Pay up Boots

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Activists from MedAct, Unite the Union, War on Want, and Change to Win are protesting today at the Boots flagship store on Oxford Street.  These activists are drawing attention to the way that tax avoidance results in cuts to important services.  The groups sponsoring the protest point out that Boots derives a large portion of its revenue from public funds (they say 40%), while avoiding an estimated £1.2 billion in taxes over the past seven years by claiming tax relief on costs that have nothing to do with the UK business.

Interestingly, when these same groups released a report on the company’s tax avoidance last autumn, Alliance Boots did not seem to dispute the central allegation: that it had taken on billions of pounds in debt in 2007 as a part of a leveraged buyout and that it has reduced its taxable income by roughly 4 billion via liberal use of the debt interest deduction from 2007 onwards.

The groups are focusing on what that £1.2 billion could have paid for in NHS services. They’ll also be tweeting today with the hashtag #payupboots.

This protest comes on the heels of a recent letter from a coalition of stakeholders, me included (I blogged about it here), calling upon HMRC to investigate Alliance Boots’ use and possible abuse of LLPs with Cayman-based corporate members.  That letter was also the subject of a Bloomberg news story.

This is the press release for today’s protest:

Doctors Tell Boots: Tax Avoidance Hurts the NHS

  • Doctorsaction at flagship Boots store highlights the impacts of tax avoiding on NHS
  • Campaigners note more than £1.21 billion in tax avoidance by Boots parent company - enough to cover nearly three years of prescription fees for all of England
  • Health professionals and charities call for reforms that close tax avoidance loopholes.

LONDON, 11 June 2014 –Donning scrubs, white lab coats and picket signs, doctors and healthcare professionals rallied with anti-poverty activists today outside of Boots the Chemists’ flagship store to publicise how tax avoidance is sickening the NHS and risking the public’s health.

Blaming budgetary shortfalls, the Government has made swathing cuts to the NHS. Meanwhile, complex tax avoidance schemes cost HM Treasury an estimated £32 billion to £120 billion each year, a significant portion of which is attributable to avoidance of the corporation tax.[1]

Protestors claimed that the high street chemists’ parent company, Alliance Boots, has avoided at least £1.21 billion in payments to the Treasury over the past seven years, and that this missing revenue could have paid for nearly two and a half years of prescription fees for the entire British public or the starting annual salary for 85,000 NHS nurses.

At the protest, activists slapped a giant mock public health notice on the store’s exterior, warning customers that unethical, aggressive tax regimes like that at Boots are eroding the tax base and triggering increasingly deeper cuts to critical NHS services. Doctors gave passersby “prescriptions” for a restored NHS - strengthening tax laws that would make companies like Boots pay its fair share.

The rally, sponsored by MedAct, War on Want, Unite and Change to Win, coincided with a launch of a petition from healthcare providers from across the country, calling on the government to investigate Alliance Boots’ tax strategy and for greater transparency in public contracts.

“Despite receiving over 40% of its revenue from the NHS - a tax-funded institution - in the form of prescription dispensing and wholesale services, Alliance Boots has avoided paying taxes while the NHS suffers the biggest spending cuts in its existence.” the petition to H. M. Revenue and Customs reads.

For the past year, Alliance Boots’ tax avoidance has been in the spotlight. Most recently, a coalition of charities and unions that include Change to Win, MedAct, Tax Justice Network, Tax Research UK, Unite the Union and War on Want have requested that Chancellor of the Exchequer George Osborne and Her Majesty’s Revenue & Customs investigate the company’s use of limited liability partnerships with corporate members in tax havens.

“Health professionals are seeing the impact of NHS cuts daily on their patients and communities. Meanwhile Boots and many other companies are profiting from NHS contracts paid for by tax payers while not paying their full and fair share of taxes. It’s time we treat unjustifiable tax avoidance as a threat to people’s health and put an end to it,” said David McCoy, Chair of the Board, at MedAct.

“The UK Government is putting its public’s health at risk by failing to tackle Alliance Boots and other corporate tax avoiders; its proposals are a sticking plaster when major surgery is needed to tackle these parasites,” said Owen Espley, Senior Economic Justice Campaigner, at War on Want.

Nell Geiser, Associate Director of Change to Win Retail Initiatives, said “It appears Alliance Boots’ tax avoidance is spreading to America. US pharmacy chain Walgreens are reported to have been looking at how to use its takeover of Boots to move to Switzerland for tax purposes. Corporate tax avoidance is a global problem and these two global giants need to be held accountable for their part in gaming the system.”

Len McCluskey, General Secretary of Unite the Union, said: "Boots has abused the trust of the British public and needs to come clean on its tax affairs, and act more responsibly towards this country. If it doesn't, the government must make it, by closing the tax avoidance loopholes and not granting public service contracts to companies that avoid their tax liabilities. These practices must not be rewarded through the public purse."

Today’s action comes just days before UK Uncut target telecommunications giant Vodafone for its use of similar avoidance schemes.