Tag Archives: Tax Avoidance

Why are poor sanctioned for tiny infringements while bank tax avoiders steal millions with impunity?

The latest figures collected by Oxfam indicate nearly a million persons have been ‘sanctioned’ (i.e. deprived of all benefits for a month for the first infringement, often trivial, for 3 months for the second, and 3 years for the third) in the last 15 months and that the numbers using foodbanks are now well over half a million.   Yet bankers are still leading the life of Riley at the public expense without any being brought to book.   Barclays under the so-called Jenkins ‘clean-up’ act has just stunned even the City by increasing bonuses by by 10% despite profits collapsing by 32%.   All the Big 4 – HSBC, Barclays, RBS and Lloyds – have shown contempt for restraint by circumventing the new EU rule limiting bonuses to 200% of salary by paying a totally artificial ‘allowance’ far exceeding this limit.   HSBC have thus paid their chief executive an ‘allowance’ worth £32,000 a week on top of his £1.6m salary.   Barclays is the bank which took the lead in rigging Libor and HSBC was arraigned for money-laundering on behalf of drug cartels, terrorists and pariah states.   Despite this background of big-time criminal activity amid soaraway boardroom greed, not one of the miscreants at the top of these organisations has been collared.
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Rather than chase tax-cheating internet companies Government opts to abolish Social Fund for poor

On the same day that it’s announced that the Government is scrapping the £180m a year last resort for the down-and-out and destitute after sudden financial crisis, a new survey shows that the big US internet companies operating in Britain have increased their UK sales last year in the UK by 18%, but paid even less tax to the UK Treasury than the year before, while the Government has done nothing to stop this.   Apple UK made £1bn this country in 2011, but paid only £15.7m in tax; this last year their UK turnover rose £1.2bn, but their tax payments vanished to almost nothing – £1.7m, or precisely 0.1% of turnover.   Facebookmade £20m in the UK in 2011 and paid an almost invisible £200,000 in tax; last year its turnover nearly doubled to £35m, but their tax payments to the UK shrivelled to nothing at all.   Taking all the 7 companies together – Apple UK, Google, Microsoft, eBay, Yahoo UK, Facebook UK, and Amazon UK – their turnover in the UK last year was just under £3bn, but their tax payments totalled just £51m, or 1.7% of turnover.
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International crackdown on tax avoidance gathers momentum, with UK resistance always dragging

The EU Commission has today outlined its attack on the artificial hybrid structures used by multinational companies to reduce or entirely avoid their tax liabilities.   Three companies – Tate & Lyle (sugar), FirstGroup (transport) and Linde (industrial gases) were specified as saving as much as $150m a year by lending billions of dollars to their own US subsidiaries and then exploiting legal differences between the US & UK to offset the interest payments against tax both in the US and the UK.   The hybrid structures work by inserting a new UK subsidiary, which typically has no employees, into the company’s US group.   The new entity is then lent large sums by another British subsidiary, resulting in both interest payments and receipts in the UK.   But US  tax rules allow the UK company to be treated as part of its US parent, thus allowing it to claim tax deductions on its interest payments in the US as well.   Significantly, it is the EU, no the UK, which is trying to block this tax avoidance device, and the UK government may well try, under lobbying pressure from the City, to water it down in Brussels.

Another breakthrough is currently being promoted in the US.   It is proposed in the US Congress that a 20% tax be imposed on the estimated $2 trillions of cash held overseas by American multinationals.   The aim is to clamp down on the widely adopted practice of US companies keeping their profits overseas to avoid paying the 35% tax rate, one of the highest in the developed world, that is applied to repatriated cash.   But it is also being put forward to generate more than $200bn in revenue for the government to be used to replace spending cuts, stimulus measures, lower tax rates elsewhere, or shrink the deficit.   In addition, it is argued, it would reduce distortions, make the tax code more competitive, eliminate the lockout effect, and obviously encourage jobs and investment in the US.   So why is there no push for similar measures in the UK?
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Bedroom tax is emerging as the same hardline ideological punitive bludgeon as the poll tax

What exactly is the point of the bedroom tax?   Its ostensible purpose is to free up accommodation from those who don’t need it to those who do.   Just about everything is wrong with that argument.   If that were really the rationale, the obvious way to solve the problem would be to build more social housing when the total build last year including all tenures was just 98,000 houses, the lowest level since 1923 and less than half the average annual house build over the last 40 years.   And if that were the real motive, why confine it to social housing and exclude private tenancies, let alone owner-occupied housing where surplus rooms (to use the government’s phrase) are far more prevalent?   So is it to save money?   If so, the bedroom tax is particularly ill-suited because if tenants are forced to move, there is nowhere near enough one-bed social housing available to accommodate them and they will be forced into private tenancies at market rents which will cost the State more in local housing allowance than the saving in housing benefit.
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Osborne, hypocrite over tax avoidance, caught out

Osborne likes to tell us he’s keen on cracking down on tax avoidance.   Ha, ha.   He’s allowed multinationals with a finance subsidiary in a tax haven (and 98% of the FTSE-100 have one) to pay corporation tax at just 5.5% instead of the current 23% – meaning you needn’t worry about tax avoidance because I’m serving it up to you on a plate.   He’s brought in another tax scam whereby any company that introduces a patent has its corporation tax on the all the company’s activities more than halved to just 10%, even if the patent involved only a tiny fraction of those activities.   And he’s very proud to be bringing forward a so-called General Anti-Abuse Rule (GAAR), though the shine’s been rather knocked off that by the revelation that it’s only aimed at the most artificial, contrived and aggressive behaviour – meaning that all other forms of tax avoidance are OK and legit.   But what has now really blown this charade is the discovery (verified by a secret recording) that one of the members of the HMRC panel chosen by Osborne to advise him on tackling tax avoidance spoke at a conference advising people on how to get away with tax avoidance.
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This is how an Act to enforce tax transparency & prevent tax avoidance should work

After 4 hours of massive Tory filibustering to prevent my bill being reached, I finally got a brief chance to make the case for ending tax avoidance and enforcing tax transparency on the richest individuals and the biggest companies: 

Michael Meacher (Oldham West and Royton, Labour)

Tax avoidance and financial transparency, or perhaps I should say the lack of financial transparency, have of course been high on the Government agenda for the past two years. They even led Prime Minister to make tax transparency and trade his central international focus at the G8 at Lough Erne in June. However, having marched his troops up the hill, rather like the Grand Old Duke of York, the Prime Minister has since proceeded to march them down again. Rather little of significance—that is being generous—has happened on the tax and transparency front since then.

At the G8, the UK published an action plan on tackling some of the issues involved, but it is not unfair to say that it was decidedly modest in its ambition. The same can certainly be said of the scope of the subsequently announced consultation on disclosing the beneficial ownership of companies. The Government have, of course, published the general anti-abuse rule, but as has often been said, it will cover only the most egregious forms of tax abuse and is consequently in danger of appearing to legitimise lesser forms. The GAAR is

rather like the lobbying Bill that is currently before the House—the Government are extremely keen to be seen to be doing something, but they have no intention whatever of actually doing much. If we are really serious about tackling tax avoidance and the financial opacity of our tax system, a more robust approach is needed. That is what my Bill is intended to offer.

The Bill was drafted by Richard Murphy, who is the founder and director of Tax Research UK and, I think everyone will agree, one of this country’s foremost tax accountants. I am extremely grateful to him, as I believe the whole House should be.

There are two drivers behind the Bill. One is the demand for fairness and social justice. The country is in the middle of a deep economic recession caused by the bankers, yet the Government have imposed on the victims the liability for meeting the ensuing very high national debt and budget deficit.   By and large, those victims are the poorer and poorest households, who bear no responsibility whatever for the crash five years ago.   According to the Sunday Times rich list, the wealthiest 1,000 persons in the UK—just 0.003% of the adult population—have increased their gains by a staggering £190 billion since the crash. Most of that has now been squirreled away in tax havens, hidden behind nominee shareholdings or secreted in opaque trusts. Frankly, that is utterly intolerable. It is high time that the very richest people in this country made a fair contribution to resolving the financial crisis. The Bill would help them to do so.

The second driver behind the Bill is sheer, plain, down-to-earth, honest-to-God common sense, if I can put it like that. My right hon. Friend Mr Darling, the last Labour Chancellor, reduced the budget deficit by about a third by the end of 2010 through his stimulatory measures, but it has now been stuck at about £120 billion after flatlining for most of the past three years.
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Private Members’ Bill to to end tax avoidance blocked by time-wasting Tory filibuster

Fifty years ago Private Members’ Bills were an important channel by which MPs, if they were lucky enough in the draw, had the opportunity to pilot legislation through Parliament of some real local or even national significance.   This small, but valuable, window of opportunity has now been closed by the steady encroachment of the Executive over the years into this territory which has effectively rendered the function of these Bills meaningless.   Today was a good example of the anti-democratic arrogance which has reduced these bills to a pointless facade.   I had the good fortune to win a place in the ballot at no. 2 out of the 20 randomly selected and out of the approx. 450 applications originally made.   Unfortunately, however, the Deputy Speaker decided arbitrarily, and without precedent or rationale when subsequently questioned, that the order in the first 20 would be reversed.   I was therefore now no.19.   This is crucial because if you’re in the first 7, you get priority in the allocation of scarce time on Fridays, when Private Members’ Bills are traditionally taken, and therefore a serious chance of your Bill getting enough Parliamentary time to secure second reading.   If you’re no.19, not a chance.
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Publish the tax returns of the biggest 250 companies and of the 250 wealthiest individuals

They’re all at it.   It’s not just Starbucks , Google and Amazon that are running rings round HMRC and the tax laws, it’s virtually all the top UK 250 companies which are deliberately cheating UK taxpayers of the tax receipts due.   No less than 98% of the FTSE-100 companies have a subsidiary in a tax haven, the only purpose of which is tax evasion/avoidance on an industrial scale.    Only today yet another massive tax scam has been exposed, this time involving Britain’s largest mobile phone network – Everything Everywhere (EE) – which scooped up £3bn profits for the French and German companies that own it, but paid not a penny in corporation tax in the UK.    Vodafone, O2 and Three are little better.    EE defends itself by saying “its accounts are transparent and it takes a responsible approach’ (UMG – the usual meaningless guff).    How do they get away with this?   Largely through tax breaks, management fees, royalties, and offshoring.   But probably the most important ingredient in all these tax fiddles is opacity which enables their manoeuvres to remain hidden.   Yet there are ways to counter all of these dodges
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Cameron’s brouhaha on corporate tax avoidance: but does he really mean it?

Given the government’s media blitz over the last few days you might be forgiven for thinking that Cameron was about to pull off a coup in cracking down on corporate tax avoidance at the G8.   We shall see.   This is a case where it pays to read the small print.   Ostensibly he is trying (i) to get UK-controlled  tax havens to sign up to a OECD agreement on providing tax information, (ii) to establish a worldwide standard on automatic tax information transfer, (iii) to get G8 countries to reveal the identity of shell companies, and (iv) to help developing countries get their rightful entitlement to tax.   All perfectly desirable objectives, but fraught with caveats.
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