TheChek News Flow

Founder of XTX Markets fails in challenge against HMRC treatment of deferred payment plan

Alex Gerko, the billionaire founder of British trading firm XTX Markets, has lost a legal appeal over the taxation of a deferred payment plan in the latest such case to go against a trading house. 

Gerko, the UK’s biggest individual taxpayer, had challenged HM Revenue & Customs’ position on deferred trading profits he and other traders made while working for hedge fund GSA Capital between 2010 and 2015. 

The payment plan was structured so the traders would be paid as much as a 50 per cent share of profits over three years. 

The “hoped-for tax analysis” was that the traders, who worked as a separate unit, would be taxed at corporation tax rates, rather than taxed individually at higher income tax rates, the judgment said.

But judges ruled that the traders should pay income tax on their share of trading profits, according to the judgment handed down on Friday at the court of appeal.

“I fundamentally disagree with the judgment, which results in massive double taxation and has wider implications for the financial industry,” Gerko said in a statement, adding that he was considering options “to continue with the litigation route”.

Gerko is the UK’s top taxpayer, according to the Sunday Times tax list, having paid £664mn last year and £487.4mn in 2022. 

“The amounts involved are small compared to the billions of pounds in tax I have paid, and been happy to pay, over the years,” Gerko said.

He left GSA Capital in 2015 to build XTX Markets, which has grown to become one of the world’s biggest trading houses, handling $250bn worth of trades daily across stock, bond, currency and commodities markets, and competing fiercely with the likes of Ken Griffin’s Citadel Securities.

The judgment makes Gerko and the others who left GSA to join XTX, the latest high-profile traders to lose a tax appeal. In December partners at billionaire Michael Platt’s BlueCrest Capital were found liable for income tax on a pay scheme dating back to 2008, after the investment firm lost its legal battle. 

GSA’s case had “material similarities” to BlueCrest’s, the judgment said. 

“I chose litigation rather than settling many years ago for a much smaller amount because I believe [the] HMRC case was built on an interpretation of complex and ambiguous tax law that led to a highly unreasonable result,” Gerko said.

Vodafone sells further stake in European phone masts business for €1.3bn

Sale is part of CEO’s plan to simplify telecoms group’s sprawling business and reduce debt

Vodafone has announced the sale of a further 10 per cent stake in a leading European mobile phone masts business for €1.3bn, as chief executive Margherita Della Valle continues her plans to simplify the sprawling telecoms group.

The disposal of the group’s stake in Vantage Towers to a consortium of long-term infrastructure investors led by Global Infrastructure Partners and KKR will shift the joint venture to a 50/50 ownership structure and help the telecoms group reduce its debt pile.

Vodafone’s latest deal takes the total net proceeds from the selldown in Vantage to €6.6bn after an initial transaction took place in 2022. The stake has been sold at the same price of €32 a share. Saudi Arabia’s Public Investment Fund bankrolled the 2022 deal.

Vantage Towers operates tens of thousands of mobile towers across 10 European countries, including the UK, Germany and Italy.

The UK-based group said proceeds from the sale would be used for cutting its debt levels and bringing down its net debt-to-adjusted earnings before interest, taxes, depreciation and amortisation after leases to the lower half of its target range.

The announcement comes as the group has been steadily selling assets. In March, the FTSE 100 company agreed to sell its Italian operations to Swisscom for €8bn.

This followed the sale of Vodafone Spain for up to €5bn to Zegona Communications, founded by two former Virgin Media executives, announced in October.

Vodafone reported its net debt excluding its Spanish and Italian businesses as €33.2bn in May.

Vodafone and Three UK confirmed plans for a domestic merger in June 2023, which is now being probed by the Competition and Markets Authority.

At the time of the Italy exit announcement, the company said it would also return up to €4bn to shareholders through buybacks and cut its dividend to 4.5 cents a share from 2025, down from 9 cents in this financial year.

Media mogul Vincent Bolloré is splitting up Vivendi to boost valuations of its individual businesses

Vivendi plans to list its French TV business Canal+ in London as part of plans to break up the conglomerate controlled by billionaire Vincent Bolloré.

The decision to list Canal+ in London reflects the group’s increasingly international operations, Vivendi said on Monday. Canal+ recently agreed to buy MultiChoice, Africa’s largest pay-television operator.

Vivendi, which is listed in Paris, said Havas, its advertising business, would move to the Amsterdam stock exchange as the group proceeds to end a conglomerate structure that had depressed its valuation.

Vivendi said its position as a conglomerate was “substantially reducing its valuation and thereby limited its ability to carry out external growth transactions for its subsidiaries”.

The arrival of Canal+ on the London Stock Exchange would represent a coup for a market that has struggled more than its rivals during a lengthy global drought in initial public offerings.

While Canal+ has deep ties to France, almost two-thirds of its subscribers are now from outside the country. Canal+ will remain incorporated in France and is expected to have a secondary listing in Johannesburg, where MultiChoice is based.

The final part of Bolloré’s three-pronged break-up will bring together Vivendi’s publishing operations, including its 63.5 per cent shareholding in Lagardère and Prisma Media, into a new company to be called Louis Hachette Group.

It would be listed on the Euronext Growth market in Paris, with a separate listing of subsidiary Lagardère on Euronext Paris. Vivendi said all three companies would keep decision-making and their operational teams in France.