I note that the Right have already been reading the Guardian's accounts, published today, and are spreading misinformation about its effective tax rate, no doubt because of the Tescos case.
To set the matter straight, this is their profit and loss account:
And this is the relevant note to the accounts:
Now let's be clear: what this shows is that on trading the effective rate of tax was 46%. If good will were added back to profit the rate would be about 21%, a rate that is low largely because much of the profit came from the disposal of assets. If that were adjusted for then the rate would be above the statutory rate. There is nothing abnormal to comment on as a result.
The low charge is on the exceptional part sale of the Auto Trader group. No complicated planning was needed to produce a low tax charge: the government allows for tax to be deferred in this case if funds are reinvested. The Guardian did reinvest the funds. That's not artificial, offshore, or complex. Indeed, it is tax compliant: the company is doing what the government wants, and for which it provides a relief.
So let's stop the nonsense about low tax rates now: it's just wrong.
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[…] Our favourite retired tax accountat (who, I believe, is funded by the Ford Foundation) has more: […]
I posted this at TW:
“Richard Murphy must have retired before 2002 when the ‘Substantial Shareholdings Relief’ (SSR) kicked in (e.g. for sale of Autotrader).
He says:
“the government allows for tax to be deferred in this case if funds are reinvested.”
Wrong, wrong, wrong.
Provided the conditions are met (and they clearly were – it’s actually a very sensible relief which most other European countries have had for ages) then it is a permanent and absolute exemption, there’s no requirement to reinvest. The Guardian can pay it all out as dividends if it so wishes.”
Mark
OK – one up to you: I don’t often deal in SSR and didn’t bother to check. So I prove I am human, after all
But this does not change one iota of what I said. And I entirely dispute that it’s a sensible relief
Richard