Mannerisms

Not only is capital gains tax paid at 10 per cent, instead of the usual 30 per cent but, in some caser, no corporation tax is paid by companies owned by private equity funds.

That’s because the interest those companies pay on the massive debts placed on them by their private equity owners is often equal to, or greater than, the cash generated by the business.

So there is no taxable profit.

It turns out that Saga and the AA have paid hardly any corporation tax in the two and a half years since they were taken over by private equity funds.

But the private equity owners of the businesses generated a two and a half billion quid return for themselves.

The response of the private equity people to this anomaly is to point out that the tax burden lands on the lenders of the money to the companies that have been taken over. These lenders have to pay tax on the interest they receive from their loans..

But since most of these lenders are foreign banks and funds, no tax accrues to the UK Treasury.

So large chunks of UK industry are effectively removed from the UK tax system, although they are operating in the UK and using UK taxpayer-funded services.

A witty wheeze indeed.