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Tax avoidance ‘at the very core’ of firms bidding for ...

Tax avoidance ‘at the very core’ of firms bidding for major NHS contracts, Unite reveals

22 March 2015

Private health firms bidding for NHS services have tax avoidance measures ‘at the very core of their business planning’, research from Unite the union has revealed.

To make matters even worse many of these companies are US companies, or have strong US investment links, which means that the government could be prevented from taking NHS contracts back into the public sector unless the NHS is exempted from the trade deal TTIP.

Key Findings: 

  • The companies analysed by the research are: Care UK, Circle, General Healthcare Group, HCA, Bio Products Laboratory Holdings, Ramsay Healthcare, Spire Healthcare, The Practice, Optum (United Health) and Virgin Care.
  • Only two of the 10 companies (HCA and Ramsay) pay any significant tax in the UK because most of the others have structures that involve the payment of significant interest, much of it to offshore companies.
  • However, all 10 companies have links to offshore tax havens, including the Channel Islands, British Virgin Islands and Luxembourg, and all but one employ extremely complex corporate structures to potentially lower their tax bill.

The shocking report exposes 10 major health companies including the four biggest private hospital chains in the UK, and Virgin Care and United Healthcare both currently bidding for major clinical contracts.

Tax expert Richard Murphy analysed 10 private health firms actively bidding for and running privatised sections of the NHS. The research revealed that all 10 make use of tax havens and extremely complex corporate structures to lessen their potential tax bill, while only two pay any significant tax in the UK at all. 

Virgin Care, a subsidiary of Richard Branson’s Virgin Group Holdings Ltd is revealed to have paid no tax on its last reported profits. Virgin uses 13 intermediate holding companies to distance the firm’s healthcare division from its parent company, based in the tax haven of the British Virgin Islands. 

Despite this arrangement Virgin Care provides 30 primary care services across England including GP practices, GP out of hours services, walk-in centres, urgent care centres (UCCs) and minor injury units (MIUs). Virgin is allowed to bid for a contract worth £280 million in East Staffordshire to treat patients with long term ailments such as diabetes and heart disease.

Similarly Optum UK, a subsidiary of US giant United Healthcare, is bidding for a Staffordshire-based NHS cancer and palliative care contract worth £1.2 billion. Optum has paid zero tax on its reported profits and is linked to tax havens including the Cayman Islands though its parent company.

Unite general secretary Len McCluskey said: “It’s a national scandal that firms can bid for cancer treatment contracts while scheming how to siphon their profits out of the country into far flung tax havens.

“To make matters even worse many of these companies are US companies, or have strong US investment links, which means that the government could be prevented from taking their NHS contracts back into the public sector unless the NHS is exempted from the trade deal TTIP.”

“Good government should do everything possible to protect  taxpayer funded public services like the NHS from companies with links to tax havens. But the Tory government’s warped Health and Social Care Act has opened up the door to private companies with dubious tax arrangements.

“Despite the NHS being under huge financial strain the coalition government is behaving like an accomplice to private companies with  tax avoidance structures in place.

Richard Murphy said: “What the structure of many of these businesses shows is that tax planning is at the very core of their activities. This is the wrong priority for companies working in the state funded NHS where the tax contribution everyone makes, including from those who supply NHS services, is vital to the continuing health of the nation.” 

Spire Healthcare and General Healthcare Group, both registered in tax havens, received tax credits from HMRC wiping out payments they had made over the previous three years.

Despite these arrangements, none of the companies surveyed have been excluded from bidding for NHS contracts. Since the Tory’s Health and Social Care Act passed in 2012 over 70 per cent of tendered contracts have been awarded to the private sector, amounting to over £13 billion worth of NHS services falling into private hands.

A new EU-US trade deal, known as TTIP, could prevent the government from cracking down on these practices. Seven of the firms including Virgin and General Healthcare Group have US subsidiaries or investors, potentially allowing them to use the deal to prevent the government blocking their future bids or terminating existing contracts.

ENDS

For more information or a copy of the research paper contact Ben Norman on 07525 590075 /  or Ciaran Naidoo on 07768 931 315    or Richard Murphy on 07775 521 797

Notes to Editors:

  • Link to Tax avoiders buying up our NHS report 
  • Source: Richard Murphy, ‘Unite investigates: Tax Avoiders buying up the NHS And how TTIP could “lock in” tax avoidance,’ Unite the union, March 2015
  • Unite is Britain and Ireland’s largest trade union with over 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey.