Supposed tax avoidance

[Daniel]

BBC News - Starbucks, Google and Amazon grilled over tax avoidance (http://www.bbc.co.uk/news/business-20288077) There does appear to be some dodgyness on part of starbucks for apparently reporting losses when they were indeed profitable, but I don't get how MP's can complain when companies like Google and Amazon act in a way which seems to be within the law and involves them paying less corporation tax than the government would like them to. Am I the only one who was staring at their TV today saying "If you want them to pay more ****ing tax then make changes to the tax laws which mean they will have to pay more tax!!!!!!". It all seems a bit nonsensical really.....

[Dave B]

Daniel is right. It may be immoral, it may be unethical, but it is not illegal. Parliament should vote on changing the law if they're so concerned about the loss of revenue.

[Daniel]

Daniel is right. It may be immoral, it may be unethical, but it is not illegal. Parliament should vote on changing the law if they're so concerned about the loss of revenue.

Too right. What kind of company would willingly pay more tax then they're legally required to?

Whilst I will usually take any opportunity to attack Apple or Google, I applaud them for playing the system and making as much money as possible. That's what their shareholders expect of them.

[Knock-on]

It's galling when the man on the street is being taxed to the hilt while massive corporations pay a fraction of what is expected.

There are two options (there always seems to be) and these are:

1. Try and change law to get a fair share of the pie from these Corporations. However, ignoring European Law for a second, successive Governments have failed to get on top of widescale abuse of the Benefits system so outwitting some of the finest analytical minds in the world (Accountants BTW) seems akin to a small Lad sticking his digits in an impossibly flawed Dyke.

2. If you can't beat them, join them. Make it attractive for these Corporations to hold HQ in the UK and pay Tax here. This will not only generate more revenue in the UK from these Corporations but will also make it a lot more attractive for exsisting and new businesses to invest in the UK. You will get a lot more jobs in UK plc and even if the overall Corporation tax raised with the lower Corporation bracket is less, you are generating massivly more revenue overall.

Of course, this will probably necessitate the UK leaving the EU. The first real whispers of this are surfacing this week.

[Daniel]

It's galling when the man on the street is being taxed to the hilt while massive corporations pay a fraction of what is expected.

There are two options (there always seems to be) and these are:

1. Try and change law to get a fair share of the pie from these Corporations. However, ignoring European Law for a second, successive Governments have failed to get on top of widescale abuse of the Benefits system so outwitting some of the finest analytical minds in the world (Accountants BTW) seems akin to a small Lad sticking his digits in an impossibly flawed Dyke.

2. If you can't beat them, join them. Make it attractive for these Corporations to hold HQ in the UK and pay Tax here. This will not only generate more revenue in the UK from these Corporations but will also make it a lot more attractive for exsisting and new businesses to invest in the UK. You will get a lot more jobs in UK plc and even if the overall Corporation tax raised with the lower Corporation bracket is less, you are generating massivly more revenue overall.

Of course, this will probably necessitate the UK leaving the EU. The first real whispers of this are surfacing this week.

Christ almighty, you should write for the Sun or something....... I hate such silly pseudo emotive language like "It's galling when the man on the street is being taxed to the hilt while massive corporations pay a fraction of what is expected"

Stock standard outraged at something story It's galling to see the man on the street having to something something whilst <insert company, religion, race to be outraged against> get away with something or other...

The law is the law and other than Starbucks who seem to be a touch naughty, the rest seem to be playing by the law.

[Rollo]

It's galling when the man on the street is being taxed to the hilt while massive corporations pay a fraction of what is expected.


You don't understand, we're told repeatedly on these fora that they need these tax breaks to encourage investment and create jobs jobs jobs jobs jobs... :P

The main rate of Corporation Tax has been steadily on the slide over the past few years and will again fall from 24% to 23% in 2013. (it was 28% just 2 years ago). Never mind the fact that the standard rate of VAT increased from 17.5% to 20% in 2011, so obviously it must be government policy to make sure that poorer people who proportionally spend more, are taxed more.
Actually I suspect that the reason why the man on the street is being taxed to the hilt while massive corporations pay a fraction of what is expected, is because massive corporations are the ones writing legislation. It's a demand driven system; the Square Mile demands it, demands that the government bails them out when they **** up the economy, then demands that they pay less in tax... so they get what they demand.

In a century the UK has gone from a place where almost the entire cabinet went to Oxbridge and companies paid almost nothing in taxation to...

[wedge]

It's galling when the man on the street is being taxed to the hilt while massive corporations pay a fraction of what is expected.

Which man on the street?

Tradesmen?

Would you say no to cash discount?

[Malbec]

Christ almighty, you should write for the Sun or something....... I hate such silly pseudo emotive language like "It's galling when the man on the street is being taxed to the hilt while massive corporations pay a fraction of what is expected"

Stock standard outraged at something story It's galling to see the man on the street having to something something whilst <insert company, religion, race to be outraged against> get away with something or other...

The law is the law and other than Starbucks who seem to be a touch naughty, the rest seem to be playing by the law.

What Starbucks et al are doing might be legal but I do think Knock-on has a valid point.

Corporation tax is often calculated very differently from other taxes. In fact I shouldn't have used the word calculated because it isn't.

For many large British based firms their tax bill is negotiated as going through their spending and calculating what they really owe is too time consuming and expensive. In most cases their tax bill is considerably less than estimates of what they should owe, usually in return for their cooperation and prompt payment.

I'm sure anyone who's filled in a tax return appreciates that is not how individual people are treated by HMRC. For us, cooperation and prompt payment is expected and we are expected to pay exactly what we owe.

Starbucks et al don't use that technique because they are based overseas, but other multinational companies can and do register in the UK and pay British corporation taxes.

It isn't a big leap of logic to claim that if corporation tax is relatively underpaid then the shortfall has to be made elsewhere, and that is through increased taxation of individuals whether at source (income tax) or spending (VAT etc).

Personally knowing how little tax these companies pay has changed my purchasing behaviour. I'm less likely to use Amazon now, and if I do I prefer using the third party traders on the site. I prefer my money staying within this country if I can help it.

[Dave B]

Of course, this will probably necessitate the UK leaving the EU. The first real whispers of this are surfacing this week.
The first "real whispers" are surfacing because the Tories are petrified of UKIP splitting their vote and letting Labour (or a Lib/Lab coalition) back in, so they're making a few sympathetic noises designed to placate the swivel-eyed Nigel Farage supporters. They have no intention of leaving the EU, nor do Labour, so we'd better get used to it.

[Dave B]

Personally knowing how little tax these companies pay has changed my purchasing behaviour. I'm less likely to use Amazon now, and if I do I prefer using the third party traders on the site. I prefer my money staying within this country if I can help it.
Personally I'm looking out for number one, so if Amazon offer the best value then I'll use them.

[Knock-on]

It's also Euro nations that are openly talking about it, if in whispers. All to do with the Veto.

[D-Type]

"Tax Avoidance" - not paying tax by finding legal methods to avoid paying. eg claiming [valid] expenses against earnings is a typical example applying to a normal PAYE taxpayer. Finding any loopholes.
"Tax Evasion" - not paying tax by finding illegal methods to avoid paying. eg a typical PAYE taxpayer having a second job that's paid in cash and not telling the taxman. Finding any cheats.

The question is "Which of the two have Amazon, Google and Starbucks been doing?"

If their methods are legal, if the Government don't like it they should change the law through Parliament.
If they are illegal then someone should be prosecuted and jailed. On that scale, fines are no more than another "operating expense" for a multinational.

[Lousada]

Personally knowing how little tax these companies pay has changed my purchasing behaviour. I'm less likely to use Amazon now, and if I do I prefer using the third party traders on the site. I prefer my money staying within this country if I can help it.

Basically every multinational that is around has a division in The Netherlands. Everybody from IKEA to Gucci to Starbucks to U2 to Mitt Romney. This is because the tax rate on royalties and interest is the lowest there.
For the same reason many multinationals try to include an Irish division in their "organizational tree", because the corporation tax is the lowest in Ireland. And of course, Amazon, like many other webshops, is based in Luxembourg because the VAT is the lowest there (and all other taxes are generally low too).

You can complain about your government all you want, but there are only two ways multinationals change behaviour:
1. Lower taxes so you are competitive with NL, Lux and IRE.
2. Have a uniform tax-base in the EU.
Both solutions will not satisfy Sun and Mail readers I suppose.


To tell you something outrageous before bedtime: our national train operator leases trains from an Irish company. Despite that the trains are designed, build, operated and later dismantled within our borders and of course will never be shipped to Ireland. And to make it more crazy: our train operator is state owned! So they are avoiding their own tax!!

[donKey jote]

It's also Euro nations that are openly talking about it, if in whispers. All to do with the Veto.

damn right too.. whinging vetoing poms ! :p

[Dave B]

By the way, the comments under this Starbucks blog post are pretty funny:
Starbucks Commitment to the UK | Starbucks Coffee Company (http://starbucks.co.uk/blog/starbucks-commitment-to-the-uk/1240)

[Daniel]

Sadly the sort of numbnut who used Starbucks before probably still will and the loss of revenue will be leas than what they'd have to pay in tax.

It's up ot the government to crack down on this now.

[Mark]

It's up ot the government to crack down on this now.

I think we can all agree on that!

[Mark]

By the way, the comments under this Starbucks blog post are pretty funny:
Starbucks Commitment to the UK | Starbucks Coffee Company (http://starbucks.co.uk/blog/starbucks-commitment-to-the-uk/1240)

Saying the usual thing "We contribute lots of tax" "PAYE / VAT etc etc". Yeah; great, and? Reputable companies contribute all that AND they pay their corporation tax too.

[Daniel]

And paye is something that employees pay....

[Mark]

And VAT is from the customers.

[wedge]

Let's not bother with F1 any more:

BBC News - Today - McLaren £49m 'cheat' fine is tax deductible (http://news.bbc.co.uk/today/hi/today/newsid_9759000/9759000.stm)

[SGWilko]

Let's not bother with F1 any more:

BBC News - Today - McLaren £49m 'cheat' fine is tax deductible (http://news.bbc.co.uk/today/hi/today/newsid_9759000/9759000.stm)

Business expense. Good luck to them.

However, if they operate from an offshore address then boo and hiss.

;)

[Malbec]

Let's not bother with F1 any more:

BBC News - Today - McLaren £49m 'cheat' fine is tax deductible (http://news.bbc.co.uk/today/hi/today/newsid_9759000/9759000.stm)

Would they have incurred that fine if they weren't involved in F1?

[Rollo]

Would they have incurred that fine if they weren't involved in F1?

That is the general question involved here. The courts decided that they would not.

Income and Corporation Taxes Act 1988
Section 74
[i]General rules as to deductions not allowable
Subject to the provisions of the Tax Acts, in computing the amount of the profits or gains to be charged under Case I or Case II of Schedule D, no sum shall be deducted in respect of—
(e)any loss not connected with or arising out of the trade, profession or vocation;
Income and Corporation Taxes Act 1988 (http://www.legislation.gov.uk/ukpga/1988/1/section/74/enacted)

The £49m is obviously directly connected with generating an income. That is not a very difficult statement to prove I would wager.

"We are accepting that businesses can behave improperly and be rewarded in a sense for it"
- Gordon Farquhar, 11 Oct 2012
BBC News - Today - McLaren £49m 'cheat' fine is tax deductible (http://news.bbc.co.uk/today/hi/today/newsid_9759000/9759000.stm)

Well duh.

Financial institutions write off all sorts of loans that they should never ethically have lent out, parking fines are normally deductible in the hands of delivery companies and I forget where but there is a case which a prostitute successfully argued according to ICTA 88 that certain assets have an estimated life and that there should be an allowable deduction for depreciation on them.
Even income which is subject to the Proceeds of Crime Act 2002 might be defined as assessable or " "taxable income" under ICTA 88 and as such, expenses incurred in generating that income are deductible - petrol used in the getaway car in a bank job, for instance.