The Foreign Secretary Philip Hammond has expressed concerns about the Indian authorities' decision to impose a shock $1.6 billion (£1bn) tax charge on Edinburgh-based Cairn Energy.
"The tax demand made to Cairn was very unwelcome," Mr Hammond told reporters after talks in India with the country's finance minister Arun Jaitley. Cairn announced on Tuesday afternoon that it had been served with the demand which relates to the 2006-07 tax year. The retrospective charge was made under legislation introduced in 2012. The oil and gas company insists it has paid all taxes due but has been in dispute with the authorities since January last year. The company has been prevented from selling its remaining 10% holding in its former Indian subsidiary pending resolution of the dispute. The stake was valued at $700m at Cairn's 31 December year end. "I've had a very clear indication from Mr Jaitley...who is clear and categoric that this government will not be issuing any further notices under the retrospective tax legislation," Mr Hammond told reporters.
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