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Margaret Hodge's family company pays just 0.01pc tax on £2.1bn of business generated in the UK
Margaret Hodge, chairman of the Public Accounts Committee, is facing embarrassing revelations over the tax affairs of her family company just days before she is due to lead the grilling of US companies over controversial tax arrangements.
Margaret Hodge, chair of the Public Accounts Committee, faces potential embarrassment over the tax affairs of her family business Stemcor Photo: DANIEL JONES
By Helia Ebrahimi, Senior City Correspondent
8:06PM GMT 09 Nov 2012
The Labour MP has been one of the fiercest critics of tax avoidance by companies such as Starbucks, Google and Amazon. However, she is likely to face questions over the limited tax paid by Stemcor, the steel trading company in which she owns shares and which was founded by her father and is run by her brother.
Analysis of Stemcor’s latest accounts show that the business paid tax of just £163,000 on revenues of more than £2.1bn in 2011. However. it is not known whether the company – which made profits of £65m – used similar controversial tax avoidance measures criticised in the past by Mrs Hodge.
Stemcor’s tax bill to the exchequer equates to just 0.01pc of the revenues it booked through its UK-based business. In accounts filed with Companies House, Stemcor revealed that despite generating about one third of its revenues in Britain, its UK tax contribution made up only 2.7pc of the tax the company paid globally.
Stemcor was founded by Mrs Hodge’s father Hans Oppenheimer more than 60 years ago.
Today, the business claims to be the sixth largest private UK company by turnover. Last year the company, which employs 2,000 people in 45 countries, generated sales of £6bn from trading about 20m tonnes of steel.
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The majority of Stemcor’s shares are still controlled by the Oppenheimer family and Mrs Hodge declares a “registrable shareholding” in the company, which is run by her brother Ralph Oppenheimer, executive chairman.
Speaking to The Daily Telegraph, Mrs Hodge defended Stemcor’s behaviour and said that the company had “assured” her it paid “every penny of tax that is owed”, adding that she was only “a very small shareholder”.
“Clearly, I have asked them the question,” said Mrs Hodge. “They have always promised that they do absolutely nothing to avoid tax. I would be very mad if I found out differently.”
Mrs Hodge said unlike other companies under the spotlight, Stemcor did not try to shield profits or “hide information” and that was the difference between Stemcor and Starbucks.
However, when pressed about the details of why so little tax was paid by Stemcor despite the billions of pounds it makes, Ms Hodge said that she had not done “enough detailed work” and did not have the information.
On Monday, Mrs Hodge will chair a hearing at which senior executives from Starbucks, Google and Amazon will be questioned on their tax affairs. The US companies, along with Facebook, were recently shown to have paid just £30m of tax between them despite generating £3.1bn of British sales in the past three years.
Mrs Hodge has led much of the criticism of these companies over the ways in which they minimise their tax bills. Mrs Hodge previously said: “There is a growing anger among ordinary people who pay their taxes that the system is not fair. That big corporates and the rich find ways to avoid tax. It may be legal but it is not moral.”
A spokesman for Stemcor defended the company’s tax policy and said it paid more than many of its peers. “In the past three years, a total of £14m of corporation tax has been paid by Stemcor in the UK. Stemcor’s effective tax rate internationally in the last three years has been over 30pc.”
The spokesman added that Stemcor was “happy” to provide more detail “about its tax affairs to the media if requested” and that it was “proud of the company’s contribution to the UK economy”.
“Stemcor is almost unique among international trading companies in that it still maintains its headquarters in the UK. Most other such companies have located themselves in low tax jurisdictions, while still having sizeable operations in London. Stemcor’s shareholders refuse to countenance such a move,” the spokesman said
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