Google "Dodge v. Ford Motor Company" or "eBay v. Newmark".

[i"A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the nondistribution of profits among stockholders in order to devote them to other purposes."[/i

Well yes, actually.

What would you expect me to do in your examples, beat you to a pulp ?

Well, I don't know. In the case of the foremost and I was your best friend, say, I expect you might.

But the punishment is irrelevant. The legal system is based on fundamental human precepts of justice - right and wrong - and not the other way around. And tax-dodging by the rich (irrespective of some high-priced accountant's actions few have access to) is wrong.

I think the relevant point is the one that someone mentioned yesterday, there are people who work at Google and other such company's who are well paid and who's job it is to minimise the company tax position within the legal boundaries, no-one wants to pay too much tax and no-one should have to but those people wouldn't haver a job if they didn't take advantage of all of the legal allowances and tactics that a company is allowed to use, the fact that Google, Starbucks and the rest are doing nothing illegal has uncovered something that we perhaps don't want to acknowledge - they do this with the connivance of our government and its only journalism that brings it to our attention.

How much is "too much"? The question is irrelevant in Starbucks' case as they haven't paid a penny. Sans legal and financial services almost no-one else has access to, would Google be paying "too much" tax? Certainly from[i its perspective[/i as any tax is too much to a corporation.



That depends on who's deciding.



Why give mainstream journalists a free pass because they've published a story they've known about for decades? The media is often described as being close to the corporate domain. This is a misconception. They are [ipart of it.[/i Very often they are owned by the same people who are rorting us up every orifice. And it was [igovernment [/i(somewhat surprisingly) that opened the doors to this issue. Journalists working for a newspaper taking half a million pounds of sponsorship from Google are loathe to write something negative about them.

Too much is more than you are required to - its that simple.

Or rather its not that simple, when I ran my own business I admit to being accounts illiterate, I can understand a profit and loss sheet (I'm not totally illiterate) but the balance sheet side of things just wafted a couple of yards above my head, so I employed an accountant who promised me that his fees would be saved each year in the amount of tax he could save me, and in that way that all small business operators do, I left it to him and I still assume that he did save me some tax by filling in my forms once a year, he certainly saved me a huge pain in the bum by doing it.






And yet they are ?

There's an awful lot of squirming around going on from various desks, all of this stuff is ignored during the good times but its only when the poo hits the fan that departments start to look around for someone else to blame other than themselves and fingers get pointed like in a school playground. Just out of interest one of our clients is currently working on a major new development for Google in Ireland where I assume their major European base is on the strength of the old "celtic tiger" low corporation tax economy, I don't suppose that the Irish government are regretting inviting them into their country on a promise of low tax and the facility to shift assets around within the EU boundaries when the return is employment and development - maybe, just maybe our government works from the same model ?

Somehow, I received an email from Frances and Keith Smith who run the independent Warwick and Kenilworth bookshops and are running rla petition on Change.orgrl calling on Amazon to pay corporation tax on their £2.9 billion UK sales.

Article on the campaign rlHERE.rl

Corporation tax is a hot topic right now.

Perhaps we need a law that requires you to pay tax in the UK on all profits from property in the UK as part of planning permission, or if you want to be based overseas you pay a levy on business rates of 500%

It's called Land Value Taxation, something I've advocated for years.

Buildings have proved remarkably difficult to offshore

First, the EU should step in here and tell any company that if they want to sell goods in the EU, they have to pay corporation tax in the EU, otherwise shove off.
Second, Fiscal Union should ensure that Ireland and Lichstenstein etc don't undercut on Corporation Tax rates (Can't see Gideon liking that though).
Third, where large scale complex tax avoidance is noted, the tax authorities should bill the companies for the amount that would have been paid if the company had no such scheme ... and then the companies can present their case for a refund rather than the officials having to unravel a string of offshore transactions to find out whether the reasons for the scheme were other than simply for tax avoidance. Or, before using the scheme, it should be put forward in clear detail with the reasons, by the company for approval by the tax authorities, with the companies paying the cost of HMRC's time and effort.

Unless you're the Duchy of Cornwall, and thus not part of the UK at all.

This.


Isn't that, on paper, the system we're supposed to have now? Yet as Private Eye keeps pointing out, no large corporation has [iever[/i been brought to book on their complex tax-dodging webs of sham arrangements. This is so, even when the dodge is blatant - like Starbucks not making a profit "because what we make we have to pay in royalties to our sister company in Holland". The mystery is not how they do it, but how the feck they are allowed to get away with it, when any person reqarding of the arrangement can see it is a blatant tax dodge. And I see the issue of whether it is "legal" as a complete red herring. The only question should be "is it effective". The resoundingly clear answer should be "NO, because although perfectly legal, it's for no reason other than to dodge tax, and so we're not having it".

You might see it as a "red herring", but the current recourse for HMRC if it believes tax is being avoided is via the tax tribunal system and ultimately the courts.

Their consideration is very much a case of "is it legal", rather than is it morally or ethically correct. As courts, that's all they can do.

The proposed "General Anti-Abuse Rule" which is going through consultation at the moment seeks to address this by looking through any transaction that HMRC considers does not match both the letter and the intent of the legislation.

How well it operates in practice is still to be seen, and quite how it will apply to existing arrangements like transfer pricing (what Starbucks does) should create lots of money for lawyers and accountants running test cases.

And I'll say again - if your business does not have a "permanent establishment" in the UK, the fact you sell products or services to UK customers is not enough on its own to render you liable to UK Corporation Tax on your profits. If the UK wants to tax these companies on the profits they make selling to UK customers, they should be prepared to lose out when UK companies make profits selling to customers in other countries and their governments want a share of the pot.

Please don't twist what I said, I obviously was referring to my view of what the position "SHOULD" be, which is why I used the word "should".

I even said it twice. I closed my remarks with
Not really. While the costs in a test case might look a lot, compared with your shopping bill at Asda, they are peanuts compared with the tax take (or non-take) that any precedent would set. And i don't know why you included accountants in that - surely they are the ones already making millions out of setting up these scams and have been for many years?


Interesting but not on the point, I thought we were discussing Starbucks et al, who certainly do have such a permanent establishment, and are liable to UK corporation tax. But don't actually pay any.


You're again completely avoiding the point. Which is that it is hardly a case of any government "wanting a share of the pot" for its own sake, but of a company which is established in Britain making big profits in Britain but by means of accounting dodges paying no tax on those profits in Britain.

If you can give me an example of where the converse might apply, I'll be happy to think about it.

One question that hasn't been asked is: How come UK based idependent Starbucks franchisees can make enough profit to be subject to UK CT, HTF can't the parent (franchisor) company make similar profits?