Infosys admits to a £20 million tax dispute with HMRC

The Indian firm that is disputing the bill has a family link to UK Prime Minister Rishi Sunak, whose administration is currently embroiled in a tax scandal.

According to the company's annual report, Indian IT services firm Infosys is contesting a corporation tax assessment by UK tax regulator HM Revenue & Customs.

"Infosys shares details of certain current issues with various regulatory bodies, including this specific tax case with HMRC," a company spokeswoman said in an official statement.

"The company has filed an appeal against a tax assessment in the UK and obtained from HMRC a hold on payment of the tax demand," the spokeswoman stated.

The annual report of the Bengaluru-based company recognises the tax disagreement with HMRC, which was originally revealed by The Times on Monday, January 30. Infosys has accepted another tax dispute in Australia.

However, there is no evidence that the Indian software company did anything improper. Nonetheless, given the company's UK links, the HMRC disagreement has political repercussions, and the dispute has been publicised at a delicate time for Rishi Sunak's government.

Political repercussions

Many corporations around the world are involved in similar issues with tax authorities, but not every company has a family connection to a head of government. Sunak's father-in-law is NR Narayana Murthy, the founder of Infosys in 1981.

Despite the fact that Murthy retired from Infosys in 2014, his daughter Akshata Murthy still owns 0.9% of the company. This shareholding is projected to be worth £730 million ($900 million), with annual dividends of around £3 million.

Murty was scrutinised by the UK media in April 2022 when it was revealed that she had claimed non-domiciled tax status in order to decrease her tax payments. This included Infosys dividend taxes.

She later relinquished her non-domiciled status.

Meanwhile, the Sunak government has already been rocked this year by a tax scandal. On Sunday, January 29, Nadhim Zahawi resigned as chairman of the Conservative Party after an inquiry revealed that he had violated the ministerial code of ethics in his tax dealings.

HMRC had agreed a £5 million settlement with Zahawi over capital gains tax payable on the sale of £20 million in shares from YouGov, a polling business he helped create in 2000, which were held through an offshore trust in Gibraltar.

This settlement includes £3.7 million in overdue taxes and a 30% late payment penalty. Dan Neidle, director of Tax Policy Associates, has threatened to sue Zahawi over his analysis of the financial arrangements. The threat of legal action, however, was withdrawn by the member of Parliament for Stratford.

By fLEXI tEAM