C&W Settles Tax Dispute With Revenue

According to a statement, C&W will pay £380 million to the Revenue to cover outstanding corporation tax liabilities for the ten years to March 31 2001. It should also secure the company’s short-term future as it undergoes restructuring under new chairman, Richard Lapthorne (see Lapthorne Moves Into C&W Hotseat).

Last night’s decision rescinds C&W’s obligation to set aside £1.5 billion to cover a tax liability linked to the 1999 sale of mobile operator One2One to Deutsche Bank. The pledge came to light in December when C&W had its credit rating reduced to junk status (see C&W Stock Nosedives Following Downgrade).

“Establishing clarity over the group’s tax position was an essential element in our planning for the future financial shape of the group,” said Lapthorne. “With the settlement in place and consequent anticipated release of funds under escrow, we now expect to have a firm financial base for securing the future of the company.”

Shares in Cable & Wireless were down 2.25p at 71p at the close of trading today.