Byron Burger accused of tax avoidance
Byron, the hamburger chain that recently used a sting to help the authorities catch illegal immigrants that it was employing, has been accused of using tax havens to avoid tax in the UK. Byron’s parent company, Hellespont Holdings, is alleged to have used £80m of loans with an interest rate of 10% from companies incorporated in tax havens to reduce its operating profit of £3m in 2015 to a loss of £9m through interest payments of £12m. In 2014, the company paid £6m in loan interest.

The hamburger chain Byron has been accused of using loans from companies incorporated in tax havens to artificially reduce its taxable profits in the UK.

The parent company of the restaurant chain, which has spent the week facing protests over allegations that it entrapped its own employees in an immigration sting, made the payments on more than £80m of loans with an interest rate of 10%, according to BuzzFeed News.

According to the most recent accounts of Hellespont Holdings Limited, Byron’s UK parent, the company made sales in 2015 of £69m, with an operating profit of £3m on which corporation tax would ordinarily be due. But a £12m interest payment reduced Hellespont’s operating profit of £3m to a loss of £9m. The company had paid £6m in loan interest the previous year.

But the accounts of Byron Hamburgers Limited, the Hellespont subsidiary that operates the restaurant chain, indicate that it paid £1m of corporation tax on an operating profit of £6m during the same period.

A spokesperson for Byron said: “Byron’s structure and tax affairs are the same as a large proportion of other companies on the high street and in the restaurant sector.

“Byron is based in the UK and is a UK taxpaying entity. It does not move profits offshore. It fully complies with UK tax law and guidance and it does not manage its tax affairs aggressively. It is a considerable contributor to the UK exchequer. The business is young and still very much in its growth phase. It has a financial structure that is consistent with its ownership and its growth profile, as it invests heavily in growing its estate.”

In 2013, Byron was acquired from the Gondola Group, which also used to have investments in other restaurant chains, such as Pizza Express, by the London-based private equity group Hutton Collins Partners. At the time, Gondola’s chief executive said Byron had “gone from strength to strength” and that it had “exciting opportunities to continue to grow in the UK”.

Hutton Collins managing partner Graham Hutton said that the company had “a clear road map for growth and a talented team in place to deliver it”. The company reportedly paid more than £100m for the acquisition.

The most recent accounts of Byron’s parent, Hellespont Holdings Limited, show the company currently owes more than £120m to creditors, mostly unsecured loans to shareholders. The company told BuzzFeed that the 10% rate was due to the loan being unsecured and therefore incurring greater risk.

A separate analysis by Corporate Watch said it was too early to identify how much the payments would affect the company’s tax bill.

The practice of loaning money between group companies is perfectly legal, but tax justice campaigners have previously warned that such loans can be used to relocate company profits to low-tax jurisdictions.

Byron has faced a storm of negative publicity since it was reported in a Spanish newspaper last week that the company had facilitated the deportation of some of its workers who had been working in the country illegally.

Some 35 Byron workers were arrested for alleged immigration offences after the company sent out an instruction for staff to attend training sessions. Instead they were met by staff immigration enforcement officers. At least 25 of the 35 arrested individuals were said to have been deported as of Monday.

The company has since faced protests from members of the public who feel that the staff were treated unfairly. The Holborn branch of Byron was closed on Monday in anticipation of a demonstration, which was ultimately attended by 200 people.

The company has said that it was unaware any of its employees did not have the right to work in the UK, and that those arrested were in possession of counterfeit documents. Companies that take insufficient steps to ensure their employees have a right to work in the UK can be fined up to £20,000 per worker.

