Business department supports calls for contractor to explain tax arrangements

Anna Stewart - Laing O'Rourke

Pressure on contracting giant Laing O’Rourke over its tax affairs has intensified after the business department backed calls for the firm to explain its tax arrangements.

Last week, Building revealed that Conservative MP Stephen McPartland had written to Laing O’Rourke chief executive Anna Stewart raising concerns over the tax affairs of the contractor, which is registered in Cyprus and is a “wholly owned subsidiary” of a company incorporated in the British Virgin Islands, Suffolk Partners Corporation. Laing O’Rourke said Stewart would review the letter and respond.

According to Barbour ABI, Laing O’Rourke has won roles on more than £1bn of public sector work since January 2012. Stewart also has a seat on the government’s Construction Leadership Council, chaired by business secretary Vince Cable.

This week a Department for Business, Innovation and Skills spokesperson said: “Laing O’Rourke have said they plan to respond to Stephen McPartland regarding his concerns.

“Members of the Construction Leadership Council are expected to demonstrate principles of best practice.

“While the council has not discussed tax issues, the business secretary has been clear on his view that companies from all sectors, including construction, should pay their fair share of tax in accordance with UK law. This view is shared across government.”

Labour MP Margaret Hodge, who chairs the influential Public Accounts Committee, which is investigating the tax affairs of large companies, said: “This appears to be another example of how widespread aggressive tax avoidance is in the corporate sector.

“A culture has grown up in which companies feel under no obligation to pay their fair share of tax and in my view that has to change.

“If any company is benefitting from the taxpayer pound, they have an obligation not to aggressively avoid tax.”

Hodge added that the committee - which has previously grilled bosses of multinationals such as Starbucks, Amazon and Google on their alleged tax avoidance in the UK - will continue with its investigations this autumn.

A Laing O’Rourke spokesperson said the group’s “effective tax rate” for 2012/13 was 23.2%, “broadly in line with the UK corporate tax rate of 24%”, and that in 2013/14 the group expected to be a “net payer of tax at a rate similar to the UK corporation tax rate”.

He said: “Laing O’Rourke is committed to global compliance in its financial and tax affairs as well as to health, safety and environmental considerations and its extensive social obligations in the communities where it works.”