A network fee charge which has saved Kuehne + Nagel Limited over £17m in corporation tax over six years is under investigation by HMRC, according to the company's latest annual results.

The investigation, revealed in K + N’s annual accounts for the year to 31 December 2018, was triggered following an earlier inquiry by HMRC in 2015 into the company’s payment of a trademark fee.

This latest inquiry centres around a network fee charge which K+N pays to Kuehne + Nagel Management AG, a company registered in Switzerland.

In the notes to K + N’s 2018 annual accounts the company said that the network fees “have been booked in the appropriate accounting years and treated as being allowable deductions for corporation tax. This has reduced the cumulative corporation tax charge over these six years (2012 -2018) by £17,497,000.”

It added that HMRC is “currently undertaking an enquiry into the network charge concept covering the subsequent years, and as yet has not declared their view of the company’s treatment, or issued tax assessments to date.”

Despite the investigation K + N said it has made no further corporation tax provision in the financial statements in respect to those years as the directors and the company’s advisors “feel that the network charge concept position is robust and appropriate.”

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K + N’s latest annual results also reveal that on 1 February 2018 the company lost its appeal in the European Court of Justice against a “substantial fine” incurred in 2012 following an anti-trust investigation into K+N and a number of other freight forwarding firms.

Since the fine was paid in July 2012 the company said it had made no provision in its latest financial statements.

The company’s results also reveal a 7% increase to £1.58bn (2017: £1.47bn) and a 21.6% leap in pre-tax profit to £48.8m (2017: £40.1m) boosted by the company acquiring the remaining 50% share of joint venture business K+ N Drinkflow from Heineken UK in February 2018.

The logistics company’s international freight forwarding division provided the lion’s share of the total turnover, up from £936m in 2017 to £1.03bn in 2018, despite “more uncertain and changeable economic conditions throughout 2018.”

K + N’s contract logistics division also boosted turnover in the period to £551.3m (2017: £541.3m) which the company attributed to organic growth and new business wins in the period.

The company added that it “continued to be a “strong presence” in the UK logistics market and said it is anticipating “another successful year” in 2019.

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