[Justin King,] the head of Sainsbury's, has lambasted fellow business leaders for failing to treat tax avoidance as a moral issue and for leadership failures that have led to a collapse in trust with the public.
Maybe he'd like to explain why it has three Cayman Island subsidiaries and a Jersey protected cell company plus Hong Kong subsidiaries and an Isle of Man insurance company.
He may also like to explain why it does not do country-by-country reporting and has such a low effective current tax rate, averaging just 16% over 6 years when the average tax rate was 28.4%.
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The Hong Kong entity is an operating subsidiary – what is wrong with that? Are you suggesting they don’t source goods from Hong Kong and Asia?
Report its profit then on a country-by-country reporting basis
Then we can see if profit is shifted or not
And don’t also then claim Sainsbury does not trade outside the UK when this proves it clearly is
That’s what King does claim, and he’s wrong
Sainsbury’s using Jersey to avoid tax, yet they won’t open a bloody super-market here! Typical.
Well if the insurance company is a captive insurance company it’ll be caught by the CFC rules – Whether the IOM company is that or something else is unclear. It is possible the Jersey company is a captive too. But it’s not clear if one, other or both could be supplying Sainsbury’s insurance to punters like you and me and as per the leaflets at the checkouts selling Siansbury’s pet, travel, house etc. insurance.
Incidentally, with captives the motive for setting up outside the UK (if you’re a UK based group) is never tax because you are always caught under the UK CFC rules. The motive is simply around insurance regulations – You don’t want to have to comply with the raft of rules and regs that apply to a UK company for an internal captive insuirance arrangement – hence the use of the Channels Islands or more exotic places like Bermuda – But Channel Islands are easier to get to so somewhat better for a UK based group. The down side of Channel Islands is flight delays when you want to visit (e.g. for board meetings, insurance updates from local brokers etc.) becasue of fog.
I agree re offshore insurance and CFCs
I still call it regulatory abuse