Corporate Tax Avoidance - A poll

[BLOCK F]

Don't blame the companies,just change the law and as others have said.............cash in hand deals?Who hasn't partaken in this

 

[beorhthelm]

And if you believe that companies should be able to use these loop holes do you not feel that the same privileges should be available to the tradesman in the street? Seems very unfair that only international corporations can get away without paying tax purely because of their size .

another falsehood, there are plenty of tradsman and particularly contractors using the same rules to their advantage.

Having read what Starbucks have done I do not believe for one second the government, in which ever decade it was, envisaged what would happen let alone "deliberately build" it into their legislation.

you mis-understand me, what Starbucks is doing is an unintended consequence. what companies would be impacted by closing the "loophole"? probably a great many companies that do international trade.

 

[Herr Tubthumper]

i think you miss the point: most if not all methods used to avoid tax are deliberatly built into the system for other good reasons. its not the case the government have had long enough, dont want to do anything or are supporting vested interests, they create rules which have unexpected outcomes. so some companies come along and misapply the rules to their benefit. like the EU, set up to allow transfer of capital and labour, means US companies can setup an office in Luxemborg or Ireland and transfer capital there where tax is lower.



they are different, one could be friendly or construed as assault. the other is assault always.

If there are unexpected, and in this case negative, outcomes then it's clearly time to re-write the law.

 

[Herr Tubthumper]

another falsehood, there are plenty of tradsman and particularly contractors using the same rules to their advantage.

Okay. I will ask my plumber how much his intellectual property license is worth and which currency he wishes to be paid next time he comes by.

 

[Goldstone1976]

This is a very weak argument. As with most things a line needs to be drawn somewhere. Do you seriously believe that a tradesman taking a bit of cash-in-hand somehow allows corporations to circumvent their UK corporation tax? Some might argue the principle is the same but it isn't; unless you also think a slap on the cheek is the same as fist in the face.

Maybe if the playing field was level and the tradesman could dismiss his corporation tax obligation via a convoluted international web of low tax jurisdictions and tenuous intellectual property licenses they they would not need to take the odd bit of cash-in-hand?

I think you're missing a point about the scale of the two issues. Take VAT as an example. In 2005, the treasury estimated a VAT shortfall caused by individuals patronising the black economy at £13Bn - £18Bn. In the following year, the treasury estimated the VAT shortfall from "large" businesses (defined at the time as having more than 1000 employees; i.e. every business that has made the headlines recently) at £85m.

£85m plays, say, £15Bn. In VAT, big business is 0.5% of the problem.

 

[beorhthelm]

Therefore, I think the Governmental aspect to this debate is an absolute red herring and will call it as such. No sooner would they close this loophole than another one would open anyway.

It genuinely is up to us.

if thats your point, then you're probably right. but are you going to do so consistantly? are you going to boycott any company that transfers profits to another country? or only those that do so "excessivly, and if so how are you going to judge. or even know? or are you just going to boycott a couple of high profile companies? who maybe making substantial investment and other non-corporation tax contributions in this country, for example those Amazon warehouses still employ hundreds here and i recall Google is spending literally hundred of millions building its new HQ.

personly i happyily boycot Starbucks as they arent very good.

 

[Bedsex]

I'm no expert but there is a big difference between this and the current Eurobonds scandal isn't there? I understand that we have to attract business to this county but we don't have to pull out pants down and lube up to do it do we?

Yes the quoted Eurobond exemption is a little different. A few years ago HMRC did propose a change in legislation to eliminate the exemption. There was much lobbying by many big corporates against this and HMRC backed down.

Ultimately the exemption does seem a little unfair, as it allows disparity of tax treatment - a tax deduction for interest payments by the UK borrower, yet no tax payable for the lender on interest receivable. However, HMRC were made to realise that a group could arrange its financing such that even without the Eurobonds the UK company would still get a deduction for interest payments (as long as arms length rate) and that the one-sided tax treatment was outside of the UK jurisdiction. In other words, if the quoted Eurobond exemption were removed, there would be no additional tax take by the UK exchequer, so why bother changing the legislation? This issue arises because of different tax regimes having different tax rules and often competing with each other to increase their own tax take. So what is the solution, a unified tax code? Should Brussels decide on UK tax law? I certainly would not be in favour of that!

 

[beorhthelm]

Okay. I will ask my plumber how much his intellectual property license is worth and which currency he wishes to be paid next time he comes by.

you're being obtuse now. you said only international corporations can get away without paying tax because of their size. there's no size limit, one man bands can and do use the same rules. i know contractors that do, being paid dividends through Jersey or Irish umbrella companies to avoid NI and pay reduced income tax. i dont suppose your plumber has any IP, but i bet he maxes the advantages he can gain from VAT.

 

[spring hall convert]

Yes the quoted Eurobond exemption is a little different. A few years ago HMRC did propose a change in legislation to eliminate the exemption. There was much lobbying by many big corporates against this and HMRC backed down.

Ultimately the exemption does seem a little unfair, as it allows disparity of tax treatment - a tax deduction for interest payments by the UK borrower, yet no tax payable for the lender on interest receivable. However, HMRC were made to realise that a group could arrange its financing such that even without the Eurobonds the UK company would still get a deduction for interest payments (as long as arms length rate) and that the one-sided tax treatment was outside of the UK jurisdiction. In other words, if the quoted Eurobond exemption were removed, there would be no additional tax take by the UK exchequer, so why bother changing the legislation? This issue arises because of different tax regimes having different tax rules and often competing with each other to increase their own tax take. So what is the solution, a unified tax code? Should Brussels decide on UK tax law? I certainly would not be in favour of that!

This further backs my belief that this is all in the consumer's court. It's up to us to regulate this. Thanks for the info, much appreciated.

 

[Herr Tubthumper]

you're being obtuse now. you said only international corporations can get away without paying tax because of their size. there's no size limit, one man bands can and do use the same rules. i know contractors that do, being paid dividends through Jersey or Irish umbrella companies to avoid NI and pay reduced income tax. i dont suppose your plumber has any IP, but i bet he maxes the advantages he can gain from VAT.

I'm not being obtuse. We seem to be talking about two different things here. My beef is with a company tenuously declaring assets as intellectual property and then charging themselves a cost which is not set by the markets but personally beneficial. This is very very different to the Jersey thing you describe which is just setting up a company to minimise personal income. This has been going on since the year dot and I cannot see a way around it to be honest. But, the, in my opinion, false classification of intellectual property is very different. I see it as false declaration. Do you actually know any one man bands like plumbers or IT consultants who actually sell a major part of their service as intellectual property?

 

[Colossal Squid]

I shall be getting on with the tiresome task of Christmas shopping very soon and would like to avoid Amazon if at all possible (sorry Bozza). What is my best bet for a similar one stop shop for everything I need, without the tax scamming? Or am I better off going back to the old fashioned method of picking up different things from different retailers?

 

[spring hall convert]

I shall be getting on with the tiresome task of Christmas shopping very soon and would like to avoid Amazon if at all possible (sorry Bozza). What is my best bet for a similar one stop shop for everything I need, without the tax scamming? Or am I better off going back to the old fashioned method of picking up different things from different retailers?

This site may well be of use to you.

http://www.ethicalconsumer.org/

 

[Creaky]

Corporation tax is nothing more than a tax on employment - by taking money out of a company you reduce its ability to grow and employ more people.

There is no need to tax company profits at all and it doesn't make financial sense to do so - profits at some point will end up with an individual at which point taxation kicks in - this can be employees, suppliers or share holders - by taxing a company all you are doing is taking away from one of those three groups. Reduce the amount available for employees and you either reduce wages paid or the number of employees - reduce the amount available for suppliers and you reduce the capability of the company to grow and/or produce more and also reduces the growth potential of suppliers and the numbers they employ - reduce the amounts paid in dividends and you are essentially taxing at a lower rate than would in general apply to those receiving the dividends.

 

[Herr Tubthumper]

I think you're missing a point about the scale of the two issues. Take VAT as an example. In 2005, the treasury estimated a VAT shortfall caused by individuals patronising the black economy at £13Bn - £18Bn. In the following year, the treasury estimated the VAT shortfall from "large" businesses (defined at the time as having more than 1000 employees; i.e. every business that has made the headlines recently) at £85m.

£85m plays, say, £15Bn. In VAT, big business is 0.5% of the problem.

I'm not sure I understand. I'm talking about corporation tax avoidance which the Independent reported at 50 billion last week. VAT is not a concern to me.

 

[Herr Tubthumper]

Corporation tax is nothing more than a tax on employment - by taking money out of a company you reduce its ability to grow and employ more people.

To grow a company needs "more people" as you point out. These people need to be educated, they need their health, their safety, security, they need roads to use to get to work etc etc. Sadly this needs to be paid for. And if a company benefits from this they should contribute via tax.

 

[Goldstone1976]

I'm not sure I understand. I'm talking about corporation tax avoidance which the Independent reported at 50 billion last week. VAT is not a concern to me.

Ummm, I was referring to the emboldened piece in your post below:

This is a very weak argument. As with most things a line needs to be drawn somewhere. Do you seriously believe that a tradesman taking a bit of cash-in-hand somehow allows corporations to circumvent their UK corporation tax? Some might argue the principle is the same but it isn't; unless you also think a slap on the cheek is the same as fist in the face.

Maybe if the playing field was level and the tradesman could dismiss his corporation tax obligation via a convoluted international web of low tax jurisdictions and tenuous intellectual property licenses they they would not need to take the odd bit of cash-in-hand?

Obviously tradesmen dodging VAT doesn't absolve corporations from avoiding Corporation Tax. However:

1) The reverse is also true.
2) Corporations avoiding Corporation Tax is legal; tradesmen evading VAT is illegal.

To me, as others have said, if the Gov't want Corporations to pay more CT, change the law, and they will. Whereas HMRC/Police should go after the individual tradesmen for fraud (if you want a level playing field). You can't on the one hand say that Corporations are wrong behaving legally, but there's no blame on individuals, who are behaving illegally. It doesn't make sense...

 

[spring hall convert]

To grow a company needs "more people" as you point out. These people need to be educated, they need their health, their safety, security, they need roads to use to get to work etc etc. Sadly this needs to be paid for. And if a company benefits from this they should contribute via tax.

And this is the point where the debate gets interesting. Business's are attracted to places with an educated workforce, to what extent do they have an obligation to contribute toward the upkeep of that (as they benefit from it) or is that solely the preserve of the British public?

 

[seagullsovergrimsby]

I'm not sure I understand. I'm talking about corporation tax avoidance which the Independent reported at 50 billion last week. VAT is not a concern to me.

Surprised we've all been whining on about about benefit scroungers in the last month or two , this is a drop in the ocean compared to corporation tax avoidance.

 

[Goldstone1976]

And this is the point where the debate gets interesting. Business's are attracted to places with an educated workforce, to what extent do they have an obligation to contribute toward the upkeep of that (as they benefit from it) or is that solely the preserve of the British public?

They have the same obligation as any other tax payer. To pay the tax that the Government determines they should pay by way of legislation. All groups of society seek to minimise their tax liability. Providing it's within the law, personally I don't have a problem with it. If it is illegal then for any member of society, including companies and individuals, they should be prosecuted.

 

[Herr Tubthumper]

Ummm, I was referring to the emboldened piece in your post below

Ah, I see. If a tradesman take cash in hand then HMRC loses the VAT and all other taxes such as PAYE and possibly corp tax as the money is not declared. But, for me, the bigger issue is corporation tax.

2) Corporations avoiding Corporation Tax is legal;

Is it legal? We will only know if they are really and truly challenged over the classification. My point, using Starbucks, is that I and others feel they have tenuously and falsely classified a service as intellectual property, they have costed it themselves and sold it back to themselves. Is this classification, or interpretation of the law, legal? Their lawyers will argue it is. Other lawyers argue it is not. Two companies, not at arms length, trading between themselves, classifying goods as they see fit and setting prices themselves.........someone really needs to rule on this.