Avoiding corporation tax

13 Nov 2012

Quote by Lizaleanrob
so how do we stop companies just registering for business tax breaks
and actually getting them to trade here also
then you will have the competition from other nations for this business. so what sort if incentives to do you give to keep them here
would it not be best to invest in manufacturing and secure our future as opposed to bowing to the corporates and hope no one steals this business

We are going to struggle in an international market to produce consumer goods. There is an ever increasing demand for better products at a cheaper price and as a consequence component production will almost invariably be located in Asia in the not too distant future. We may be able to produce high value quality goods but this is never going to return us to the levels of 100% employment when Britain was an industrial nation.
I reckon that we are part of the worldwide economic correction and unless we are all prepared to work harder and longer for less money then mainstream "manufacturing" jobs will slowly but surely leave these shores for ever. This is why we have to review what Britain is going to be about in the future and what can make Britain work. We can't have a 100% State funded employment (Public Sector) so we have to do something to get Companies to want to HQ here, even if they can't afford or don't want to have an industrial presence.
The only way to do this is to make the UK's tax regime attractive for worldwide brands - but with conditions attached (employment, banking etc)

13 Nov 2012

Quote by GnV
I think we are all missing the point here.
Our tax legislation allows HMRC to look at a group of transactions and say – the figures here are designed to send profits outside the uk and so substitute the figures for real ones. So Starbucks may pay to Switzerland for every cup of coffee but HMRC say that’s fine but for tax purposes its 30p per cup.
The real question is why aren’t HMRC doing this – is it because it’s easier to hassle the small guy as he won’t be represented by a major legal team ?? – or perhaps agreement is reached somewhere else in the system which we know nothing about?? – ohh I feel a conspiracy theory coming on …

I doubt they could get away with that alan.
If an invoice is issued which meets all statutory requirements for cross company/international trading it cannot be tampered with in the way you describe by the Revenue. They may not like it, they may have doubts about its provenance but there is diddly squat they can do about it under international law.
To take your point to the extreme, as you suggesting that if the buyer in CompanyX buys less efficiently than the buyer in CompanyY for the same goods and pays 100 Swiss francs more for something, that HMRC can later impose what they think is an acceptable price?
Absolute nonsense, sorry.
Provided the actual price paid is reflected in the accounts of the foreign trader (with whom the UK probably have cross trading/taxation regimes anyway) market forces prevail and there can be no justification for tampering to suit its own purposes. Such an action would immediately put trading agreements between the two nations at severe risk of collapse - with all the consequences that would ensue.
Its called transfer pricing rules and is covered by s147 TIOPA 2010 !

13 Nov 2012

Alan, isn't this covered in Too Hot's earlier 'elephant test' posting at 1:51pm?

13 Nov 2012

Quote by Too Hot
Watched the news reports last night as well as the performance of the Directors of Google, Amazon & Starbucks in front of the select committee.
Despite the public outcry and claims of how morally wrong it all is I can't help but think:
Corporation tax is an unfair tax anyway as it is a punishment for success - why did we (UK PLC) not think about setting up an attractive Corporation tax regime to attract these Company HQ's? I did also think it strange that Google were attracted tio Ireland because of the low corporation tax and yet Ireland has been a recipient of a Euro bailout - but I guess that is another story.
The point is that these Companies are global entities and so presumably they are mitigating their tax liabilities across many different State borders and not just the UK. I would take a positive spin on this and look at ways that we can make UK PLC the preferred home for these worldwide mega companies by being more tax friendly. We need to be corporate friendly country and forget about penalising companies for success - or at least offer CT offsets if profits are banked in this country.

Sorry, but I had to reply here!
The facts:
I'm a normal "Joe Soap" employee that currently pays income tax at the rate of 42% that combined with PRSI ( National Insurance) and a Universal Social charge added amounts to a further 7% - now it doesn't take much to work out that 49% of my wage packet goes to the Irish Government! and some to the British Government. Rant over :twisted:
Ireland has a population of somewhere near 4.1 million with a current unemployment rate of 14.8 percent and thousands suffering from the austerity measures imposed by Europe, during our peak ( The Celtic Tiger ) this small little Nation contributed a surplace to the EU process exceeding all expectations.
The issue of Corporation Tax has been a constant debacle with even proposals for a harmonisation throughout the EU, it failed and will do so.
The Global Players in Ireland are, Google, Microsoft,Intel etc to name but a few.
Why you may ask, yes it's the low Corporation Tax, but it's also about the skilled workforce! Yes costs are high, but all in all would they stay here if their profits where affected? I agree there's an element of using registered Companies in a certain location to avert a TAX implication all Global Companies do it!
For the record, I pay Tax and National Insurance in the UK to this day due to the nature of my role, I'm considered as an Ex-Pat.
Hope I've not offended anyone in my rant.
Paddy

13 Nov 2012

Arrrr bollix. I am gonna vote with my feet. I shall just avoid:
Vodaphone
Amazon
Google
Starbucks
Tesco
Cadbury
Boots
And any other bugger that I decide is avoiding tax.
Easily done. On the basis that every penny in tax they dont pay the rest of us have to.

13 Nov 2012

2 years to the day from when this was posted
Nice to see that the MP's have started to catch up
Give it another 2 years and we might actually get the Chancellor to start thinking about doing something about it

mmmm, seems it's not just the previously mentioned 'suspects' that are seeking to avoid UK Tax either.
Spotted in one of the heavyweight papers over the weekend, "Ownership of the iconic scallop sign which appears on thousands of Shell petrol station forecourts has migrated to a Swiss tax haven."
It seems that Legal ownership of the trademarks now belongs to a subsidiary set up in the low-tax canton of Zug, which is entitled to charge royalties for their use to other Shell companies. The canton hosts about 18,000 companies, mostly foreign entities set up to take advantage of corporate tax rates as low as 8%.
It would seem that Shell are not alone, as Diageo the owners of many famous trademarks such as Johnnie Walker whisky & J & B Rare, transfered 'ownership' to Diageo Brands BV in Amsterdam using a technique known in tax circles as "outward domestication". By this means, Johnnie Walker became "Dutch". Via various other corporate changes, J&B finally ended up alongside other whisky brands, as part of Diageo Brands BV.
Unusual, it appears not.
The title to more than 40 GlaxoSmithKline trademarks went to a factory in Puerto Rico, including the trademark for the top-selling diabetes drug Avandia. In 2007, the Puerto Rico trademarks, including Avandia, were shifted on to the firm's Irish operation in Cork. The trademark for the newly launched breast cancer drug Tykerb was assigned to Ireland, another low-tax regime, in 2005, followed there by the firm's Sensodyne toothpaste brand in January 2008.
Also, it seems that when HM Customs & Revenue (HMRC) changed some rules back in 2004 they've admitted that there have been some 14,000 tax avoidance schemes since then, and via a Parlimentary answer to Austin Mitchel MP, no fewer than 90 promoters are under investigation for failing to disclose schemes.
Based on 2005 figures from the HMRC, the official estimated gap between the £40bn corporation tax actually collected and "the theoretical tax liability if all taxpayers complied with the letter and the spirit of the law" was somewhere between and not collected.
In 2008, the Commons Public Accounts Committee was told by HMRC that there was of "potential corporation tax at risk", according to its initial review of 2006-7 company tax returns. "It is currently using these estimates to develop a measure of the tax gap."
HMRC has also advised, in recent years, that it recovers between £100m and £250m a year in tax lost through what it considers incorrect transfer pricing by large businesses. (In 2006/07 the figure rose to £473m after the settlement of a major investigation into Barclays Bank's payment protection insurance business, whose policies were sold in the UK but booked in Dublin.)
If all the above is true, which it seems to be given the main source being HMRC and Parliamentary committee, there's certainly some food for thought here given the Defence Spending Review, Local Government Funding cuts, and other spending cuts announced in the last few months by the Coalitition.

13 Nov 2012

Quote by Ben_Minx
Arrrr bollix. I am gonna vote with my feet. I shall just avoid:
Vodaphone
Amazon
Google
Starbucks
Tesco
Cadbury
Boots
And any other bugger that I decide is avoiding tax.
Easily done. On the basis that every penny in tax they dont pay the rest of us have to.

Remember tomorrow when your shopping and being selective, needs must - opinions go out the window, we're all guilty.
:giggle:

13 Nov 2012

I tell ya paddy between this and my other crusades there wont be a shop left. Ahh well just send minx and assuage my conscience that way.

Quote by Paddy
Arrrr bollix. I am gonna vote with my feet. I shall just avoid:
Vodaphone
Amazon
Google
Starbucks
Tesco
Cadbury
Boots
And any other bugger that I decide is avoiding tax.
Easily done. On the basis that every penny in tax they dont pay the rest of us have to.

Remember tomorrow when your shopping and being selective, needs must - opinions go out the window, we're all guilty.
:giggle:

16 May 2013

Good time to resurrect this as Amazon announce £2.4 million CT on a turnover of £4.2 billion despite receiving £2.5 million in government grants.
Good to see Cameron and Osborne taking the lead to get international support in order to put an end to the use of international loopholes. Clearly though with £4.2 billion in sales, UK consumers can say what they want about corporate tax evasion but it does not stop them using Amazon.

16 May 2013

Quote by Too Hot
Good time to resurrect this as Amazon announce £2.4 million CT on a turnover of £4.2 billion despite receiving £2.5 million in government grants.
Good to see Cameron and Osborne taking the lead to get international support in order to put an end to the use of international loopholes. Clearly though with £4.2 billion in sales, UK consumers can say what they want about corporate tax evasion but it does not stop them using Amazon.

16 May 2013

Quote by starlightcouple
Good time to resurrect this as Amazon announce £2.4 million CT on a turnover of £4.2 billion despite receiving £2.5 million in government grants.
Good to see Cameron and Osborne taking the lead to get international support in order to put an end to the use of international loopholes. Clearly though with £4.2 billion in sales, UK consumers can say what they want about corporate tax evasion but it does not stop them using Amazon.

It seems a fact that big businesses manage to get around laws that others have to abide by. I am not privy to their accounts, but those figures have an air of dodgyness about them, and that's putting it mildly.
C'est simple star.
Get yourself a single share in the company which gives you the right to be given information about the detail of their accounts and the ability to attend their Annual General Meeting where you have right of audience. Ask the question there.
Like the new avatar by the way :thumbup:

16 May 2013

Quote by GnV
Get yourself a single share in the company which gives you the right to be given information about the detail of their accounts and the ability to attend their Annual General Meeting where you have right of audience. Ask the question there.
Like the new avatar by the way :thumbup:

Cheers GnV.........Got bored with the two cheeks one. wink