2011 February » Tax Research UK

Enclosing the public sector for private gain – and destroying democratic choice on the way

Feb 212011

I wrote a blog on the above theme last July. In it I argued that:

Private enterprise has no clue how to generate wealth right now. I mentioned the consequence a while ago. Private business has no idea what to invest in now, no new product to make, no big idea to offer.

So this government is offering it the NHS, education and more so that public benefit can be enclosed for private gain.

This is what happened two hundred years ago.

And it’s happening again.

Today Cameron announced that this is what he’s now going to do: all public service is in effect open to private sector bidding.

So we have a situation where, very deliberately a prime minister elected without a majority will try to ensure the end of public service in the UK.

Alice Hood explains many of the consequences on the TUC blog.

I offer this thought: I have no doubt the contracts offered will be for more than ten years. Centrica, Serco, and others will be laughing all the way to the bank. But this is a fundamental threat to democracy: if these contracts are written so they cannot be cancelled by an incoming government they will undermine real democratic choice.

And that’s the real agenda here, I have no doubt.

Progressive tax blog explains the reforms needed to UK tax – to beat Boots and friends

Feb 212011

The Progressive Tax Blog has a wonkish and thoroughly useful piece up explaining how to tackle some forms of UK tax abuse – including excessive interest rate deductions.

Recommended – and why not sent a copy to H M Revenue & Customs?

PWC, Deloitte and the ICAEW, all supporting corruption

Accounting, Corruption, Country-by-country, Deloittes, Development, ICAEW, PWC 2 Responses »

Feb 212011

Larry Elliott has a good article under the title “The new scramble for Africa must have the courage to curb corruption” this morning. It does, of course, support country-by-country reporting in the extractive industries, to which George Osborne and Vince Cable lent their support yesterday. The idea originated long ago in a publication I wrote called Extracting Transparency.

Larry notes in the article that:

Vince Cable, the business secretary, says he is in favour of the initiative and the Treasury has made similar noises. Ministers are expected to voice their support at an experts’ conference Sarkozy has organised in Paris to discuss the issue next week.

Cable says that so far he has had no push back from UK companies, which is somewhat surprising.

It’s also wrong. There is massive opposition to this transparency in business. The call for country-by-country reporting has just been subject to a consultation by the European Union. As the submissions show the massed rank of opposition to this proposal, whose aim is to ensure the end of corruption and the increase in shareholder value as well as the beating of tax abuse, is enormous. Those bodies who oppose disclosure and so support the continuation of corruption (one follows the other – since none of them suggest an alternative mechanism for tackling the issue) include:

The Institute of Chartered Accountants in England and Wales

PricewaterhouseCoopers

Shell

European Banking Federation

Societe General

International Association of Oil and Gas Producers

Deloitte

Deutsche Bank

UK 100 Group of FTSE Finance Diectors

Federation of European Accountants

Glaxo Smith Kline

Repsol

The Association of Chartered Certified Accountants

UK Accounting Standards Board

Belgian Accounting Standards Board

Association of British Insurers

Each and every one of them needs to be held to account for supporting corruption.

Each and every one of them could have said they wanted disclosure to help stop corruption. But they refused to do so. Thy put their own self interest first.

And for that they deserve all the blame they get.

And in due course special mention will go to PWC – watch this space.

Osborne – friend of bankers’, yet again

Banking, ConDems 4 Responses »

Feb 212011

As the Guardian notes:

In December 2009 Osborne suggested that one way to make banks make a contribution to society would be to stop them offsetting their losses against tax – a standard practice for the business community.

It is, of course, an idea I have been promoting.

But Osborne has abandoned it now he’s in office. He has now, of course, to keep his future employment options open since he’s a one term Chancellor.

When will Cayman learn?

Cayman, Secrecy jurisdictions, Tax Havens 1 Response »

Feb 212011

I note the new Chair of Cayman Finance seems determined to continue in the tradition of his predecessor.

Interim Chairman Roy McTaggart , who recently succeeded Anthony Travers OBE, has sent a letter to Ronnie Campbell, MP because he referred to the Cayman Islands as a tax haven during a debate in the House of Commons last week. McTaggart said, according to Cayman News Service, that:

Cayman is a fully transparent jurisdiction and not a place where individuals or corporations are able to “hide money”.

And of course the ritual denial that Cayman is a tax haven was delivered.

I’d have hoped that after the excesses of the Travers years that a new Chair of Cayman Finance might have toned down the rhetoric, and might even have realised the folly of tilting against windmills. But apparently not. If McTaggart does not realise that there’s as much chance of his argument that Cayman is not a tax haven being accepted in the House of Commons or in the UK generally as there is of a claim from the Libyan government this morning that it is an open, liberal democracy being accepted at face value then he very clearly does not understand first of all what a tax haven is, second what the generally accepted use of the term is and thirdly what Cayman is.

Keep issuing such absurd letters of you want Cayman, but all you prove is how far removed from reality you are, and while you do that people will rightly realise that all you have to sell is a myth – the myth that tax havens firstly do something other than let people and companies avoid their obligations to society and secondly that doing so is useful, both of which are very obviously untrue.

When will you learn?

Will those who helped Mubarak stash his money in London be investigated?

Corruption 5 Responses »

Feb 202011

If, as now seems to be the case, it is recognised that Mubarak and his friends stashed their money illegally in London are those who helped them do it – the lawyers and the banks in particular – going to be investigated under money laundering legislation? Are their cases at the very least going to be investigated (I stress – I am not pre-judging things)? And if not, why not?

When will we know?

Where’s the DPP on this?

And SOCA?

Shouldn’t we know?

Shouldn’t the people of Egypt know?

Shouldn’t the rulers of other states know?

Most accountants who’re making comment are to blame for the mess we’re in

Accountancy, Barclays, Big 4, Ethics 11 Responses »

Feb 202011

Nick Cohen wrote in the Observer today:

The banks are as great a threat to our national security as a foreign enemy. We collect intelligence on hostile powers. Why should we not collect it on the hostile City?

He’s right in his analysis: the banks, and let’s be honest about this, some other parts of the financial services industry and big business, are a massive threat to our well being. What they promote is detrimental to the well-being of the vast majority of people in this country.

And yet it’s assumed they’re the innocent party. Clear evidence of this came yesterday. As I’ve noted, I gave several interviews for the BBC on Barclays’ tax. All I am asking Barclays to do is to pay their tax in accordance with the letter and spirit of UK law – something they have signed up to do but which i doubt they have done in the past. And yet the BBC were tortured in their attempts to link me to UK Uncut, or not (as is the case – as I made clear – I have sympathy but am not a member – however that might be defined). As was explained to me that’s because they had to make clear to viewers “I have opinions, but of course most accountants who come on are just commentators”.

No they’re not! Most accountants who go on air come from the big firms – and they’re the architects of the tax abuse we are witnessing and the failure to account of which we are seeking the consequences. They’re not innocent, unbiased parties. They’re profoundly political, utterly conflicted by self interest and wholly vested in maintaining the status quo.

But because I simply ask that people comply with the law as parliament intended it my position has to be explained.

Cohen is right – these people have even captured the BBC, and it’s time we reclaimed the state for the benefit of the people of this country – because right now it is being openly abused by those who really are its enemies.

Banks, their losses and why they won’t be paying tax for some time to come – at cost to the rest of us

Banking, ConDems 13 Responses »

Feb 202011

For those who want to know why banks won’t be paying corporation tax for some time to come, can I recommend a report I wrote last year for the TUC? It’s here.

As the TUC said at the time:

Despite being rescued by taxpayers during the crash, UK banks will avoid paying £19 billion of tax on future profits by offsetting their losses during the financial crisis against their tax bills. This is equivalent to more than £1,100 for every family in the UK, a TUC report says today (Monday).

The TUC report – The Corporate Tax Gap – says that as well as benefitting from an £850 billion bailout from taxpayers and the Bank of England during the recession, banks are able to offset their £19 billion [cash value] of tax losses between 2007 and 2009 against paying tax on future profits.

The report, authored by tax specialist Richard Murphy, has calculated this double subsidy from the accounts of five UK high street banks – HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS (later Lloyds Banking Group) – and HM Revenue & Customs (HMRC) data.

That’s why we’re not all in it together.

And that’s why we need to restrict the use of these losses in the future. There is no way banks should get double relief on them – once when we bailed them out because they made these losses and again in the future when they return to profitability. We could do this by simply banning their carry forward now for offset against future profits. It’s a one line new piece of law that is needed.

It’s the simplest reform to recover cash the government could make – billions in all. So why isn’t it doing it?

More moves to force companies to say where they are – which is in tax havens

Country-by-country 2 Responses »

Feb 202011

The Financial Mail is continuing its campaign on tax haven activity by major companies:

Hundreds of secret tax haven subsidiaries belonging to major companies have been revealed after Financial Mail exposed widespread failures of disclosure in Companies House filings.

Fifteen companies – including Marks & Spencer and insurance giant Legal & General – have admitted that they control a total of 568 subsidiaries in secretive locations such as the Cayman Islands and Jersey.

The details emerged after the firms resubmitted a list of their subsidiaries to Companies House. The firms acted after being contacted by Financial Mail following a complaint by charity ActionAid and after receiving letters from Companies House.

This is, of course, the continuation of work I began with the Tax Justice Network two years ago – and good for all who have taken it forward.

As the Mail reports:

A spokeswoman for Companies House confirmed that it had contacted-49 firms in the FTSE 100 to warn that failing to disclose makes directors liable for steep fines.

Miner Anglo American is revealed as having 30 offshore subsidiaries in the British Virgin Islands (BVI) – including Ambase Exploration ( Tanzania) Limited – and the same number in Luxembourg, including Anglo American Exploration Columbia Sarl. Anglo South American Investments Limited is based in Mauritius.

Retailer Burberry admits to having seven subsidiaries in Luxembourg, while technology giant Smiths Group has a subsidiary called John Crane Ireland Limited, based in the Cayman Islands.

Media giant BSkyB’s subsidiary Oddschecker (Jersey) Limited is registered in the BVI.

A further 14 companies – including British Airways, cruise giant Carnival and supermarket group Morrisons – were in the process of filing disclosure of their subsidiaries or were at least looking into the issue.

Of course, this disclosure would be a routine part of country-by-country reporting.

The case for country-by-country reporting is becoming unassailable.