2010 December » Tax Research UK

Hero of the day – Stuart Jones

Accountancy, Dennis Howlett, Tax justice, UK Uncut 1 Response »

Dec 202010

Dennis Howlett, a long term blogging friend of mine has a great blog on his site about another blogging friend and commentator here - Stuart Jones, senior partner 3CA, chartered accountants based in Kendal. As Dennis says:

He’s a really nice person who works hard to do the best he can for his clients. He gets rightfully annoyed at the antics of bureaucracies that harm, impede or otherwise behave badly towards the small business. He’s none too impressed by the way some people manipulate the tax system to their advantage. Last weekend he went out to support protesters at the Westmorland shopping centre. He ended up being banned from using the centre for the day.

Stuart followed up with a well timed blog post entitled: Why I think the protests against Topshop are justified. He says:

I have sent this letter to the Financial Times. Hopefully they will publish it.

Sir,

Richard Horton’s suggestion “that more UK tax would be payable if Sir Philip owned the companies himself, but he does not, and he cannot pay tax on something he has not received and to which he has no legal right” would be more believable if HM Revenue and Customs accepted his argument and stopped applying “income splitting” legislation to smaller companies.

Until they do criticism of Sir Philip Green’s tax “savings” is fully justified.

As Dennis concludes:

None of this will be news to chartered accountant Richard Murphy who has been campaigning on this broad topic for many years. What is different today is that the ‚Äòman in the street’ is finally seeing the direct impact of abusing the tax system on the ability of the nation to provide essential services. That’s where the rubber hits the road and where people like both Richard and Stuart have their part to play. They are the face of a progressive profession though you’d be hard put to know that when seeing some of the opposition ranged against their related but different stands on this topic.

Thanks to Dennis, but Stuart is a hero. It takes courage as an accountant to go out in the town where you work and protest about tax. Good for him! And it’s great to know there are accountants in the world who do think it’s right to protest.

The companies can answer on tax – by putting their tax under the glare of publicity

Country-by-country, Secrecy jurisdictions, Tax Havens, Tax justice, UK Uncut 2 Responses »

Dec 202010

The Observer noted yesterday that:

Behind the scenes, those companies that have been targeted, such as Topshop, Vodafone and Boots, are angry and frustrated that their staff and customers are being affected by protests.

One senior executive, who would only speak privately and anonymously, says: "This is the most difficult communications issue I have ever faced. Tax is a very complex issue but these protesters – egged on by some parts of the media – are reducing it all to a few black and white slogans using information which in some cases is entirely wrong."

Another executive is more blunt, insisting it is "disgraceful" that some of the UK’s biggest brand names are being targeted for vilification and that so little is being done by politicians and press commentators to defend them.

I note they won’t be identified, poor little dears.

But the truth is that these companies could deal with this issue easily and effectively. They could:

1. Publish their accounts on a country-by-country reporting basis – a profit and loss account for every country (without exception) in which you trade and full details of tax paid by country;

2. Reconcile their tax charge in each country with the profit and the current tax bill – not the deferred tax bill, which tells us nothing;

3. Tell us when they expect their deferred tax to be paid, if ever, and where;

4. Reconcile their accounts to show how opening and closing tax liabilities reconcile so we can sure that everything due is being paid.

That way we’d know and their shareholders would know what you’re up to.

But right now we don’t – and press releases will never change that, even if everything undertaken is done entirely legally.

If these companies are so sure all they’re doing is acceptable do it in the glare of publicity. Then we’ll know. But right now they hide, behind their accounting rules, consolidated accounts and their use of tax havens – where nothing is put on public record. And that will not do.

The Telegraph and UK Uncut

Economics, Tax justice, UK Uncut 10 Responses »

Dec 202010

I note the Telegraph has been making some very strange comments at the weekend. Toby Young wrote:

Has there ever been a more ham-fisted protest movement than UK Uncut? The express purpose of this organisation is to force rich individuals and corporations to pay more tax. ‚Ä¶.

What makes the movement so objectionable is that the main victims of this form of protest are the people trying to buy Christmas presents for their loved ones, not the corporations that own these shops. The organisers purport to be sympathetic to the victims of the cuts whom they describe as “the poorest and most vulnerable” – a category I must fall into because my family’s child benefit has been cut to zero – but the ordinary shoppers harmed by the UK Uncut protests will include precisely these people.

Even if this method of protest was successful and Vodafone and Top Shop ended up paying more tax, it wouldn’t be ordinary people that would benefit. On the contrary, the higher taxes would immediately be passed on to consumers in the form of higher prices. How, precisely, is that going to help “the poorest and most vulnerable”?

His suggestion:

If the organisers of the UK Uncut movement really want to help the most needy at this time of year, why don’t they patrol the streets of their home towns giving food and blankets to the homeless? That way, the rest of us can get on with our Christmas shopping without being screamed at by a bunch of red-faced students.

Ah, as ever, the elite’s response is to say:

Don’t ask why the poor are poor, just hand out food parcels

That’s the Tory view of charity for you – and it’s why Thatcher hated Oxfam so much.

But let’s go back to the main comment and note the claim that “the higher taxes would immediately be passed on to consumers in the form of higher prices”.

If that is true then Toby Young has hit on some much more serious issues. the first is that these companies can charge whatever price they like to considers and the consumers have no choice but pay it. Several things follow. First, demand is apparently unaffected by price. I bet that’s news to Vodafone. But just in case it isn’t then that means they’re a monopoly and it’s absolutely right that their prices are regulated (which they are – negating Young’s argument). Third, it says that if the company could increase price at will and doesn’t it’s not acting in its shareholder’s interest now.

Alternatively it says that the protests are actually bang on target, this is the right thing to do, and that Toby Young has not a clue what he’s talking about.

I think both are true.

Not good enough Marks & Spencer

Country-by-country, Secrecy jurisdictions, Tax avoidance, Tax Havens, Tax justice 2 Responses »

Dec 202010

Somewhat to my surprise and to the surprise of UK Uncut Marks & Spencer was targeted by tax protests this weekend, apparently as a consequence of the blogs posted here entitled ‚ÄòKnickers to tax’ looking at M&S’s tax affairs.

As the Telegraph reported:

The UK Uncut spokesman admitted the protests against M&S had taken even him by surprise. He said: "Those protests were organised by one of our regional groups. We were not aware they were going to happen.

"We understand they are due to a blog by Richard Murphy, an expert on tax, which claims that M&S is paying too little tax."

A spokesman for M&S dismissed the allegations, adding: "Marks & Spencer is a UK domiciled company and we pay tax in accordance with UK laws and regulations, as well as in each country where we operate internationally.

"We provide full disclosure to the tax authorities and in the last financial year we paid over £600 million of tax to UK HMRC and over £125 million in business rates to the UK government.

"Like many other UK companies, we obtain tax relief for our business expenditure. We also own a number of stores internationally where the profits made are subject to the local tax rates which vary from country to country."

Sorry M & S but that does not stick.

Until 2003 you paid your tax – at rates expected in the UK.

Then three things happened.

a) Stuart Rose

b) New overseas operations – which pay almost no tax at all according to the accounts – which seems highly implausible without serious planning;

c) A big increase in outsourcing and vertical supply chains from outside the UK.

All of this is matched by a stated policy of holding reserves outside the UK to avoid tax – a deliberate manipulation that must in the end prejudice shareholder interest but is flattering for profit.

None of which says M & S is doing anything illegal – but no one ever said they were. It’s the ethics that are being challenged – not the legality.

And as for the claim that business rates somehow counts – are they really that stupid? Try saying next time you owe income tax that you’ve paid your council tax and see what happens.

So M & S come clean. Do this:

1. Publish your accounts on a country-by-country reporting basis – a profit and loss account for every country (without exception) in which you trade and full details of tax paid by country;

2. Reconcile your tax charge in each country with the profit and the current tax bill – not the deferred tax bill, which tells us nothing;

3. Tell us when you expect your deferred tax to be paid, if ever, and where;

4. Reconcile your accounts to show how opening and closing tax liabilities reconcile so we can sure that everything due is being paid.

That way we’d know and your shareholders would know what you’re up to.

But right now we don’t – and press releases of the type issued this weekend don’t explain tax rates as low as 10% when you admit money is being stacked offshore, even if entirely legally.

You’re known by the company you choose

Conservatives Comments Off

Dec 202010

David Cameron has picked a new property adviser to help the Tories by a new London HQ – far from student protests presumably. As the Daily Mail says, one of those chosen:

is the debonair property dealer Christopher Moran, 62, who owns the 15th-¬?century, 85-room Crosby Hall in Cheyne Walk, ¬?Chelsea, and a 48,000-acre sporting estate in Scotland.

He’s an ¬?interesting choice by ¬?Cameron, who pledged to clean up politics and political funding. True, Moran ¬?masterminded the £30 million sale of Conservative ¬?Central Office, the ¬?historic backdrop to Thatcher’s election victories.

In fact, on paper, grammar school-educated Moran, worth an estimated £200 million, is a shining example of how it is possible to rise from humble beginnings to vast wealth. But on his way to the top, Moran was censured several times in the Eighties by the London Stock Exchange for a series of controversial share purchases.

He was the first person in 300 years to be debarred for life by Lloyd’s of London, for ‚Äòdishonourable conduct’. And he was convicted of insider dealing in the U.S. and fined £1.15 million.

Nice.

If the Mail has it right – and I presume it’s done its leg work (and it seems it concurs with others) – then there comment is vey appropriate.

No wonder people hate this government.

1 in 10 bankers to get no bonus! Shock!

Banking 2 Responses »

Dec 202010

From the FT:

More than one in ten bankers and traders in the UK and Europe could receive no bonus this year, as banks slash their year-end pay-outs following weaker revenues.

Surely some mistake?

Won’t the world be ending soon if that’s true?

A truly subversive store action

Uncategorized 8 Responses »

Dec 192010

I love it.

Congratulations to all involved in this one – if they want to do tax too – just let me know!

I have no ethical problem with my actions as a chartered accountant

Accountancy, Ethics, Tax justice 9 Responses »

Dec 192010

Someone who reveals themselves to be both American and at the same time from the seriously far right of the political spectrum (from other comments made) mailed me this weekend asking:

As a chartered accountant do you feel that it is appropriate that you are calling for a social unrest program?

What a very odd question was my first response. After all, as far as I know I’m not promoting a program of social unrest. I am without a shadow of doubt opposed to the policies promoted by the government and I absolutely and always will uphold the right of any person to protest peacefully about such sentiments – this being a fundamental human right in according to the UN Charter. I will never condone violence but peaceful non-violent demonstration is as fundamental to the strength of our democracy as free elections.So the first response that this question was bizarre if posed by a democrat was justified.

My second reaction was – who is creating the social unrest here? I would have thought that a government deliberately putting more than a million people out of work was the party causing the social unrest. The idea that to raise objection to such destruction of well being is somehow wrong is again very strange indeed. To put it another way, I think the question was asked of the wrong person.

Then there’s the obvious implication that as a chartered accountant I must be an agent for oppression, or at the very least for maintaining the status quo on society. And yet again the response is that the question is bizarre. When so much that is so bad for our society has been created by the misdirected reforming zeal of chartered accountants – including the promotion of tax havens, the sale of tax avoidance, the promotion of regressive taxation that shifts the burden from capital to labour,PFI, the dismantling of regulation, the accounting for off balance sheet mechanisms and so much more besides – the idea that somehow it is wrong for an accountant to promote social change is odd. More strange still is the idea that an accountant standing up for openness, transparency, broader accountability, the end of illicit financial flows, the upholding of the rule of law, the proper amount of tax paid at the right time in the right place and ethical conduct by accountants so that they do not spend their time getting round the law is somehow the accountant who has to justify their actions is so very odd that the questioner really is showing their true colours in posing the issue to me.

I have no problem justifying what I do.

But I think a great many in my profession would face considerable difficulties if put on this spot and asked how they could justify that their actions were in the public interest. And yet it is that interest in which we are supposed to act.

If that’s the best the opposition can do they’re in trouble

Ethics, Tax avoidance, Tax justice 17 Responses »

Dec 192010

I note that Mallen Baker, the man whose article I responded to when writing The Ethics of Tax avoidance on Friday features in the Observer this morning repeating his really bizarre argument that:

In most developed societies, companies have the right – as do individuals – to arrange their affairs in such a manner as to minimise the amount of tax they pay. It is legal, even honourable. After all, a company that goes bankrupt because it paid more in tax than it needed to would be neither responsible nor competent.

One observation: no company has ever gone bust by paying too much corporation tax. By definition income is available to pay it if it is due.

One question: since when was it honourable to get round the law?

If this is the standard the opposition in this debate has reached they are in trouble.

PS I guess disclosure requires that I note I appear in the same article