They did so by using interest relief. Just to be clear, there is nothing especially contentious about interest relief per se. The idea that you could offset the cost of debt against profits is fine.

And also, just because a company pays no corporation tax does not mean it doesn't pay the 17 other taxes that companies pay. Employees still pay income tax, national insurance is still paid, and the economic activity generated is still a huge boon for the exchequer.

The issue is whether or not the loan is really a loan or equity. Rather well put by John McFall, I thought:

'The question is, are the private equity companies using debt as equity?' he said.

'If they are, then they are distorting the system. These are questions that are still to be answered.'

We don't know that, and it would be interesting to know (and there is I think a review underway).

Peston goes on to say:

Private equity partners tend to argue that all they do is transfer the liability for tax to those institutions that lend money to their companies.

But in a globalised financial world, many of these providers of debt are domiciled outside the UK, and do not pay tax here (if they pay tax at all).

And separately on his blog

You can dismiss the private equity argument that the tax liability is merely transferred to those who lend to their companies. Some of these lenders pay tax in the UK, but in a globalised financial world, most don't.

You can't dismiss it that easily I don't think. What's it to the private equity industry if they use an offshore lender? Why should they care if it's the best value loan they can get?

There are issues around transparency, and whether the firms are really using straightforward lending structures, but we need to go a lot deeper into this issue before we can start accusing anyone of doing anything untoward.