A complex tax avoidance scheme being used by transport group Stagecoach to wipe £11m off its tax bill has been defeated in the tax courts.
In a 56-page ruling, a judge, Gordon Reid QC, found that the scheme, devised with the help of tax experts at KPMG, fell foul of tax avoidance legislation.
The scheme involved shifting money between companies within the Stagecoach group to create a large loss in one of them without a corresponding gain in any other.
I know what will be said: this was an old scheme and so part of history because everything has changed now.
Except it wasn't: this dates from 2011 and shows that KPMG were still manufacturing tax avoidance schemes at the time.
The scheme was rightly struck down: it sought an artificial tax loss. But three questions remain.
How many more such schemes have yet to emerge?
Has KPMG stopped this practice now, and how do we know?
How can we be sure it will not happen again?
KPMG's comments would be welcome.
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KPMG:-
Keeping
Profits
Moving
Globally
Have they changed?
I see this as a redundant question.
People with money love dodgy accountants. You said as much in the Joy of Tax which I have at long last got around to reading (love it).
On one side of my family, someone works in a high profile investment bank. The staff regularly get newsletters about how to be ‘efficient’ with their tax and also helps them to access the network of so-called accountancy services that go with it.
Tax evasion and avoidance are part of British culture because (again as you point out) Tax is portrayed as evil and wrong.
I have heard of cases where a couple have separated for many years but never formally divorced and have being taxed as a couple for around 30 years – still claiming the allowance on that. And they see nothing wrong with it. Both these cases are middle class issues. But also, plenty of manual labourers offer their services with a tax free option when quoting for work.
People do not like paying tax and until the re-education you talk of takes place, I do not think there will be a change in attitudes and therefore an availability of the schemes you describe above will continue.
“I have heard of cases where a couple have separated for many years but never formally divorced and have being taxed as a couple for around 30 years — still claiming the allowance on that.”
I wonder who was advising them. We have had independent taxation since 1990. No-one was taxed ‘as a couple’ after that.
But married couples allowance still exists!!!
I understand the couple separated well before 1990 Pardeep!!
My point was that people tend to too often automatically try to get around paying taxes – it seems to be rather accepted – almost as much as having a cup of tea or any other British past-time at the moment.
Also, what of the ‘married couple’s allowance’ which is stated on the Gov.uk website which can save couples money?
My comments were aimed at that qualifying group. OK?
Meanwhile here in Sheffield, we’ve seen the biggest cuts in bus routes and fare rises since privatisation in 1986. Many bus routes are operated by Stagecoach and there has been public anger (although not enough this being the UK where, as Alan Bennett once said, a degree of timidity is seen as something of a virtue). The South Yorkshire tram/train project is also costing £58m from central government. It will be operated by Stagecoach who already receive public subsidy for running the city’s existing tram network. http://www.railwaygazette.com/news/news/europe/single-view/view/sheffield-rotherham-tram-train-service-to-start-in-2017.html
The levels of subsidy required, from a State at either local, regional or national levels which according to the religious doctrines of the holy faith of neo liberalism has no money of its own, is revealing.
Back in the 1970’s and early 80’s the ratepayers never stopped bleating like a bunch of mardy five year olds about the City Council policy of subsidising the bus fares and continue to complain about the City Council being “anti car.” Yet what passes for public transport in the city still requires not only public taxpayers subsidies but also higher and higher fares and constant cuts to routes and timetables in order to keep executives in the luxery they expect as of a right and guarantee profits. Yet another example of the parasitic rentier class entitlement attitude.
Yet despite the levels of subsidy the private sector could not deliver within the city when the Council was forced, through centrally enforced cuts and rate capping, to gift them (the private sector) it’s sports and recreation facilities. Cuts in local government finances led to reductions in subsidy and the private sector responded by shutting facilities in order to maintain its profit levels. Don valley Stadium, built for the world student games less than a quarter of a century earlier was demolished and they even tried to close a sports and pool facility down to the north of the city which did not belong to them, having been originally built with donations from the local community.
Fortunately that facility is now being run by local volunteers. So much for the slogan “sport for all.” The late Councillor Jack Watson will be spinning in his grave.
That example does not bode well for public transport as the drive to “balance the books” and achieve a surplus will inevitably result in further cuts in subsidy from both central and local government, despite the Northern Powerhouse rhetoric, which in turn will prompt the inevitable response from the private sector operators of a further spiral of price hikes and route cuts until eventually there is nothing left. No doubt leaving the same groups of ratepayers, mostly concentrated in the leafy suburbs to the South West of the city, smug, self satisfied and still moaning about anti car policies as they struggle in the inevitable traffic jams caused by their self righteous short sightedness.
I well remember the days of subsidised public transport in Sheffield. We had the biggest bus patronage of any European city; 5p for adult fares and 2p for child fares were maintained for many years. It helped keep the roads less congested than many other comparable cities and was, at its peak efficiency, reliable, cheap and extremely frequent. We were well on the way to an integrated transport system, with the new tram network in the planning stages from the mid 1970s. In fact, my parents had an argument with my grandpa who was County Engineer for South Yorkshire County Council up to 1986. He was a Tory voter at the time and argued that old argument that ‘his’ taxes shouldn’t be used to fund a service he wouldn’t use (despite getting a publicly funded salary and pension!) Just a few years into privatisation he admitted how wrong he’d been, seeing the congestion and the effect it was having on the city’s road, causing the pot hole reputation we have now. (We could now go onto the situation that Amey and SCC are causing with that, the destruction of the city’s trees and natural environment, which is gathering support across the city and, contrary to some assertions, not just in the ‘leafy’ suburbs) I believe, if the change from the city’s transport leading up to privatisation in 1986 to the situation in 2016, had happened over a short period of a year or so there would have been true outrage across the city and the UK and the situation quickly halted. Going with the long, slow torture approach (cutting back on investment in preparation for privatisation, selling privatisation as the cure for the ills of a publicly under-funded service, presenting the very afflication as the cure) ‘the free market’ relies on keeping people ignorant, scapegoating disempowered minorities, using obfuscation and distraction to keep people placid, to keep a lid on their anger. Thankfully, many people in South Yorkshire have been vocal and passionately challenging cuts and austerity, putting forward workable solutions; I myself have taken advice from Richard on the intricacies of tax avoidance when appearing on local radio and TV to talk about the issue. However, as with everywhere, one wonders when a critical mass of anger and desire for radical change will ever be achieved.
Spot on re the congestion and the state of the roads. What was once a 30 minute bus journey can now take over an hour and the daily commute in a private vehicle is a nightmare. Even on a Sunday it’s a two hour round return trip in a car from the northern suburbs to the southern ones. The tram system has helped considerably but is nowhere near as extensive as the previous system was in the 50’s and early 60’s. It urgently needs extending and new routes added if centralisation of facilites and serices is to continue its present trajectory.
What has not helped is the centralisation of everything, from recreation, health and educational facilities through to local branches of banks, utilities, council services etc. Everyday activities and transactions which were once available locally now require considerable effort in planning, travelling etc. Yet, we were told it would never ever be like this. The silicon chip would give us more leisure time than we could shake a stick at and I recall an event in Harrogate in the early 1990’s where Ian Vallance confidently informed us that the integration of telecommunications with computing would result in the work coming to us rather than us having to come to the work.
Today, the centralisation continues apace as even a city this size loses out and work and facilities are centralised regionally, requiring jobs which were once local, then subsequently moved into the city, now shifted to other cities requiring in effect two commutes each way. I spent the last two years at work sat next to a chap who had to commute in from Retford every day and moves were taking place to shift jobs to Leeds (which although only 35 miles away is more often than not an hours journey by train). The local and visible HQ building on Charter Square is now luxery student flats, as is the old depot behind the main telephone exchange and we are are only one iteration away from even more services and facilities being transferred to a single regional northern hub in either Leeds or Manchester. Leaving the periphery cities like Liverpool, Hull, Newcastle, and Sheffield or even whole regions like South Yorkshire, Merseyside, Humberside, and the North East as the equivalent of dormitory suburbs of a twin or even single northern hub suckling in jobs which require a three or four hour daily commute to and from the secondary tributory cities/regions.
Which is why the Government, despite its protestations of having no money of its own and an objective of balancing the books is ready to spend shed loads of money subsidising transport links between cities to cut the commuting time by ten or twenty minutes each way. It allows the corporate entities to centralise locations and sell off building assets, cut staff even further, and move jobs and work into one place becoming even more remote from those they claim to serve. Why else are there plans to construct a tunnel under the pennines to open up a route between Manchester and Sheffield?
We have the superfast broadband superhighway. Why do we need to shift workers even longer distances from where they live to a place of work?
Yes, I agree with all your major points. And yet. Despite Manchester and Leeds having their ‘regional’ roles foisted upon them over the last 40 years or so, due to their legacy of financial services making them an attractive location for ‘back office’ roles, infrastructure investment in the cities has been dire. (I understand that up until the 1970s, Sheffield’s industrial output accounted for over 50% of Yorkshire’s GDP; Liverpool was once the more ‘prosperous’ of the two major north west cities). This is especially true of Leeds, which has no light rail/rapid transit network, an outmoded, overcrowded rail network, a major lack of regional connectivity to Leeds/Bradford airport and chronic road congestion, making the city even more tedious to get to and travel around than Sheffield, in many people’s experience. This is the chaos of a market led approach to planning and investment. Supertram, the tram/train and the recently opened M18 link road to Doncaster/Sheffield airport give South Yorkshire a superficial sense of infrastructure modernity; however, in actuality, it feeds into the overall chaos of infrastructure in the north. This is especially evident in plans to place the HS2 station at Meadowhall. In order to achieve significant cuts to door-to-door journey times, it seems that a new, PFI funded tram link to Sheffield’s south western suburbs would be needed, negating the savings of locating the station at Meadowhall as opposed to the city centre. This of course would benefit the probable operator of the new link; tax dodging, profiteering Stagecoach.
My regular bus service was operated by a local company called Norfolk Green until they sold out to Stagecoach. Since then (less than two years ago) the standard of service has significantly declined and upward of 70 drivers have left their jobs. In this period I have travelled on buses where passengers have had to give drivers directions. I was the subject of such a succession of long delays at the back end of last year that I was able to extract some compensation from them because the situation was so obviously unacceptable (I had worked out that in the space of three days I spent over two hours waiting for delayed buses to arrive), They make huge profits by running rubbish services and then try to get out of paying their taxes on those profits.
That summarises Stagecoach pretty well