Danish taxman delivers £126m demand to Just Eat after London HQ move

Just Eat is embroiled in a row with Danish authorities over more than £100 million in back taxes.

Denmark has accused the fast-food delivery app of failing to pay enough tax after shifting its headquarters from Copenhagen to London in 2012. Last year the taxman made a £126 million claim against the company after an audit into how profits are allocated across the group.

Just Eat, which is in talks over a proposed £5 billion takeover by a Dutch rival, believes that the claim is without merit. Nevertheless, it has made a £21 million provision to cover the potential bill, accounts published last week show. It admitted that under the “most extreme” scenario it would have to pay the “full £126 million”, which includes back taxes, interest and penalties.

The online takeaway service was founded in the Danish capital in 2001 and established a British subsidiary five years later, which became its most valuable operation. The tax dispute is thought to centre on a disagreement over where Just Eat pays profits for use of its brand.

After relocating, Just Eat is understood to have begun registering new trademarks in Britain, paying HM Revenue & Customs taxes on profits generated from the intellectual property. The Danish authorities believe that they were shortchanged. They argue that Just Eat should have paid higher licensing fees for existing trademarks, which remained in Denmark. As a result, Just Eat paid lower taxes in its country of origin than it should have done, according to sources with knowledge of the dispute.

The Danish tax agency declined to comment. The company declined to answer specific questions on the legal tussle, but pointed to stock exchange disclosures on the “ongoing transfer pricing audit”.

The dispute is to be resolved through a “mutual agreement procedure” between British and Danish authorities. A decision is due next year and Just Eat said that it expected the “full elimination of the potential double taxation”.

“Such an outcome may result in a reallocation of income between the UK and Denmark, with different tax rates applying over different time periods and net interest charges,” Just Eat said in its half-year earnings statement.

Last week, Just Eat agreed in principle to an all-share bid from Takeaway.com, which would give Just Eat investors 52 per cent of the new business.

Greggs profits are rolling in after sales hot up

Bakery chain Greggs said today that its sales for the first half were up 14 per cent on the previous year.

Sales hit £546m in the six months to 29 June which Greggs said was helped by the popularity of its vegan sausage roll.

Underlying pre-tax profit margin rose to 7.5 per cent from 5.4 per cent the previous year.

Reported pre-tax profit grew to £36.7m, up from £24.1m in the same period last year.

The company boosted its interim dividend per share 11.2 per cent to 11.9p.

It also declared a special dividend of 35p per share.

The company said trading in the first half was “exceptionally strong,” building on “the successful end to 2018, and helped by the popularity of the new vegan-friendly sausage roll”.

It opened 54 new shops in the period and closed 23. It said it expects around 100 net new shops for the year as a whole.

Greggs had 1,984 shops trading as at 29 June 2019.

Chief executive Roger Whiteside said: “Given the strength of our year to date and the outlook, we have decided to increase investment in strategic initiatives in the second half of the year to help to deliver an even stronger customer proposition and further growth in the years ahead. Our expectations for underlying profits for the year as a whole remain unchanged.”