Cadbury, the British chocolate maker that triggered a national outcry when it was sold to US

food company Kraft in 2010, was running aggressive tax avoidance schemes a decade before the
takeover, according to a report in the Financial Times. It paid an average of 6.4m tax a year in
the decade before it was sold, despite annual profits of 100m, the paper said. Cadbury's tax
avoidance schemes were described as highly aggressive by an unnamed former executive
interviewed by the Financial Times.
Mondelez, the owner of Cadbury is facing controversy over its tax arrangements after it was
reported that it had not paid UK corporation tax last year. The arrangement, which is legal, meant
Mondelez was able to pay no UK corporation tax despite accounts showing that Cadbury UK, its
subsidiary, made profits of 96.5m in 2014 and 83.6m in 2013.
Multinationals corporations like Cadbury are deliberately exporting their profits with artificial
company structures to avoid tax. The founders of Cadbury who set it up as ethical of company.
Mondelez was born out of Kraft Foods which bought Cadbury five years ago in a deal worth
more that 22bn. A Financial Times report after the purchase claimed Cadbury had tax avoidance
schemes in place when it was bought by the multinational, saying the chocolate-maker had a
system of loans in place that allowed it to reduce its UK tax bill to just 6.4m a year on a profit
100m. In common with all global businesses, Cadbury pay corporation tax based on the laws of
the countries which they operate.
The 12bn takeover of the company by Kraft in 2010 was debated in the House of Commons,
with MPs warning that the sale would slash the tax take for the Treasury. But long before the
deal, Cadbury was reportedly concocting complex schemes that shuffled money around
subsidiaries. These included an arrangement, codenamed Chaffinch, that knocked 17m off its
tax bill between 2006-08.
Another successful play between 1998-2002 involved sheltering 400m in the Cayman Islands,
wiping 9m from its tax bill in one year alone. The company also used the more conventional
avoidance strategy of loading its business with debt in high-tax countries and financing growth in
low-tax countries such as Ireland.
References:
http://www.theguardian.com/business/2013/jun/21/cadbury-accused-tax-avoidance
http://www.theguardian.com/business/2015/dec/06/cadburys-owner-paid-no-uk-tax-last-year
http://economia.icaew.com/news/december-2015/anger-over-cadbury-tax-dodge