In a revelation that has ignited political and public fury, supermarket behemoth Asda paid absolutely zero in UK corporation tax last year, despite raking in nearly £1 billion in profits. This startling disclosure comes as millions of British families grapple with a crippling cost-of-living crisis.
The zero-tax bill was made possible through the use of significant interest payments on debt, a common financial manoeuvre employed by private equity-owned companies. While Asda's UK operations were profitable, these interest charges effectively wiped out its taxable income.
The Private Equity Playbook
The backdrop to this controversy is Asda's £6.8 billion takeover by the Issa brothers and TDR Capital in 2021. The deal, heavily leveraged with debt, has placed a substantial financial burden on the company's balance sheet.
Critics argue that this model prioritises extracting wealth for owners over contributing to the public purse. In a move that has further inflamed tensions, Asda’s parent company paid a staggering £300 million in dividends to its ultimate owners in Luxembourg over the past year.
A Political Firestorm
The situation has drawn sharp condemnation from Shadow Chancellor Rachel Reeves. She lambasted what she called an "unfair system" that allows large, profitable firms to avoid tax while working people pay theirs through PAYE without question.
This case has become a central exhibit in the debate over corporate tax avoidance, putting immense pressure on the government to close loopholes and ensure large businesses pay their fair share, especially those serving millions of consumers weekly.
The controversy raises serious questions about the social contract between large corporations and the communities they serve, suggesting that the system may be fundamentally skewed in favour of wealthy owners at the expense of public finances.
