GE division makes millions in sales to health service, and is net beneficiary from UK Exchequer
There have been calls to ban NHS providers who are not paying tax Rex
One of the biggest suppliers of equipment and testing services to the NHS pays barely any corporate tax in the UK, despite receiving hundreds of millions of pounds a year from medical sales to British clinics and hospitals.
A study of GE Healthcare’s accounts by The Independent suggests it has received more money back in tax benefits over the past 12 years than it has paid in, with the taxpayer appearing to be missing out on millions of pounds a year in lost revenues.
The company has been headquartered in Buckinghamshire since 2003 when its vast US owner, General Electric, bought the British multinational medical firm Nycomed Amersham. It makes scanners and other equipment used in areas such as oncology and heart disease.
Nycomed Amersham typically used to pay up to £8m in corporation tax to the Exchequer every year, plus £50m to £90m more abroad. But in the 12 years since its takeover by GE, the UK divisions examined by The Independent made a total net gain of £1.6m in benefits from the taxman.
GE is notorious in the US for avoiding taxes. News of its tax situation here will inevitably lead to questions about its success in winning contracts from the publicly funded NHS, which is struggling to find savings of £22bn.
Gail Cartmail, the assistant general secretary of the union Unite, said: “The NHS is under massive financial strain: the tax contribution we all make is vital to the health of the nation. It’s a national disgrace that private companies which profit from our health service can get away with having tax avoidance structures in place.”
The straitened state of the NHS has clearly not been lost on GE. In its most recent set of accounts, its GE Medical Systems division noted “the general economic and political conditions in the UK continue to make it challenging to increase the present level of trading activity”.
That statement was made alongside accounts which showed the division paid zero corporate tax.
Since buying Nycomed Amersham, GE appears to have put much of the British operation into an interlinked web of UK companies all ultimately owned by a holding company in the low-tax Netherlands. Over the years, big dividends and loans have been paid from one GE Healthcare company to another, which may have reduced its tax bill.
In the most recent accounts, only one of the seven GE Healthcare companies in the UK scrutinised by The Independent paid any corporation tax – a tiny £250,000, or 1.7 per cent of its £14.3m profit.
The full tax affairs of GE Healthcare’s global business since it bought Nycomed Amersham are impossible to gauge due to the way the group’s various companies’ accounts are filed. On 22 January, GE’s full-year accounts showed healthcare profits globally were $2.8bn (£2bn) in 2015. The parent company GE, whose businesses range from lightbulbs to wind turbines, has been widely criticised in the US for its aggressive tax avoidance. One of the world’s biggest companies, it structures itself to maximise the amount of money it makes and holds in lower-tax overseas countries.
It was notorious for tax avoidance long before the spotlight fell on Apple, Starbucks and Amazon. A New York Times investigation in 2011 revealed how, through a mixture of aggressive tax structures and lobbying for tax breaks, GE was paying hardly any tax in the US. That year, far from paying tax on the $5.1bn in profit it made, it received a tax benefit of $3.2bn.
This month it announced it was moving its global HQ from its Connecticut home of more than 40 years to Boston after cash-strapped Connecticut closed corporate tax loopholes in the state. GE said it had been considering the move before the tax rise but the state’s clampdown is reported to have hastened its departure.
Its UK healthcare division carries out large numbers of contracts for the NHS, and in 2012 was criticised after accidentally sending personal medical files on 600,000 patients to the US, in breach of data protection laws.
Dave Prentis, the general secretary of the union Unison, said: “Companies that make healthy profits from selling to the NHS, yet pay minuscule amounts of tax, ought to hang their heads in shame. Nurses, midwives and other healthcare workers struggling to make ends meet would probably like to have years where they could pay zero tax, but that’s not a choice open to them.
“NHS staff are angry at companies that would rather pay profits to shareholders than the right level of taxes.”
He called for NHS providers to be excluded if they appear to be avoiding UK taxes.
In a statement, GE said: “GE Healthcare pays the taxes it owes in every country where we operate.” It added that it had invested more than £500m in research and development in the UK in the past 10 years and had recently opened a multi-million pound “innovation village” in Cardiff to support life sciences businesses. The GE group as a whole employs 22,000 people in the UK.
The Independent was prompted to look at GE’s UK-based healthcare taxes after it announced plans this month to move its global base from Amersham to the US. Although this is not expected to lead to substantial job losses, it will be mourned locally.
The company has been based in Amersham since the 1940s and was built to process radium confiscated from a German shipment. The lab’s radioactive expertise has made it a world-leader in creating markers used in medical scanning.
NHS contracts won last year include a £30m deal to supply X-ray archives to medics using cloud computing.In a statement, GE said: “GE Healthcare pays the taxes it owes in every country where we operate.” It added that it had invested more than £500m in research and development in the UK in the past 10 years and had recently opened a multi-million pound “innovation village” in Cardiff to support life sciences businesses. The GE group as a whole employs 22,000 people in the UK.
The Independent was prompted to look at GE’s UK-based healthcare taxes after it announced plans this month to move its global base from Amersham to the US. Although this is not expected to lead to substantial job losses, it will be mourned locally.
The company has been based in Amersham since the 1940s and was built to process radium confiscated from a German shipment. The lab’s radioactive expertise has made it a world-leader in creating markers used in medical scanning.
NHS contracts won last year include a £30m deal to supply X-ray archives to medics using cloud computing.
