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International Personal Finance tops the FTSE 250 fallers, impacted by a Polish tax decision

The doorstep lender said it would appeal against a decision by the Polish tax authority relating to the accounts of its Provident Polska business for the 2008 financial year.

Polish town
IPF said it "strongly disagreed" with the Polish tax authority’s interpretation

International Personal Finance  PLC (LON:IPF) was the biggest mid cap casualty today after the doorstep lender was impacted by news of a tax decision which penalises its Polish business.

In a statement today, IPF said it would appeal against a decision by the Polish tax authority relating to the accounts of Provident Polska for the 2008 financial year.

The company said the decision involved "a transfer pricing challenge relating to an intra-group arrangement with a UK entity", as well as "a challenge to the timing of taxation of home collection fee revenues."

The FTSE 250-listed firm - which provides small personal loans to over 2.7 million borrowers in Europe and in Mexico - said it "strongly disagreed" with the tax authority’s interpretation and added that both items were accepted in previous audits by the same body.

Pay to appeal …

IPF said: "We will appeal the decision to the District Administrative Court and pay the amounts assessed (about 20 million pounds comprising tax and associated interest) which is necessary in order to make the appeal."

It added: "The payment of this sum is not a reflection of our view on the merits of the case and accordingly it will be recognised as a non-current financial asset in our group.”

The group said it also expected a similar decision from the Polish Tax Chamber for Provident Polska’s 2009 financial year, which would give rise to a similar liability.

It added that 2010 remains under audit and all subsequent years are open to future audit as well.

But, the group said: “International Personal Finance and Provident Polska do not adopt aggressive tax strategies as evidenced by Provident Polska's average effective tax rate since 2008 which exceeds the Polish corporate income tax rate of 19%.”

Shares drop ….

In reaction to the news, IPF shares topped the FTSE 250 fallers in early morning trade, down over 10% or 18.4p at 157.5p.

In February last year, IPF’s chief executive Gerard Ryan reiterated an earlier warning that regulatory changes in Poland and Slovakia would hurt the company's profitability in 2016 and beyond.

New credit laws in Poland, which came into effect in March 2016, have weighed on the group.

Meanwhile, in 2015, Slovakia amended its consumer legislation, which IPF said was expected to hit its business there.

Quick facts: International Personal Finance

Price: 171.42 GBX

Market: LSE
Market Cap: £383.44 m

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