Merrill Lynch will cost a lot more than Northern Rock

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Tax compliance is paying the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transaction and the form in which it is reported for taxation purposes coincide.

There's not one comment I have read on Merrill Lynch booking its US subprime losses in London that thinks it is tax compliant.

But we have no apparent mechanism to tackle it because as long as they have got the legal form right, in which case the economic substance does not matter.

That's ludicrous.

There's another thing: country by country reporting would help highlight this sort of abuse.

We need radical tax and accounting reform is we're not to be taken for a ride.

And remember: Merrill Lynch is going to cost a lot more than Northern Rock now.

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