VolkerWessels took a £14m hit on tax last year after losing a legal dispute with HM Revenue & Customs (HMRC).
The complex case related to the Dutch-owned contractor’s attempts to set off losses for its former Volker Stevin Construction Europe arm, a Netherlands-registered entity operating in the UK.
During 2007-9, Volker Stevin Construction Europe incurred losses totalling around £38m, and VolkerWessels “surrendered” the bulk of this total to other members of its group, leading it to pay less tax.
However, in 2022, following an investigation by HMRC, a tribunal found that the contractor owed £10.2m in tax.
VolkerWessels argued against the finding, on the basis that to work out whether the business’s losses had been deducted was so complicated that the relevant law needed to be made clearer. It appealed the tribunal’s decision to the Court of Appeal, but lost the case in March 2023.
Newly released accounts for the contractor show that it included the £10.2m tax bill and £4.1m in interest and penalties relating to the dispute within its financial year ending 31 December 2022.
Its pre-tax profit was £37.7m in the period, up from £27.1m the year before, but after taxation this dropped to £15.9m, some £8m below 2021 levels.
The contractor saw turnover rise to £1.35bn in 2022, up from £1.15bn. This was largely driven by its commercial, industrial and educational work where revenues stood at a total £337m, up from £170m in the prior year.
Chief executive Richard Offord said in a statement released with the accounts that while its VolkerFitzpatrick arm was still seeing lower activity levels in the commercial office market, it had taken on significant work in the life sciences sector. It also started work on the £174m Eastbrook Studios job (pictured) in Dagenham, East London, in the year.
Rail remained the largest single sector for the group, generating £494m of its revenue, through work on projects including HS2, East-West Rail, the London Overground extension in Barking and the new University Station in Birmingham.
Offord said: “Our financial strategy of focusing on profitability and cash, bidding and winning work that will generate positive margins and cashflows, and managing our overheads and capital investment appropriately, has enabled us to continue to deliver consistently on all our key financial performance indicators in most of our businesses.”