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The Politics of Tax thread

Thought I would start a new thread, rather than risk diverting others such as the R. Brand one.
On that thread by @Callumcafc, and on QT itself, the issue of tax "avoided" by large corporations was raised. I consider this to be a far more important issue than immigration for the prosperity and social fabric of the country and will start to put my case here. I'll try not to put too much into the first comment.
I think the sums involved are so dizzying that people can't get their brains around it. So lets take just one case for starters. Vodafone settling a "deal" with HMRC over their acquisition of Mannesmann in 2000. The deal was such that HMRC, having calculated that Vodafone should pay £8billion, settled for £1.25 billion.

Stop and think about that for a moment. £6,750,000,000 let off.

That is enough to pay for TWELVE brand new hospitals the size of QE Birmingham, opened in 2010

But HMRC are busy. Oh yes, they are busy. In 2009 , "HMRC were managing the cases of 1.5 million individuals who may have underpaid in total some £400 million of tax." That's one and a half million different cases worth on average 320 quid each. You might just start to feel that HMRC could do with a bit of re-focusing, no?

Vodafone is just one example. We can start to discuss Google, Facebook, and Starbucks if you like. But what are HMRC and UK politicians doing about it? Sweet FA. Osbourne claims to be introducing a Google tax. Its a sham, as I will argue later if people are interested.

My case in summary. We are losing money in corporation tax which could absolutely transform the wealth of the UK and make it a better place for all citizens. For various reasons, no UK parties have shown any inclination to go after this money. They know HMRC are not fit for purpose, yet this government has actually CUT the funding of HMRC.

If you want to get angry about the state of the nation, get angry about this!

Looking forward to counter-arguments, especially from @cafcfan and @dippenhall.
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Comments

  • I think even Voltaire would reassess his pithy phrase if he could see a modern day HMRC. Tis nothing certain about taxation in the UK, save for the fact that the lowest paid end up paying a disproportionate slice of their hard earned in real terms.

    When I first qualified as a solicitor it was into corporate tax and I remember one case in particular. High street electronics tax and the issue was the tax on extended warranties (IPT as the warranty is a deemed insurance). 65M lost to the coffers basically due to HMRC administration errors.

    I continue to file returns on behalf of some of my self-employed friends and dealing with HMRC is a nightmare. Understaffed and those that are there don't have the requisite expertise. Trying to return a refund made in error was a particular frustration, if "Computer says no" then the call centre staff don't have a clue

    Blame on the muppet politicians that countenance tax avoidance for the wealthy in the form of agressive planning schemes.
  • I think it's very hard to argue that tax avoision isn't morally wrong. The problem is that it is so easy for companies (not just large ones) and wealthy individuals to do. The simplest answer is to introduce new laws and regulation into taxation but that seems highly unlikely, the loopholes appear to be large and numerous and given the power of the City of London Corporation look set to continue. Essentially though we have created this problem for ourselves, just look at the number of crown dependencies that are tax havens; the Channel Islands, the Isle of Man, Bermuda, Caymans, British Virign Islands and so on. We have reaped the benefits of doing so but at the same time have created this tax issue.

    I personally don't think the answer is just to make it compulsory to pay tax on everything, it's rarely a black and white case. For example I work for a company that I'd guess no one on here has heard of and uses Bermuda to cut down on tax. On the face of it seems like a nasty Starbucks like company costing the country millions. Essentially though the business we do does not involve British customers and is basically not for profit. In that case should the ability to move funds to a tax haven be stopped? It's an extremely complex issue, I don't fully understand it and like Brand I don't have the answers but it seems obvious something needs to be done.
  • edited December 2014
    Thing is after the film finance debacle there was a move to turn away from prescriptive statute and loopholes to a principles based approach
    It is now the position that HMRC can strip out any stage of a transaction if the sole purpose of that stage is to circumvent tax accountability.

    However, despite now having the legal basis to set aside sham schemes, the reality is that big business covert political favour and are allowed to strike deals with the threat of a huge legal budget behind them. Players such as Goldman Sachs are untouchable, what they offer is what's on the table, take it or leave it. Why have we allowed private enterprise for profit assume supra-governmental levels of power in the field of tax? Despicable.
  • Are big Corporations avoiding paying their tax liabilities to add to the UK coffers? Of course they are, they always have done and some smart arsed lawyers and accountants will always find a way of assisting them.

    It's a moral disgrace and Government should be more constructive in attempting to maximise the returns from these corporations and individuals.

    I do understand that certain Companies will always set up elsewhere if it means minimising their liabilities, but there must be some way a happy median can be reached - even it does mean negotiating on the final tax sum.

    I look at the tax avoidance in the same way as the UK arms industry. It's not morally right, but if we didn't do it there would always be someone else who will be prepared to step into our shoes.
  • I always thought the difficulty the government has re: corporation tax is balancing attracting companies for job creation vs money for the public purse. Notably it's become more of an issue recently given how companies like google are utilising the legislation to pay less etc. I just think it's another example of those in big business yielding unaccountable power.

    My mrs is soon to be leaving WPP, Sorrell's group. They were one of the companies that moved their company registration to Ireland to pay a lower tax rate. She's soon to be leaving because what they pay her for her role is well below market rate. They know that when filling her role they'll be plenty of willing applicants even though the rate of pay isn't as much as others. I imagine they take a similarly cavalier approach with how they protect themselves from paying too much corporation tax
  • Thought I would start a new thread, rather than risk diverting others such as the R. Brand one.
    On that thread by @Callumcafc, and on QT itself, the issue of tax "avoided" by large corporations was raised. I consider this to be a far more important issue than immigration for the prosperity and social fabric of the country and will start to put my case here. I'll try not to put too much into the first comment.
    I think the sums involved are so dizzying that people can't get their brains around it. So lets take just one case for starters. Vodafone settling a "deal" with HMRC over their acquisition of Mannesmann in 2000. The deal was suchindependent.co.uk/news/business/news/vodafones-84bn-tax-avoidance-bonanza-nothing-for-taxpayers-in-verizon-deal-while-bankers-share-500m-in-fees-8794169.html that HMRC, having calculated that Vodafone should pay £8billion, settled for £1.25 billion.

    Stop and think about that for a moment. £6,750,000,000 let off.

    That is enough to pay for TWELVE brand new hospitals the size of QE Birmingham, opened in 2010

    But HMRC are busy. Oh yes, they are busy. In 2009 , "HMRC were managing the cases of 1.5 million individuals who may have underpaid in total some £400 million of tax." That's one and a half million different cases worth on average 320 quid each. You might just start to feel that HMRC could do with a bit of re-focusing, no?

    Vodafone is just one example. We can start to discuss Google, Facebook, and Starbucks if you like. But what are HMRC and UK politicians doing about it? Sweet FA. Osbourne claims to be introducing a Google tax. Its a sham, as I will argue later if people are interested.

    My case in summary. We are losing money in corporation tax which could absolutely transform the wealth of the UK and make it a better place for all citizens. For various reasons, no UK parties have shown any inclination to go after this money. They know HMRC are not fit for purpose, yet this government has actually CUT the funding of HMRC.

    If you want to get angry about the state of the nation, get angry about this!

    Looking forward to counter-arguments, especially from @cafcfan and @dippenhall.

    Hard for any right thinking person to argue with the principle of what you say.

    However, like me, you are old and ugly enough to have learned that 'principle' and' reality' are not one and the same.

    In simplistic terms I see the dilemma as this: Googlevodabuck PLC incurs a theoretical UK corporation tax liability, before "avoidance", of £1bn and after after "avoidance" of £500m. There is also the further option of switching the whole shebang for tax purposes to a tax free haven meaning that corporation tax payable in the UK is reduced to NIL.

    The dilemma is whether or not it is better to take the £500m or push for the full £1bn at the risk of Googlevodabuck PLC upping sticks in a fit of pique.

    What is indisputably wrong, as one who has the misfortune to deal with them in a professional capacity, is the increasing tendency of HMRC personnel to act as little more than muggers in suits by attempting to bully vulnerable individuals for relatively small sums which are often incorrectly assessed in the first place.

  • LenGlover said:

    Thought I would start a new thread, rather than risk diverting others such as the R. Brand one.
    On that thread by @Callumcafc, and on QT itself, the issue of tax "avoided" by large corporations was raised. I consider this to be a far more important issue than immigration for the prosperity and social fabric of the country and will start to put my case here. I'll try not to put too much into the first comment.
    I think the sums involved are so dizzying that people can't get their brains around it. So lets take just one case for starters. Vodafone settling a "deal" with HMRC over their acquisition of Mannesmann in 2000. The deal was suchindependent.co.uk/news/business/news/vodafones-84bn-tax-avoidance-bonanza-nothing-for-taxpayers-in-verizon-deal-while-bankers-share-500m-in-fees-8794169.html that HMRC, having calculated that Vodafone should pay £8billion, settled for £1.25 billion.

    Stop and think about that for a moment. £6,750,000,000 let off.

    That is enough to pay for TWELVE brand new hospitals the size of QE Birmingham, opened in 2010

    But HMRC are busy. Oh yes, they are busy. In 2009 , "HMRC were managing the cases of 1.5 million individuals who may have underpaid in total some £400 million of tax." That's one and a half million different cases worth on average 320 quid each. You might just start to feel that HMRC could do with a bit of re-focusing, no?

    Vodafone is just one example. We can start to discuss Google, Facebook, and Starbucks if you like. But what are HMRC and UK politicians doing about it? Sweet FA. Osbourne claims to be introducing a Google tax. Its a sham, as I will argue later if people are interested.

    My case in summary. We are losing money in corporation tax which could absolutely transform the wealth of the UK and make it a better place for all citizens. For various reasons, no UK parties have shown any inclination to go after this money. They know HMRC are not fit for purpose, yet this government has actually CUT the funding of HMRC.

    If you want to get angry about the state of the nation, get angry about this!

    Looking forward to counter-arguments, especially from @cafcfan and @dippenhall.

    Hard for any right thinking person to argue with the principle of what you say.


    What is indisputably wrong, as one who has the misfortune to deal with them in a professional capacity, is the increasing tendency of HMRC personnel to act as little more than muggers in suits by attempting to bully vulnerable individuals for relatively small sums which are often incorrectly assessed in the first place.

    100% this. Can't pick on the big boys so lets bully the little uns.
  • I have very little to add to this debate right now beyond saying that if it is the mindset of enough people that they shouldn't pay tax, people as individuals, or people as a part of a large corporation, then the result will eventually be a societal collapse of some kind. it is valid to chase every tax avoider, just more of a result if you chase down the big ones.
    However the basic philosophy that for example if motorways cost a million pounds a mile to build, then you get half a mile for half a million, and somehow the money has to be sourced has to be pondered upon.
    To an extent we are all guilty in wanting something for nothing are we not? For a start we want Roland to spend his money on our pleasure, and is there really nobody reading this that hasn't accepted or paid cash in hand?
    Perhaps we need to refresh our look at the philosophical principles of taxation and decide if we can do everything alone, or to what extent we want to construct our society collectively.
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  • seth plum said:

    I have very little to add to this debate right now beyond saying that if it is the mindset of enough people that they shouldn't pay tax, people as individuals, or people as a part of a large corporation, then the result will eventually be a societal collapse of some kind. it is valid to chase every tax avoider, just more of a result if you chase down the big ones.
    However the basic philosophy that for example if motorways cost a million pounds a mile to build, then you get half a mile for half a million, and somehow the money has to be sourced has to be pondered upon.
    To an extent we are all guilty in wanting something for nothing are we not? For a start we want Roland to spend his money on our pleasure, and is there really nobody reading this that hasn't accepted or paid cash in hand?
    Perhaps we need to refresh our look at the philosophical principles of taxation and decide if we can do everything alone, or to what extent we want to construct our society collectively.

    Again a principle it is very hard to disagree with.

    However a fundamental tenet of taxation is representation. People presently feel disenfranchised for various reasons and thus resent payment of taxes to a government which does not (is perceived not to) act in their interests.

    Until people feel represented taxation will continue to be resented in my opinion.
  • Is there anyway to calculate the loss?
    If the money isn't spent on tax it gets spent on consumption.
    Probably.

    That is true of individuals, probably, but is it true of companies?

  • edited December 2014

    It is a citizen's right legally to avoid tax so far as possible and it is a board of directors' fiduciary duty to its shareholders to do likewise.
    It is the Government's right (subject to approval by the legislature) to make and amend the taxation legislation as it sees fit but tax avoidance that "loses" billions of £ to the Revenue is the fault of sloppy legislation by Parliament, not those legally minimising their tax bills.

    Mmmm I am not too sure about your legal basis on this point. It is (as emphatically stated in the case of McGuckian) entirely legal to disallow any commercial transaction which has the primary aim of avoiding tax. Tax avoidance is Illegal on a principles based approach, any judge should look behind the veil and seek the true purpose behind any transaction

    So for me it's not the legislation that is the major problem, it is its application in a commercial reality.

    For those interested in the legal position on tax planning, A note by D Goldberg QC is a great summary of the changes in tax law during the 90s. "The approach of the Courts to tax planning" on www.taxbar.com

  • It is a citizen's right legally to avoid tax so far as possible and it is a board of directors' fiduciary duty to its shareholders to do likewise.
    It is the Government's right (subject to approval by the legislature) to make and amend the taxation legislation as it sees fit but tax avoidance that "loses" billions of £ to the Revenue is the fault of sloppy legislation by Parliament, not those legally minimising their tax bills.

    Up to a point, I agree, and that's why I started the thread. Which politicians have proposed substantive changes to our laws to stop this industrial scale avoidance? How many of us have this top of the list when we come to vote next May?
    However as @calydonroad says above, I think the problem is more the law's "application in a commercial reality".

    If you assume that my summary of how Google does business in the UK is accurate, do you think the law needs to be changed? Or does it not just need an HMRC with the balls and the professional competence to take them to court and win?
  • The United Kingdom also has a system of taxation by confession. ~ as amended from Hugo Black
  • As I said in another thread, a strong argument can be made for paying tax in the country where the profit is made.

    My own personal dealings with the Revenue bit of HMRC certainly lead to the conclusion that most of the front-line staff do not have a single clue what they are doing. (But they probably only come second in the incompetence stakes due to the utter and complete uselessness of the DVLC!)

    However, globalisation isn't going away any time soon is it? Without forcing a company to move somewhere else, say the Republic of Ireland, how do you get an equitable tax regime to work for businesses and the benefit of UK citizens without driving away the proverbial geese that lay the golden eggs?

    Here's an example that I've made up: you are a French fashion house. Your HQ is in France. You have a small pink alligator as your logo and trademark. You hold the intellectual rights on that readily recognised brand. Your clothes are designed in France but are made in countries as diverse as Peru and Mexico. You have a separate wholly-owned subsidiary in the UK which has a few of its own shops but also organises the importation and distribution of your products throughout the UK.

    Just how does even a competent taxman begin to get to the bottom of how much tax is due on profit made in the UK? (Then there's the offsetting of losses from previous years.)

    What could be done? Well, as far as things like paying a disproportionately large fee in respect of intellectual property rights to another subsidiary conveniently based in a tax haven: that's easy, the HMRC just says know (sorry @paulie8290 but you see how confusing that looks?).

    Here's an idea though: a withholding tax (that many governments use anyway as a tool to ensure that foreign investors pay their dues on interest and dividends earned). Use it too on corporation tax. Just pick a figure based on what a company SHOULD be earning by way of profit on a certain turnover and tell them they have to pay, upfront, 20% of that notional profit. They can then come back to HMRC afterwards and argue their case for paying a lesser amount because of asset acquisition, write-offs, or whatever.

    In any event, it should not be overlooked that many of the infamous companies we all know about contribute a lot to the UK economy. Okay, Starbucks haven't been paying corporation tax. But they sure as hell have been paying business rates* on their 760 (and growing stores), they pay over (on behalf of their employees) all the PAYE and NI contributions, they pay the employers' NI contributions (aka the tax on jobs), whatever discounted VAT rate they can't claim back from their inputs and God knows what else. I'm not defending them, merely pointing out that UK plc does accrue (significant) income merely from Starbucks' presence.

    * On another matter, I firmly believe that business rates (and, maybe rents) should also be based upon a figure calculated from a businesses turnover. This would help start-up retailers, for example, in the early years of their business operation, not overburden small independents in the tough times and screw people like Apple who make vast sums from their shops on their over-inflated prices.

  • It's the simple fact that it's not good enough that no major parties are offering us at least an attempt at solving this issue.

    Excellent opening post, Prague.
  • vffvff
    edited December 2014
    Interesting thread and discussion so far.
  • edited December 2014

    It is a citizen's right legally to avoid tax so far as possible and it is a board of directors' fiduciary duty to its shareholders to do likewise.
    It is the Government's right (subject to approval by the legislature) to make and amend the taxation legislation as it sees fit but tax avoidance that "loses" billions of £ to the Revenue is the fault of sloppy legislation by Parliament, not those legally minimising their tax bills.

    This is a very important point. Googlvodabucks are doing absolutely nothing illegal. If you had the opportunity to "save" your hard earned money, rather than hand it over to the tax man, I'm sure you would too.

    It's not the corporations that need reform, it's the legal systems under which they operate.
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  • It is a citizen's right legally to avoid tax so far as possible and it is a board of directors' fiduciary duty to its shareholders to do likewise.
    It is the Government's right (subject to approval by the legislature) to make and amend the taxation legislation as it sees fit but tax avoidance that "loses" billions of £ to the Revenue is the fault of sloppy legislation by Parliament, not those legally minimising their tax bills.

    This is a very important point. Googlvodabucks are doing absolutely nothing illegal. If you had the opportunity to "save" your hard earned money, rather than hand it over to the tax man, I'm sure you would too.

    It's not the corporations that need reform, it's the legal systems under which they operate.
    We all do it don't we? Who wouldn't put their hard-earned into an ISA wrapper investment at the earliest opportunity?
  • Something we can do, if we feel strongly enough is to stop using these companies.

    I assume you stick with vodaphone for a monetary reason Prague? Could they offer you the deal they do if they paid all their tax?
  • cafcfan said:

    It is a citizen's right legally to avoid tax so far as possible and it is a board of directors' fiduciary duty to its shareholders to do likewise.
    It is the Government's right (subject to approval by the legislature) to make and amend the taxation legislation as it sees fit but tax avoidance that "loses" billions of £ to the Revenue is the fault of sloppy legislation by Parliament, not those legally minimising their tax bills.

    This is a very important point. Googlvodabucks are doing absolutely nothing illegal. If you had the opportunity to "save" your hard earned money, rather than hand it over to the tax man, I'm sure you would too.

    It's not the corporations that need reform, it's the legal systems under which they operate.
    We all do it don't we? Who wouldn't put their hard-earned into an ISA wrapper investment at the earliest opportunity?
    Oh come on, mate, what we are talking about with Google et al is nothing like an ISA, which has actually been designed by the democratically elected UK government, to encourage people to save effectively.

    Your idea of a withholding tax on CIT seems like a good one, but still might suffer from piss-taking when Googlevodabucks lawyers move in. We still need the same thing, political commitment, and a more competent and well resourced HMRC.

    Your example of the French fashion house. OK, how is their case so different from that of Unilever the owner of Dove and countless other global brands with huge "intellectual property" value? As far as I am aware Unilver make charges to cover intellectual property but they are modest. They do not suck up all the revenue earned so that the national Unilever pays no CIT. That is what Starbucks do. They are taking the piss. HMRC need to hire brand experts who will scrutinise Starbucks alleged "brand" costs, by comparison with those of other companies and help HMRC build up a robust case in court that they are indeed taking the piss.

    As for the "well they pay other taxes" defence, ask Costa Coffee what they think of that. Or ask Justin King of Sainsbury, who has to compete with Amazon. His comments are well worth considering

    "Tax is a moral issue, I would argue. Every business in a position of trust should be able to stand up and try to explain why they arrange their affairs the way they do if they believe they have nothing to hide.

    "Trust is a moral issue and you can't claim to hold a trustworthy space on any issue, including tax, by just saying 'I'm operating within the law' because it is not a good enough articulation to win trust."

  • Something we can do, if we feel strongly enough is to stop using these companies.

    I assume you stick with vodaphone for a monetary reason Prague? Could they offer you the deal they do if they paid all their tax?

    Your first sentence is exactly what Justin King of Sainsbury is arguing.

    Re my VF choice its made in here in Prague, where O2 is now owned by Czechs of dubious background, (and who stopped selling the iPhone 2 years ago !!!!) and T-Mobile is the only other operator. Their pricing has very little to do with their global tax arrangements and much more to do with their relatively weak network here, which I live with for the savings.

    I make a point of boycotting Starbucks and explain why to every bewildered Czech who suggests to meet there. (none of them are previously aware of what Starbucks get up to with their "brand") I'm doing my best to buy from elsewhere than Amazon too, and have several times written to them to tell them so. Google, I don't need to advertise with them. I do my best to persuade talented people not to go to work for them, or to poach those they have (but they are paid a fortune for not a great deal). So I think I'm doing my bit.
  • LenGlover said:

    seth plum said:

    I have very little to add to this debate right now beyond saying that if it is the mindset of enough people that they shouldn't pay tax, people as individuals, or people as a part of a large corporation, then the result will eventually be a societal collapse of some kind. it is valid to chase every tax avoider, just more of a result if you chase down the big ones.
    However the basic philosophy that for example if motorways cost a million pounds a mile to build, then you get half a mile for half a million, and somehow the money has to be sourced has to be pondered upon.
    To an extent we are all guilty in wanting something for nothing are we not? For a start we want Roland to spend his money on our pleasure, and is there really nobody reading this that hasn't accepted or paid cash in hand?
    Perhaps we need to refresh our look at the philosophical principles of taxation and decide if we can do everything alone, or to what extent we want to construct our society collectively.

    Again a principle it is very hard to disagree with.

    However a fundamental tenet of taxation is representation. People presently feel disenfranchised for various reasons and thus resent payment of taxes to a government which does not (is perceived not to) act in their interests.

    Until people feel represented taxation will continue to be resented in my opinion.
    The American War of Independence was fought with the rallying cry of 'no taxation without representation' ringing in the air, and indeed the rightness of that claim is 'inalienable'. There is an irony that it eventually led to a champion capitalist country, where the aspiration seems now to be reduced to simply 'no taxation'.
    The uninsured are left to more or less fend for themselves, especially in health care, where if a doctor fancies a new car they can pressure people to have unnecessary yet lucrative treatments.
    I agree that people feel disenfranchised for various reasons, and of course those people ought to get involved in changing things the way they see fit. I suppose my point is that the notion of tax itself is not the demon it is painted to be, 'what on earth are they spending my money on?', and the sooner we get to 'how shall we spend our money?' the sooner the virtue of taxation will be re-established.
  • Quite right @sethplum and from where does the new breed of corporate super-avoiders come from? The USA.
    Question for @LenGlover . Which country provides for you a better example of a state which looks after the interests of a broad range of citizens - the US , or Germany?
  • Something we can do, if we feel strongly enough is to stop using these companies.

    I assume you stick with vodaphone for a monetary reason Prague? Could they offer you the deal they do if they paid all their tax?

    I generally agree with your statement. We should boycott these companies that do avoid paying tax. In practice however it is very difficult. There are so many companies that do it not just the few multinationals that the media have picked up on. So the real options available are to research every company's financial statements (even then it won't be clear) and then decide if you are going to purchase their products or services or to just buy everything from local small firms and even then you can't be completely sure they pay the full amount that they should be.
  • cafcfan said:

    As I said in another thread, a strong argument can be made for paying tax in the country where the profit is made.

    My own personal dealings with the Revenue bit of HMRC certainly lead to the conclusion that most of the front-line staff do not have a single clue what they are doing. (But they probably only come second in the incompetence stakes due to the utter and complete uselessness of the DVLC!)

    However, globalisation isn't going away any time soon is it? Without forcing a company to move somewhere else, say the Republic of Ireland, how do you get an equitable tax regime to work for businesses and the benefit of UK citizens without driving away the proverbial geese that lay the golden eggs?

    Here's an example that I've made up: you are a French fashion house. Your HQ is in France. You have a small pink alligator as your logo and trademark. You hold the intellectual rights on that readily recognised brand. Your clothes are designed in France but are made in countries as diverse as Peru and Mexico. You have a separate wholly-owned subsidiary in the UK which has a few of its own shops but also organises the importation and distribution of your products throughout the UK.

    Just how does even a competent taxman begin to get to the bottom of how much tax is due on profit made in the UK? (Then there's the offsetting of losses from previous years.)

    What could be done? Well, as far as things like paying a disproportionately large fee in respect of intellectual property rights to another subsidiary conveniently based in a tax haven: that's easy, the HMRC just says know (sorry @paulie8290 but you see how confusing that looks?).

    Here's an idea though: a withholding tax (that many governments use anyway as a tool to ensure that foreign investors pay their dues on interest and dividends earned). Use it too on corporation tax. Just pick a figure based on what a company SHOULD be earning by way of profit on a certain turnover and tell them they have to pay, upfront, 20% of that notional profit. They can then come back to HMRC afterwards and argue their case for paying a lesser amount because of asset acquisition, write-offs, or whatever.

    In any event, it should not be overlooked that many of the infamous companies we all know about contribute a lot to the UK economy. Okay, Starbucks haven't been paying corporation tax. But they sure as hell have been paying business rates* on their 760 (and growing stores), they pay over (on behalf of their employees) all the PAYE and NI contributions, they pay the employers' NI contributions (aka the tax on jobs), whatever discounted VAT rate they can't claim back from their inputs and God knows what else. I'm not defending them, merely pointing out that UK plc does accrue (significant) income merely from Starbucks' presence.

    * On another matter, I firmly believe that business rates (and, maybe rents) should also be based upon a figure calculated from a businesses turnover. This would help start-up retailers, for example, in the early years of their business operation, not overburden small independents in the tough times and screw people like Apple who make vast sums from their shops on their over-inflated prices.

    If Starbucks fecked off from the UK don't you reckon all the Starbuckers would carry on buying coffee from whoever filled their shoes?

    The argument made for the fashion house with recognised foreign owned branding does not really wash with consumables like coffee. If you care enough about corporate tax avoidance don't buy from Starbucks, but patronise your locally owned coffee shop instead. If you must have sickly sweet stuff in it then bring it along - the proprietors won't mind, honest!
  • To the best of my knowledge I have never purchased anything from Google. I choose to use it's free search engine and am not greatly bothered by it's advertising or the fact that it gathers information on my searches to sell to people I won't be buying from.

    I am not familiar with it's business model as I'm not in the advertising business so it's not altogether clear to me why Google should be paying gazillions in UK Corporation tax. Starbucks on the other hand is selling coffee on every high street and I see no reason why it's posits are not taxed by reference to it's turnover and normal margins. Transfer pricing legislation already empowers HM RC to do this.

    I don't use Starbucks. I don't consider using Googles search engine is supporting tax avoidance - am I wrong??
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