Who could disagree with any of the following...
"The detrimental effects of the unnecessary and enormous borrowings by some companies deserve greater prominence than just the last sentence of an article about Thames Water (Ofwat to halt Thames Water 8% price rise, 17 October). It is not just the avoidance of tax but the increase in prices to pay the interest and to still provide a profit that are hurtful. It seems to me the acquisition of a UK company by private interests typically goes as follows. Using a large loan the private company or fund buys a UK company that has no substantial debt - for example a utility company or a football club - then causes the acquired company to take out a big loan, the proceeds of which are paid to the new owner as a dividend, or some such, thereby extinguishing the owner's original debt. The transfer most likely avoids tax in any country.
The UK company now labours under a large debt, restricting its ability to borrow for genuine business purposes and requiring higher prices for its goods or services in order to pay the interest, which may be set against profit for tax purposes. Not only does the loan carry a high rate of interest but, the new owner may even have a beneficial interest in the lending organisation.
Some private owners will state they have never done all of the above and, in any case, it is all within the law. So, it is shrieking out for the law to be changed so that this series of steps is thwarted.
Barry North
Cobham, Surrey"
http://www.theguardian.com/world/2013/oct/17/who-owns-britain-anybody-but-us