AA/Saga tax: a case in point

The fortunes of private equity have not been built entirely on the foundation of friendly tax law. But the ability to deduct interest expense from taxable profits has certainly played an important role. Take Saga and AA, two UK financial service and travel firms which are planning to merge. Both have done well in their two years of private equity ownership, to judge by total capital gains estimated at £2,6bn on a £6,2bn deal. But neither has paid more than token amounts of corporation tax on pro...