The Sunday Express is the latest paper to notice the comments John Christensen, the international director the Tax Justice Network, and I have to make on tax. I apologise for the time taken to get to them on here, but I've been travelling.
Several things shocked that paper. The first was that those companies complaining most about changes in UK tax are those that are also paying little or no tax here. This is a fact only known because of research I have done, now covered by numerous papers.
Second they were surprised at how hard it is to find out how much tax a company does pay with any accuracy. They want to take that issue up and run with it.
Third, they appreciated that if the largest companies in the UK are going to pay less tax someone is going to pay more. Tax need not be a zero-sum game, but given the state of the economy right now it is in the UK. And as I pointed out, this may well be the smaller companies of the UK. Already the largest companies pay little more than 22% on average, which is a figure that is bound to fall as the headline tax rate declines. But already many small companies pay tax at higher rates than that, whilst medium sized and large privately owned UK based companies might pay at more than 30% in many cases.
As far as I am concerned, and as far as TJN is concerned, progressive taxation has as much role in the corporate sector as it does in the taxation of individuals. Capacity to pay is vital in both cases, and in the corporate sector has to be linked, at least in part, to capacity to raise capital from external sources, which multinational quoted companies have relative ease in doing but which is something smaller companies have very great difficulty in achieving, meaning any tax bias must be in favour of smaller companies.
Despite that we are now seeing the exact reverse situation developing. Now I know all the abuses of tax rules that take place in small business, and have written both about them and how to stop them. But whilst we keep our current corporation tax and company law what is not reasonable is that we have a tax system that is so clearly biased against small business and UK based companies and so clearly favours large business and the multinational enterprise.
What the Sunday Express did not point out though, but which does amaze me, is that it has taken the Tax Justice Network to draw attention to this. I would have thought that this would have been the job of the IoD, the ICAEW, the ACCA, the CBI, The British Chamber of Commerce, the Federation of Small Business and others. Don't get me wrong. We're happy to make the point, but we are surprised that these others, who are so often in print, are not saying the same thing and do not seem to be undertaking research on this issue either.
If they'd like to join with us in doing research into the effective tax rates of smaller business I would be delighted to work with them. I'm sure that this is something most of their members would appreciate. The methodology to do this exists. I've created the benchmark for comparison with the work I've done on larger companies. For the partner who would like to join with us to create some innovative and ground breaking research, perhaps in association with a medium sized form of accountants, the likelihood of excellent publicity is high.
Anyone want to give me a call? I'm keen to show that this is real issue for the companies that make up the backbone of British enterprise and that we need to get this right. Given that the future of corporation tax is on the agenda now, this is the time to do this work for the sake of smaller businesses in the UK. It's your call. We can deliver the results. Just try 01366 383500.