Quote Andy Gilder="Andy Gilder"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.'"
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?
