IBM Corp has confirmed that it is currently being investigated by the UK’s Inland Revenue, following reports in the Wall Street Journal that said the tax authority was probing the company for possible tax evasion.
Citing anonymous sources, the newspaper said the authority has been investigating IBM for two years, since former employee Gerard Churchhouse alleged that the firm had avoided $500m in UK tax by upping the sales royalty payments it made to its US parent from 8% to 12%. When accounted for, operating profits would have been lowered, meaning the tax burden would have been reduced.
Churchhouse is reported to have been sacked from his sales and marketing position in 1995, subsequently suing IBM for wrongful dismissal. The WSJ reports that among the allegations he made at the time were claims that he was dismissed for uncovering evidence of corruption.
IBM Friday said that it was currently working with the Inland Revenue on an inquiry, saying it is a normal and routine procedure and IBM is cooperating fully. The firm had no comment to make regarding Churchhouse or his allegations. The Inland Revenue will not comment on the inquiry.
