by 40 various measures and we are not too happy to come out top of the league on the profit measures.
“Any adjustment is only worthwhile if it can be significant, just playing at the edges is not a lot of value.
“We don’t want to make the businesses more difficult, and as I have said we don’t just want to tinker round the edges. Is there any legitimate way in which we might achieve our objective without any negative tax implications?
According to the Tribunal judgment: “the group hoped that the majority of people who would look at the accounts would look ‘to the bottom line numbers’, and, in any case, would not be able ‘to tell directly what those publishing rights and the amortisation were’."
Iliffe chief executive David Fordham said in a statement to Press Gazette: “These were commercial transactions (which the court acknowledged) carried out several years ago, with full and proper advice taken at that time. We will pay whatever tax the courts finally decide is due, but at this stage are still considering the detailed implications of the judgment.”
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