{"id":19054,"date":"2013-01-29T09:08:37","date_gmt":"2013-01-29T09:08:37","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=19054"},"modified":"2013-01-29T09:08:37","modified_gmt":"2013-01-29T09:08:37","slug":"if-companies-cannot-pay-tax-then-nor-can-they-make-profit-which-means-that-every-audit-report-ever-issued-is-wrong","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2013\/01\/29\/if-companies-cannot-pay-tax-then-nor-can-they-make-profit-which-means-that-every-audit-report-ever-issued-is-wrong\/","title":{"rendered":"If companies cannot pay tax then nor can they make profit, which means that every audit report ever issued is wrong"},"content":{"rendered":"

I gave evidence before the\u00a0House\u00a0of\u00a0Lords\u00a0last week on the Finance Bill 2013 and the\u00a0General Anti-Abuse Rule in\u00a0particular. A transcript is here<\/a>.<\/p>\n

Let's leave that\u00a0particular\u00a0issue aside for a moment and\u00a0note\u00a0instead that Bill Dodwell of Deloitte and\u00a0the Chartered Institute of Tax made the claim:<\/p>\n

There is one of the challenges: companies do not pay tax<\/p><\/blockquote>\n

This is one of the\u00a0regular\u00a0claims of those who love\u00a0corporate\u00a0tax\u00a0dodging: if they can say companies don't pay tax then they can, of course, claim they can't dodge tax. It's a terribly\u00a0convenient\u00a0idea\u00a0much beloved of the political right and the\u00a0Oxford Centre for the non-Taxation of Business. The essence of the argument is that since companies are just a pile of\u00a0legal\u00a0contracts\u00a0between people they don't really exist as such and only really people can pay tax for them.<\/p>\n

Oddly the claim seems\u00a0only\u00a0to ever relate to tax paid. But let me re-present the argument, first like this:<\/p>\n

Companies do not make profits<\/p><\/blockquote>\n

Isn't that obvious Bill? If companies can't pay tax then surely they can't make profits, can they? In which case all that reporting\u00a0suggesting\u00a0they do make\u00a0profit\u00a0is just wrong - and every single audit report Deloitte has ever signed off saying that accounts showing profits made are true and fair is also\u00a0straightforwardly\u00a0fraudulent since according to the argument that companies can't pay tax never once was the profit made by a company. I hope Dodwell now has the decency to say so.<\/p>\n

Let's try another reformulation:<\/p>\n

Because companies can't pay tax they should be taxed as if they're individuals under income tax rules at income tax rates on their worldwide income just like all other natural people<\/p><\/blockquote>\n

Now that, I think, works nicely. A UK company pays UK income tax rates now at standard tax rates of 50% and\u00a0shortly\u00a0to be 45% on their worldwide income wherever arising and whether remitted or not to the UK and let's stop all of this nonsense about territorial taxes, remittances, and so on for companies. Let's create a\u00a0level\u00a0playing field. That should give Bill Dodwell something to think about.<\/p>\n

Alternatively he and others who claim companies can't pay tax might like trying to tell the truth, which is that they can, they do, and if they don't the burden is shifted onto others.<\/p>\n","protected":false},"excerpt":{"rendered":"

I gave evidence before the\u00a0House\u00a0of\u00a0Lords\u00a0last week on the Finance Bill 2013 and the\u00a0General Anti-Abuse Rule in\u00a0particular. A transcript is here. Let’s leave that\u00a0particular\u00a0issue aside for
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