£45m repaid to credit lender after appeal against tax audit findings

Leeds-based International Personal Finance (IPF) has received about £45m in cash following its successful appeal against 2008 and 2009 tax audit findings.

IPF operates a Polish-based home credit company, Provident Polska.

In early 2017 it confirmed it would be appealing a decision received from the Polish Tax Chamber, the upper tier of the Polish tax authority, with respect to its 2008 financial year.

The decision involved a transfer pricing challenge relating to an intra-group arrangement with a UK entity together with a challenge to the timing of taxation of home collection fee revenues.

Commenting today on the outcome of its appeal, IPF states: “Following a decision in March which has not been appealed by the Polish Tax Authority, the Warsaw District Administrative Court has formally confirmed that its decisions, which found in our favour on the 2008 and 2009 tax cases, are final. 

“As a result, yesterday we were repaid c.£45m in cash which comprises c.£35m that we paid in January 2017 in order to appeal the tax authority decisions, plus associated interest of c.£10m.”

In an update this morning the listed credit lender also said almost all its agents are now actively serving customers again.

It says collections effectiveness continues to improve and is now 92% of pre-Covid expectations. And credit issued has increased to 43% of pre-Covid expectations.

IPF’s update notes: “Government restrictions in our European markets have now been largely lifted, almost all our agents are continuing their visits to their customers, and a phased return to work for our office-based staff is underway, both under strict safety measures.

“Whilst we continued to maintain a cautious stance on issuing credit, we have been encouraged by our consistently improving collections effectiveness following the progressive relaxation of lockdown restrictions in our markets.  

Without relaxing our focus on credit quality, we intend to progressively accelerate credit issued in the coming months.

“The continued improving collections performance, the impact of cost reductions and the effective management of credit issued resulted in net cash-flow generation in July of £46m (May £43m, June £42m).”

Gerard Ryan, CEO at IPF, said: “I continue to be very encouraged by the improving performance delivered in July.

“This has been driven by a normalisation of agent service to our customers in the last two months,and I anticipate a continuation of our positive collection trends alongside progressive increases in new lending, both of which will help deliver further improvements in our overall Group performance. 

“I am also delighted to be able to finally report the successful conclusion of the ongoing Polish tax audits, with the reimbursement of the monies paid out in 2017, together with interest, bringing this long-running issue to a close.