And not as the video states, tax evasion, but still: This is a real piss-boiler for me. You have to pay your tax, your small business has to pay its tax, but if you are a multinational making squillions, you don't. Yes, mass unemployment, austerity and higher personal taxes are all a result of letting corporations milk the system. You get riled about a few ne'erdowells not bothering to get a job and living on benefits? That's small change. Get riled about something that really matters.
Individuals and companies should all pay their fair share but which of us would pay more than we legally need to ? The laws should be changed to make paying tax unavoidable and possibly the rates brought down to encourage more businesses into the UK so we collect more tax. What I cannot abide is the way the governments have colluded with big business to help them reduce their tax bills whilst taking so much from "hardworking people and families" as we are now called. Has anyone worked out what % of income we keep after paying income tax, insurance tax, fuel tax, rates, vat, airport tax, capital gains tax, import duties and any other taxes that I have missed out. I`ll be surprised if I get to keep more than a few % . Still, as long as the MP`s can keep their second homes etc and they feel they have the moral high ground to criticise anybody`s tax affairs nothing is going to change is it. Speaking of second homes, I wonder if 500 odd room hotel exclusively for MP`s and at no charge to MP`s, reasonably close to work would be a far better proposition. No need to buy a duck house, toilet brush or whatever,no expenses claims, no mortgage payments and no property flipping. Do we have any hoteliers here that would have any idea of the costs of buying and running this potential national asset ?
I get angry about companies like Apple and Starbucks who avoid tax and take money out of the country, it’s morally corrupt. But then you need to look at where the real blame lies, after all these companies are only trying to save themselves some money and increase their profits. The real blame lies with the government and with the general public (yes, thats you and me, generally speaking). Governments should shoulder the majority of the blame as they have created a tax system so complex that any reasonable accountant can find these loop holes and promote them to large industries. Remember that next time Cameron or Osbourne stand up and pontificate about tax avoidance; after all they promised to simplify the tax system and have failed to do so. Just ask any small business owner about the new RTI scheme to hear the truth on this. [FONT="]As for why the general public are to blame: look in the window of Starbucks, it full of the apathetic British public spending their money with a foreign company that does not pay its fair share of taxes, often when there is a less guilty coffee chain round the corner or even an independent that is more deserving of their trade.[/FONT]
Stevie - agree with you on the apathy thing, my personal moral crusade is to avoid these wherever and whenever possible. A drop in the ocean, maybe, but at least I enjoy my brew knowing the price is fair competition, and some of the revenues staying here. if enough actually thought it through, then Starbucks, et al, would suddenly take notice (and their coffee is over-priced pish, IMHO). big business use the age old argument of "well, if you tax me more than I want, I will take my company elsewhere..." with Lilly-livered politicians running scared. So where would Starbucks take their company, various webs of offshore "companies"? Well try to sell x million cups of pish per year to the inhabitants of "offshore island y" and see where it gets you. The vacuum left behind would be filled quite quickly, methinks. but hey, I'm just a simple engineer, what do I know?
I used to work for a large British drinks multinational, the biggest player in Scottish. The world's biggest Scottish brand is now managed out of Amsterdam. Of course it is all made and exported from Scotland (it has to be) and doesn't go anywhere near the Netherlands. Although the company's headquarters is in London, that brand is tax domiciled in Holland. It's not just a few foreign companies avoiding paying tax. I suspect that all large concerns are at it, including British ones. Anecdote: I tried to buy some Timberland shoes on the web the other day. I finally found what I wanted to on the Timberland UK site. So I checked the terms and conditions to see if they would send to Switzerland. They wouldn't. In fact they wouldn't send anywhere outside the mainland UK (and that included the Channel Islands). Fair enough. But get this: the Ts & Cs said I would be purchasing from Timberland Switzerland AG. What? A Swiss company that refuses to do any business in Switzerland? So I rang them up in Zurich, or wherever they are, and they confirmed this to be the case. Clearly therefore a company that does all its business in the UK, but pays not a penny of tax there, as it is a Swiss company.....that doesn't operate in Switzerland. They will of course have got a tax break from Switzerland, as the levels of corporation tax here and in the UK are nominally very similar. You think that some corporation tax rules harmonisation would be a good idea? No shit Sherlock. Remember, we elect the governments that invent all these rules. Oh, and also remember that the reason companies are so good at finding loopholes is that they employ ex Inland Revenue staff, who invented the rules, to tell them where the loopholes are. The private sector pays a lot better than the Revenue, so it is typical for people to work a few years there, get all the inside information, and then join the private sector.
A much less complex tax regime would surely be a good way forward with lower direct taxes on individuals and companies . This would discourage avoidance , encourage people in to work and possibly negate some of the "living wage" arguments . Imagine zero tax on the first £20k r, say 5% on the next £10k and then a further 5% on each £10k up to a max of 40%. Most of us would be much better off and those that pay the vast majority of the tax take will still be paying the vast majority of the tax take. Those on low incomes pay no tax and hopefully need less handouts. Many of us would have more disposable income and buy more things thereby paying more vat etc and with luck also generating some growth. Business could have a max tax bill of say 10% on their profit which is low enough to discourage avoidance so while Mrs Smith with her independent book shop still pays her £5k of tax a year the big corporates contribute billions more than at present and may even employ more people too. I am probably being over simplistic but as with many things, the most simple are the best. I`ll just wait now for someone to come along and point out all the flaws....
The way that taxation is enacted in this country (I don't know about other countries) is a bit of a joke, where multi-million pound multi-nationals are concerned. It's all arse-about-tit. I'll refer to companies like Starbucks here where it's obvious even to the average Ducati rider where the flipping profits are coming from - i.e. in the country where the coffees are being sold. Via magic-accountancy, Starbucks had been effectively transferring taxable profits out of the country, to be subject to taxation elsewhere. They could do this "legally" via so-called "loopholes". This is how it works - accountants find loopholes and then government twigs it and eventually squits out a legal instrument to block it ... until the next flavour of loophole is discovered. Rinse and repeat. Fecking useless system. There is an answer for businesses turning over a certain limit. Specialist tax inspectors are already responsible for over-seeing large and complex companies. These inspectors need to be empowered to assess liability more fairly by discounting the loopholes, effectively ignoring it for tax purposes - this of course would need to be enshrined in law. Companies will appeal against these assessments on the grounds that they are not in accordance with current taxation law. HMRC accept the appeals but the fun part is this - government sets up a fast-track system for retrospectively closing the loophole and making it law. The companies that appealed pay interest (perhaps at a premium rate) on the late payment of tax and the companies that see the writing on the wall and pay, in full and on time, don't pay any (punitive) interest. Compare this to the current system where a company freeloads on a loophole until the necessary statute eventually comes into play - or until a company like Starbucks generously decides to pay a "voluntary contribution" (FFS) towards the taxes they ought to be paying - and they only did this because of the negative publicity they received over their shenanigans. People will say that this will discourage companies from trading in the UK. Well, Starbucks cannot serve coffees to us Brits if they pull out of Britain. If they do, a home-grown company will fill the gap and also pay tax on their profits. As for companies that currently trade in the UK but where there is less obvious sources of profits - financial trading houses, with no local branches that serve customers, for instance - well, that's what we have now. Other methods may be required and if I had the answers to that kind of question, I wouldn't be typing this in the lounge of my two-up-two-down :smile:
Absolutely agree with the consensus here. A simplified and lower tax regime will actually bring more tax into the treasury. By way of example, look at Hong Kong. 14% max tax and they have so much they recently rebated $6k back to every citizen in the territory! There isn't a great welfare safety net so family values remain very strong - you look after your own. There should also be a simple tax regulation that states that any company that is deemed to be employing measures to avoid paying a reasonable amount of tax against it's UK sales will be hit with penalties and sanctions.....oh err, Brussells wouldn't allow that would they? I am sure a good set of lawyers and tax specialists could knock something together. On the Joe Public front; There is great consumer-power waiting to be influenced into avoiding the companies that are not paying UK tax (in any meaningful amount). If there was a well publicised list of the wrong-doing companies, I am sure this would change their tax behavior faster than any new law or regulation. This could be a not-for-profit type organisation that would independently scrutinise companies and not be under anyones influence. So who's going to start it? Pete?
im thinking of using a time machine type thing to register my plumbing business in the year 1245 in Australia where any tax due maybe 3 pence cant be paid as they havnt been discovered. I may patent this idea and sell it to google, starbucks etc
You might like this website: UK Uncut And other people are on the case: http://www.taxresearch.org.uk/Blog/...-about-defending-democracy-from-big-business/
Very interesting and a powerful argument to change the tax system but regardless of that how about spending cuts because the state is too big , disorganised and bad value. Just as a teeny example, my partner works in the NHS in admin. There have been several redundancies requiring big pay outs. Now the trust is employing temps to do the work so they have replaced experienced staff with higher cost, less experienced temps and paid out redundancies too. Top work ! I`m all in favour of taxes raised being used helping those in need and deserve help but I`m not happy with things as they are. As with Kirky`s post about Hong Kong, that is the way to go to make progress. Let the state do less , let people be more responsible for themselves, less state tax and less state spending.
[FONT=&]In my opinion which is based on what has been reported and not on individual company accounts and audits, I am unable to agree with many people who say what Amazon, Starbucks and Google etc do with regards to taxation is immoral or tax evasion even.[/FONT] [FONT=&]A company may have many divisions to its business…EG Starbucks USA; Starbucks GB; Starbucks Germany etc etc…..[/FONT] [FONT=&]If the overseas central or holding company can make huge profits in some divisions and massive losses in others, within the taxation legislation for many countries, it is quite reasonable for those losses to be offset against profits, thus reducing the tax burden.[/FONT] [FONT=&]Starbucks GB (or UK) might be selling millions of beverages each year upon which taxation (VAT) is imposed and included in the price; but they are also paying millions is salaries upon which UK income tax and Nat Insurance is imposed; renting property for all the outlets upon which business rates and other taxation is imposed.[/FONT] [FONT=&]Therefore if those taxes mentioned above are actually being paid to HMRC; but Starbucks UK is being run at a loss because the salaries and overheads outweigh the profits, there is no reason why they shouldn’t offset the losses against massive profits obtained in other quarters. [/FONT] [FONT=&]In reality it is similar to an ‘owner managed’ limited company (virtually self employed) specialising in plumbing and electrical work…..The owner may well live in France with the business registered there……yet he works in the UK. He makes a lot of money from the plumbing work but loses on the electrical contracts because he has to employ sub-contractors…….therefore he can offset the losses against the profits……But the subbies pay tax (or should do) and materials attract VAT.[/FONT] [FONT=&]This opinion applies to Google, Amazon (and Nissan)………as much as it does to Shell, BP, Esso etc etc etc.[/FONT] [FONT=&]If the UK government want a percentage of overseas company profits when they set up a division in the UK, they should have written appropriate legislation to ensure their greed is satisfied………that is all it is ‘Greed’, because they want a slice everybody's revenue without working for it......and that includes overseas foreign companies that appear to be doing well. AL [/FONT]
Is it too late for the majority of folks in this country? Cut the taxes and cut services - what happens? People buy health insurance, pension plans, unemployment insurance, save for a rainy day? Or do they start buying more of the stuff they want today, and tomorrow be damned? The sheer inertia of current British society, the resistance to change ... I don't see the country surviving that. The US has a different culture, self-reliance comes more naturally to its citizens, but I see little evidence of that here. Not no evidence at all, just not enough of it.
You're off base here, Al. My understanding of the situation with Starbucks is that it has nothing to do with losses. Starbucks Group was "charging" some sort of fee to Starbucks UK, which "wiped out" the profit it makes in its UK operation and transfers it to the overseas recipient of the these so-called fees. It was/is a transparently artificial device to move profits to a more beneficial tax regime. Same with Amazon and other multi-nationals. The business is carried out in the UK, the profit is made here, it needs to be subject to UK tax.
If the parent / holding company and accounts are overseas, then the UK have no legal recourse to a slice of the profits.....the fee you refer to could entirely be a franchising fee which is a perfectly acceptable way of running a franchising operation....if that fee just so happens to wipe out profits.......tough...............the Govt and HMRC should have been awake enough to see it coming instead of moaning because a company is operating perfectly satisfactorily within the taxation legislation. .....but you may be right in what you say...............I didn't research any of the company structures or their accounts and frankly this government needs to do more to curtail other important at home issues***, than try to get their grubby hands on profits made by overseas companies. ***as it would appear the UK could soon be supplying rebels in Syria with arms....Why, FFS? Leading to exactly what the USA found when they supplied arms to the Mujahideen in Afghanistan leading to B*n Laden turning on the USA.
Interesting take on taxation there, Al. I don't agree with it, but we all have opinions. I would suggest that a company like Starbucks is operating perfectly unsatisfactorily within the taxation legislation. Accountants, companies and even HMRC treat this all as a game to be won or lost within an inadequate legal framework. "Ooh, you have a loophole! Well played, you!" rather than addressing the issue of one firm operating a distinct advantage over another for no other reason than one is a multi-national and the other is purely domestic. These overseas companies can create scenarios out of the blue to circumvent taxation whilst playing within the regulations - I like to see government being able to create solutions, on the fly, to artificial constructs that are only intended to avoid tax. I've seen scams, legal ones, that are sold to companies to reduce their taxation burden. One company, without access to the scam, will pay more tax than another company who employs the scam, even though there may be no other difference between how the operate, what their profits are or anything else. The difference in tax is purely down to the scam. In another life, I was shown a tax avoidance scheme for company directors, clearly a shell-game, and asked to find the flaw in it. After a couple of hours I confessed I couldn't work it out - I was then told there was no flaw, it was an artificial scheme being sold by certain kinds of accountant to companies. There was no wealth creation there, no speculate to accumulate, nothing - it was a legal way of saying something like £1m profit was actually only £750k profit. It didn't involve expenditure or investments, it was pretending one type of income was actually a different kind of income. Call me old fashioned but in my book, you pay income tax or corporation tax on what you make, after legitimate expenses. It doesn't matter whether you agree with taxation or not, if there has to be taxes, there has to be fairness and consistency. As for Syria, I just think we need to exclude ourselves from the internal affairs of foreign countries. They want to slaughter their own people? So be it. There isn't a British Empire anymore, suck it up.
I speak on taxation with a degree of limited but useful experience..... ....Someone I know very well runs an 'owner managed' limited company....the advantages of this tax-wise over a self-employed sole proprietor are significant..........tax burden to the individual is minor and the company corporation tax burden, with good accountancy is nowhere near what an individual employee would be taxed under PAYE.....which is somewhat ironic, considering the MD of the owner managed limited company is actually an employee of the company. There is nothing being done wrong in the above situation and is all above board and in line with the HMRC rules etc etc. Which in my opinion is what Google etc etc etc are doing......ie all above board. Taps side of nose.... AL
I used to argue with company directors on behalf of "The Crown", for a living - a long time ago. The 2008/09 taxation pie shows Income Tax receipts (from individuals) exceeded Corporation Tax receipts by three to one. Back in the day, the receipts from PAYE, the income tax from employed individuals, dwarfed those from the self-employed - I think that's true now. I formed the opinion back then that the main thing that government was concerned with was getting the bulk of the cash in. I felt that efforts to ensure that the self-employed paid their share were somewhat less than the drive to get the PAYE haul in. I suspect the same is true now of Corporation Tax vs individual Income Tax, for the same reason, although I have no current experience to back up this claim.
Just want to make sure I've understood your viewpoint: Amazon, Starbucks and Google et al are all loss making firms that for some strange reason choose to do business in the UK so that they can lose money. They are also philanthropic ventures who kindly supply people with jobs so that these people can pay taxes on their incomes. Not content with this, they actually collect VAT for the Chancellor. Having been so generous in supporting the UK economy, it is patently outrageous to ask them to pay any corporation tax at all. In attempting to pay for the NHS, supply a safety net for the unfortunate, pay for education, the police, roads, infrastructure etc, the government is greedy.
