For those who want to see what was said yesterday the hearing is available on line, here.
Andrew Tyrie called it The Richard Murphy Show.
I, of course, beg to differ.
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Hi,
I was interested to watch this hearing but the government has selected a rather obscure american video player for it’s website that for the life of me I’m unable to get to work,
is anyone else finding themselves stuck on endless buffering?
It is exceptionally ignoring
No idea why they do this
I’m sure they choose an obscure player on purpose to be honest.
I wonder why they chose the Thatcher room for this hearing?
Surely that’s exactly the right place for the Richard Murphy show?!
And a good show at that – clarity of thought delivered cogently and coherently. And even managing to touch on the social purpose of tax!
Thanks
You did come across as a bit self-promoting.
On a number of occasions you didn’t answer Andrew Tyrie’s questions and he appeared irritated by it. You do the same to me. You can do what you like on your own blog, but I don’t think it was a habit to take into that room.
I haven’t seen it all – got up to Helen Goodman’s questions, will try to watch the rest tonight.
Andrew Tyrie seemed unable to understand that I had answered his question time and again but not in the way he wanted
I refused to change my answer
That was his problem, not mine
Well done Richard, I have just watched the first 30 minutes
As an aside I do so hope that you and Andrew Tyrie will have more to do with each other, especially in his announced intention to pursue the FCA in its lapse dealings of audit firms, HBOS. And I sincerely hope that this pairing will encompass our own institute’s (ICAEW) failure to discipline with the actual audit firms that perpetrate most of the inadequate audit work, namely the large audit firms. Bearing in the sway that these large audit firms have over the ICAEW, I would argue that this is the main reasons these delinquent large firms have not been appropriately disciplined by the ICAEW.
Anyway back to the first 30 minutes, I agree with most of what said but I take issue in expecting multi-national companies to abide by the spirit of the law rather than the letter of the law. You cannot expect the management of these companies, who are accountable to their shareholders, to abide by the spirit if by so doing it results in a higher tax bill than would otherwise occur simply by following the letter of the law. Unless a clear commercial case can be made for carrying out the spirit of the law, along the only lines that shareholders would accept (profit maximisation), namely by so doing, perhaps because of public approval additional profits would be generated which would outweigh the extra tax liability ( being the difference between the “spirit of the law” liability and the “letter of the law” liability. This would be the only exception, in all other cases, where the management by following the spirit rather than the letter of the law incurred a greater tax liability with no offsetting benefit, the shareholders would have a case for suing the company and requesting a change in its management.
It must be the responsibility of parliament as the law makers to ensure that tax law us fit for purpose.
Clearly tax law is not fit for purpose as it allows your 3% (by number but significantly more by value) to transfer price their profits away to the lowest tax regime.
I used to work for Ford Europe, and they would choose where to base their manaufacturing in Europe taking in to account wage rates, union strength, incentives provided by the host country in the form of grants, soft loans, etc and tax rates. Ford would naturally seek the country that provided the lowest cost base.
Why would Ford and other multi-nationals do anything other than seek the lowest tax base or structure, whilst always abiding by the tax laws of each individual country forming part of this base or structure?
Because of the reputational risk abuse gives rise to
Wally I found your comments interesting and thoughtful, mostly because like me you have worked within large multinationals and so have some insight into such shareholder and director logic.
There was something troubling me last night when I read your words and it niggled away at me this morning too. It was almost insignificant at first but then it hit me.
You said “I used to work for Ford Europe, and they would choose where to base their manaufacturing in Europe taking in to account wage rates, union strength, incentives provided by the host country in the form of grants, soft loans, etc and tax rates. Ford would naturally seek the country that provided the lowest cost base.”
What bugged me and I feel I need to challenge is the word “naturally”. In my experience there is nothing natural about the way multinational business logic works. It is systemic, it is logical, it is financial, it is legal, it is accountingly and taxingly correct – but it is not natural.
That was in the end one of the main reasons for me exiting multinational life after 10 years in 3 different organisations – none of them in my view were the least bit natural or conducive to a sustainable humane peaceful world (let alone any form of normal family life!).
They increasingly struck me as the civilian equivalents of the armed forces, top down hierarchical order driven dictatorial organisations – waging economic and financial warfare on behalf of their rapacious institutional owners who are the modern day hereditary royal families of international finance.
Until you get inside these beasts it is hard to see beyond their benign and enticing brands and external PR nonsense.
Seemed like a lot of the committee had a big problem with comprehending transfer pricing/ip/royalty etc – particularly Jacob Rees Mogg and Chris Philp
1) they don’t have any viable alternative way to incorporate it/account for it.
2) they seemed to be operating with the assumption that is somehow ‘unfair’ to tax profits at the normal rate if IP/royalty arises from investment/R&D elsewhere and that the company should get some sort of benefit in for developing the IP.
Surely it totally misunderstands the situation: the benefit companies get from investment (eg. google in their algorithm) is that it allows them to make high profits in the UK and that they are free to repatriate those profits to head office/shareholders once corporation tax has been paid.
Agreed
They struggled with my idea that IP has value only because a customer uses it
That’s not that hard, us it?
As expected, Google are rolling out Matt Brittin again to fend off the embarrassing (but probably not too relevant) questions from the PAC. I’ve no doubt he’s a bright lad and handles the pressure well, but he’s not the CFO or CEO who should be in the hot seat to tell the truth and not repeat the PR myth.
http://www.theguardian.com/technology/2016/feb/07/google-ireland-staff-paid-less-than-half-their-london-colleagues