Margaret Hodge has written about Google's tax affairs in the Observer today. After saying that the settlement made appears far too low the core of her argument is:
If trust is to be restored in the fairness of our tax system, much greater transparency is essential. We need to open companies' tax affairs to public account. HMRC always refuses to disclose the details of its tax deals with companies by hiding behind the legal obligations to keep taxpayers' affairs confidential.
That will no longer wash. When we know the assets that companies hold in every country, the revenues they earn in every country and the profits they make from those revenues, we will be able to see if the tax they pay is fair.
I don't think greater transparency will destroy or even harm capitalism, but it will help to persuade the 85% of the UK population who pay their tax through PAYE that everybody is truly equal under the tax laws.
I agree. We do need details on tax deals. And we do need country-by-country reporting.
And far from harming capitalism it will boost it. Anyone who knows anything about economics knows that information is the key to successful markets. We are being denied the information needed to make markets work. And that is undermining trust. Restoring trust is vital. Transparency is vital if we are to do so.
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Could someone please update me as to how much Corporation Tax, George Osborne’s family wallpaper company has paid since 2010?
According to the Grauniad none in the last 7 years:
http://www.theguardian.com/politics/2015/nov/02/pale-chancellor-george-osborne-afraid-expenses-scandal-budget
Private Eye 30 Oct -12 Nov 2015 gave more detail:
Osborne & Little reported pre-tax profit of £722,000 on a turnover of £34 million and incurred a corporation tax charge of £179,000. But the accounts for the year to March 2015 showed it ended up paying precisely zero ‘United Kingdom corporation tax” as the company was able to claim for “timing differences” from previous years that offset the £179,000. In fact Osborne & Little has not had to pay any UK corporation tax for the last SEVEN years as it has claimed for “capital allowances”, “adjustments in respect of previous years” and historic losses – even as the company generated a total of over £200m in sales between April 2008 and March 2015.
Osborne & Little actually received a corporation tax credit of £12,000 in the year to March 2010, and the last time it handed over any corporation tax was for the year ending March 2008.
Nevertheless the unnamed highest paid director (almost certainly Osborne’s baronet father) got an inflation busting 18% pay rise to £684,000 just a year ago despite a flat financial performance.
Hope that helps.
No it doesn’t help. I assume you understand that if you extract profit from a company via salary at 684k the employee gets taxed via income tax and it obviously reduces corporation tax liability?
If revenue authorities are resourced adequately to deal with these issues, and have legislative support to look through these artificail structures, then something will be achieved. Until then, the best that can be hoped for is tinkering around the edges.
Over the past few days the Chancellor has stressed the importance of confidentiality to the tax system.
Now I can see that a case can be argued for individuals and private companies but for public companies and multinationals?
The exponential growth of derivatives, dark pools and high frequency trading, the gains or losses from which are then spread across numerous jurisdictions, renders accounts incomprehensible and therefore beyond accurate audit. Accounting has become estimating, levels of materiality are such that guesswork predominates.
A member of the Treasury Select Committee, Mark Garnier, says Google’s taxation issues are complex, the implication being that complexity is a mitigating factor.
I would have thought that transparency of tax requires transparency of accounting assumptions.
Luckily we now have the previous CEO of the British Bankers Association chairing the Office for Tax Simplification
That last appointment says a great deal