It seems a popular sport on the BBC these days to go after successful multinationals who use every legal trick to minimise the tax they pay here in the UK. Demonising the likes of Starbucks and Amazon has been an enthusiastic activity for the Broadcasting House comrades. The game is moving on however and now it is time to go after the “Big 4” Accounting firms who provide the financial advise to these multinationals and are thus “implicit” in the tax avoidance activity that so worries the political left and its broadcasting arm. So, I listened to the 7.39am item on Today when this was discussed and no less august a figure that Margaret Hodge was brought on to pronounce on these matters, effectively threatening the large Accountancy houses with the loss of government contracts if they do not stop helping large corporations. I guess Hodge does understand a few things financial, given her £1.8m shareholding in Stemcor and her lavish use of taxpayers money to fund her expenses. Such details are irrelevant to the BBC, it seems, as it does everything possible to present this harridan as the very model of financial probity.
TAXING TIMES…
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I wonder how much UK tax Jeremy Vine’s poster girl Bea Campbell pays from her French domicile as she witters away weekly in her ‘right-on’ Northern accent about the ‘poor’ Brits being screwed by, (believe it or not), an unformed, just ripe for termination, (it’s Kate’s right), Royal baby.
Was this the gormless twatess on yesterday about poverty (when William and Kate’s child is born 1 in 4 will be in poverty blah blah blah)? She sounded like the archetypal bland, drear, clueless but politics-of-envy spouting hag.
That’s our Bea!
Never heard of this woman, so I had a look at her Wikipedia entry – unbelievable – she should be in jail or, more likely, mental institution!
I think people need to be told how much Vodaphone, Starbucks etc pay. I mean what they really pay: the MILLIONS and MILLIONS in taxes. They are doing NOTHING ILLEGAL so WTF is the problem? The millions in National Insurance, in general business taxes, rent and rates.
And Hodge has now been outed in nearly ALL media so to continue to bring up her personal attachment to immoral ‘tax dodgers’ is insane (or simply BBC). (imagine if Hodge was Theresa May or similar, do you think the detail of family company tax avoidance would go unmentioned?
should of course read: so to continue to NOT bring up
Seems that when it was mentioned the one time, she told them to STFU, which they dutifully did.
http://order-order.com/2012/12/03/bring-it-on-hodge/
Just as the tax-avoiders of Broadcasting House have been told to STFU about Harold Wilson’s invention of corporate tax allowances.
Whilst these multinationals employ accountants to ensure that tax returns are “by the book” the way they operate is very often illegal in most countries.
Having seen the way some multinationals operate in other parts of the World they use a system called transfer pricing to ensure no profit is made in the host country. The way the game is played is that the company sites its Head Office in a tax haven. When doing business with the UK, for instance, the goods sold in the UK are sold to the UK operation at the same price they are selling the item at therefore it appears they make no profit.
How this works the item is bought in say China at £1. The item is shipped to the UK operation and the UK operation is billed £10 for the item by Head Office located in the tax haven. The item is sold by the UK operation at £10. Effectively a paper transfer of profits to reduce tax liability in the host country which is illegal.
Yes, I am sure this is true but what you must remember is that Amazon et al do not pay any tax – their customers do – so they are avoiding tax on behalf of their customers and I am quite happy with that. If Amazon’s tax bill were to increase, it would be their customers that pay the increase. It would not come from the retailer’s margins which would be increased to cover the tax liability. More indirect taxation on the hard done by man in the street.
Of course, the dimwitted voter is fed the narrative that this missing tax money will be used to wipe the smug grin from some bowler hatted, pin striped suit wearing, champagne quaffing, city toff – whereas the reality is that we, the great unwashed will, as usual, be the only ones to suffer.
By using transfer pricing these multinationals are evading tax on profits they are making in the UK.
They prefer the option of paying a lower tax rate on profits MADE IN THE UK in the tax haven in which their Head Office is registered. Any taxation on profits made in the UK is derived by the tax haven.
One must also consider that the power of multinationals suppresses competition by local traders.
No taxation without representation. Amazon and Starbucks can not vote. Why should they pay any tax at all, apart from the fact the thieves we call The Government want it.
All tax should be personal – no excise duty or VAT social engineering – and MP’s held to account for how it is being spent. Something called democracy and freedom to live as you please within the law.
The current media frenzy about tax is stealth anti-capitalism and Occupy tosh beloved of the BBC’s armchair Socialists
You really don’t know what you are talking about. One of the biggest areas of a tax audit is tranfer pricing. Any multinational client of a Big 4 accounting firm always makes sure there is adequate profit in a country in which they sell products or provide services. The tax athorities in the UK, US, Japan, etc are not innocent babes in the woods. They are very aggressive in tormenting the taxpayer (i.e., the entities that actually generate the wealth of a society) and causing a dead weight loss to the economy. Do you have any evidence of your assertion of a corporation evading tax or is this just an excuse for your own failings?
How is that illegal? The item is bought in China and sold to a UK concern at its market value of £10. If that isn’t its market value, you have a related party transaction for which actual market value can be substituted and HMRC get their whack of tax.
It’s always open to the government to get a share of tax, either by negotiating with the Chinese government or by imposing tariffs (and risking a trade war). Welcome to the world of international trade where companies will site their operations where they can pay the least tax. It’s a balancing act for any government which I’ve yet to see explained on the BBC who consider Margaret Hodge a suitable person to pontificate on the matter.
Its illegal because the acquisition cost declared to accounting is false. The goods are acquired by the same entity but the real acquisition cost is hidden.
The parent company says send the invoice to me at my Head Office and then it generates a false invoice of cost. The gross profit of the business is falsely declared.
I’m not quite sure if you’re saying it’s illegal in the UK or the “tax haven” (definition?) involved. If the former is there a good reason why we can’t use the tax authorities and the police to investigate and prosecute it? If the people charged with such a duty can’t be bothered to pursue illegal activities why put the blame on the accountants?
Therein lies the beauty of multinationals. The original paperwork lies outside the jurisdiction of the authorities.
Many commentators have said that the laws need changing to close these loop holes to prevent what is effectively immoral behaviour.
TigerOC, you say it is immoral, others do not consider it so. Just because you, or others, make a claim it is immoral does not make it so, it is simply a personal opinion.
I would say it is more “morally dubious and questionable”
…”the laws need changing to close these loop holes…”
There is nothing “immoral” about obeying the law as stated. If someone then chooses to change the law, then the goal posts move, and that is another thing, but your accusation of “immorality” is frankly HUOA (head up own a**se)
Were you at the “Tax Justice” demo today? Sounds like your bag.
I heard the 7.40 piece and the 8.30 piece and both were absolutely ludicrous. Expecting accountants to abide by a Hodge-prescribed general principle of “morality” to make up the deficiencies of parliamentary drafting in tax legislation and the consequences of international tax treaties will only end in tears, and probably quite expensive tears. The answer is that if these companies are doing something legal which is deemed morally unacceptable there is one and only one solution – make the unacceptable activity illegal. Of course the truth that Hodge & Co don’t face up to is that because of the international tax agreements they have blithely signed up to that’s not so easy, so the boo-boy accountants become the scapegoats for the politicians who are too lazy or too cowardly to do what is needed to change the law to say what they apparently would like it to say.
Of course, the net result of this bollocks is that the companies with no need to be physically located in the UK will take the bricks, mortar and jobs of their business to somewhere more friendly. Net result, no tax paid at all in the UK, no employees, no PAYE, no national insurance, no related jobs (site maintenance, shipping etc), no employees spending their wages locally and, finally, a whopping unemployment benefits bill.
Well done BBC and Hodge! Triple Lattes all round!
Hodge and the BBC also fail to address the fact that it was Gordon Brown who created many of the loopholes that the BBC are now complaining about.
The Today piece after 830 was good, balanced and illuminating. An avoidance antipathetic dude and a more sympathetic tax adviser dame.
The BBC’s war on legal tax avoidance steps up a notch as two slots were given over to this topic on Today this morning. First Andrew Hosken – for the BBC – gave a highly contentious “report” on tax havens from a script which was probably written by Richard Murphy a notorious propagandist for the notion that paying more tax than you’re legally obliged to is OK since all wealth/income belongs to the state anyway. Later Murphy himself was brought on to confirm – unchallenged – his Mussoliniesque view of life: “all within the state, nothing outside the state, nothing against the state”.
Why weren’t we told by Evan on Today this morning that Richard Murphy’s (sorry, that’s “Richard” to Evan) Tax “Justice” Network is purely a pressure group (a la Greenpeace) and “Richard” is a paid adviser to, among other organisations, the TUC? Also, why does the BBC fail to confront “Richard” with Tim Worstall (who made mincemeat out of Margaret Hodge – the MP for Stemcor – on SKY)? Worstall regularly – daily even – on his website debunks “Richard’s” faulty reasoning and policy recommendations. Worstall is prevented from taking the war to the enemy because “Richard” – as the reason denier that he is and in common with the CAGW crowd – steadfastly refuses to allow any commenters on his blog who might contradict his words of counter-wisdom.
Instead, Today following its usual custom (as it did in the recent discussion involving for instance Lord Myners – a Labour peer), opposes an hysterical anti-rule of law propagandist with a tax expert (ie a mechanic) rather than someone who is prepared to give as good as he gets. Mind you, someone of Worstall’s standing might point out that the advocate for the BBC view (to the effect that all private wealth/income belongs to the state) is a propagandist and hypocrite.
Setting a propagandist against an expert is not impartiality just because they disagree. Although Mary Monfries, head of tax at PwC gave a good account of herself, what occurred was that “Richard” made the case and Evan (for the BBC m’lud) found accountants in general and those who take their advice guilty as charged and requested a plea in mitigation. This was not an interview or even a discussion, it was the enabling of hysteria. Of course the approved theme was lefty statist hysteria; we (or, rather the BBC) wouldn’t want those who see a danger to the rule of law in this demonisation of legal behaviour to be given a similar pulpit, let alone a hearing.
‘Why weren’t we told by Evan on Today this morning that Richard Murphy’s (sorry, that’s “Richard” to Evan) Tax “Justice” Network is purely a pressure group
Not the old ‘pointing out facts like editorial by omission’?
Careful now, Prole will be sifting through old copies of New Statesman to ‘prove’ via ‘blowing herrings out of water’ this is not valid blog thread behaviour by Lord Jim’s rules.
Though they may stall a tad when such as the good Col. arrive with less vague evidence.
Not the Hodge red herring yet again. Private Eye blew this out of the water last edition.
Every country in Europe is demanding these companies pay their way. It is not bias but utter truth that they are not paying tax while Brit companies are.
Try harder.
Private Eye relies (for example on Vodafone) on a former tax collector who admits to having plucked the £6bn number out of the air, said number having been repeatedly pointed out to be balls.
Looking at Starbucks’ corporate accounts, they paid more than 30% tax last year. Amazon pays little to no tax because its net margin is somewhere around 0.5% of turnover and it has enormous losses built up developing the business. The latest one quoted on the Beeb last night, Tui, is just ludicrous; the company went bust and restructured a couple of years ago and has very large cary-forward losses, reducing it’s *taxable* profit to zero. Every company in the UK gets similar allowances, it’s one of the exchanges the state knowingly makes to allow businesses to start and grow. If you make a loss you get to offset that against future profit (subject to limits) so that it’s only once the costs are repaid that you start paying tax on the profit.
For the benefit of those of us who think that Private Eye has gone down the drain (and therefore don’t buy it), maybe you could present some evidence as to why Hodge’s family firm’s tax affairs don’t make her hypercritical?
Stemcor is a British Company is it not? I believe that it has “minimised” its tax liability somewhat. Vodafone, British?
No company, British or otherwise, pays more tax than it is legally obliged to do. It would be in breach of its legal duty to shareholders if it did.
“No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.”
Lord Clyde, Ayrshire Pullman Motor Services and Ritchie v. IRC (1929) 14 TC 754
“Now of course I am minimising my tax … and if anybody in this country doesn’t minimise their tax, they want their heads read.”
Kerry Packer, Australian media tycoon
“Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.
Baron Tomlin, in the UK House of Lords case, IRC v. Duke of Westminster (1936) 19 TC 490, [1936] AC 1
It is up to the Government to alter the tax laws to prevent eg transfer pricing that is deliberately structured to avoid tax. Until that is done, it is wrong of the BBC to imply that various corporations are acting illegally.
With Vodafone – the real fraud was right at the beginning. Vodafone “won” the original licence to compete against BT in mobile telephony – even though they had failed to put in a compliant bid. Their bid amounted to about 10 pages. The bids by others (eg Ferranti, Cable and Wireless) ran to umpteen volumes of detailed plans, as prescribed by the invitation to bid. But Vodafone suited the purposes of the then Minister – arch-smoothie Kenneth Baker, so they were given the licence.
THAT is the real corruption.
Unfortunately (and I mean that) Private Eye no longer blows anything. I am presuming that somebody has an awful lot of dirt (compromising photos/situations?) on Hislop as of late he has been markedly ‘down’ and certainly an emasculated form of his former self.
Hislop gets a lot of exposure on BBC on HIGNFY and the relatively frequent documentaries. At the same time Private Eye‘s obsessions appear to mirror those of the BBC. In PE although greenies get an occasional going over, the general corruption of science (as in “climate science”) is generally ignored; in the MidEast – and also rather nearer home – the Jews are always the guilty party; immigration? fairly often a limp story about corruption in “New British”-controlled local authorities surfaces. But, all-in-all, PE isn’t exactly making the world unsafe for the political class and its pets is it?
Hislop displays most of the characteristics of a member in good standing of that class, the margins of which Private Eye has an occasional go at. Oddly though, in seeking to wound (for commercial purposes) PE causes little real damage. PE’s crusade against Vodaphone (which has morphed seamlessly at the BBC into a highly satisfying crusade against multinational capitalism) was based on crap info from a worthless mock-whistle blower.
Hislop is encouraged to drone on HIGNFY about the wickedness of tax avoidance, but it’s the usual BBC set-up. Nobody is invited on HIGNFY who might be prepared (or, if prepared, allowed) to show up Hislop’s skewed “humour” for the statist propaganda that it is. Hislop might not be the typical lefty indulged/recruited by the BBC (cf David Preiser’s expose of the “impartiality” of BBC employees as expressed through their tweets) but he might as well be, because he plays the same game and advances the same cause.
The hypocrisy here is not Stemcor’s – Lady Hodge’s family company – minimising its corporation tax, it’s connected with Lady Hodge being the beneficiary of a trust set up by her father. One of the results of setting up this trust was that a (probably) substantial amount of inheritance tax/estate duty was – perfectly legally – avoided by the settlor of the trust and Lady H is enjoying the fruits of such avoidance of tax.
AFAIAA no-one from the BBC has asked her whether or not such avoidance (from which she personally continues to benefit) is “moral”. Indeed, AFAIAA no-one from the BBC has mentioned her trust beneficiary status when she, at (over)frequent intervals is invited to preach into a BBC microphone to bleat her party’s line on the morality of minimising tax bills.
Why isn’t Lady H asked by a BBC interviewer why she doesn’t return the inheritance and other tax (legally) avoided by the operation of the trust from which she benefits? It’s highly probable that no-one at the BBC has the effrontery to ask Lady H such a question: it might damage the “cause” – it would certainly damage the questioner’s career.
What’s the betting that the upshot of all this tax hoo-ha is the Europe wide harmonisation of taxation?
BBC mantra number one and a half
All wealth belongs to the State.
All the fruits of a man’s labour belong to the State.
The State is God
Praise the State.Taxation does not exist.
All belongs to the State.
“By shaming Starbucks into paying its taxes, UK Uncut is fighting on the side of capitalism.”
By Ed West.
http://blogs.telegraph.co.uk/news/edwest/100192715/by-shaming-starbucks-into-paying-its-taxes-uk-uncut-is-fighting-on-the-side-of-capitalism/
Margaret Hodge is vying for first place ahead of Harman (all female short lists except when my husband is being parachuted into a safe Labour seat!) for two-faced hypocrite of the year. Not only is she a shareholder in her family’s well-known tax avoidance deals, but today she was wittering on about the Big Four accountancy firms and how they must be distanced from government deals because of tax avoidance advice they have given to the businesses currently incurring the wrath of Labour and the Guardian.
This will be the same Labour party that according to the annual report of Price Waterhouse was given 2662 free hours of ‘’technical support’’ (oh right!)
This comes about by ‘employing unpaid Interns’’ from the major accountancy firms who give lots of free helpful advice; they clearly do this purely altruistically and not to get close to and influence MPs.
PwC is a major player in tax avoidance schemes.
My point is, that the BBC interviewer should have been aware of this and raised the matter and hammered it home.
All any of the researchers needed to do was read Private Eye issue 132 Sept 2012.
I expect better from the BBC, the researchers and editor who probably blocked raising this matter should be sacked; and if they didn’t know they should still be sacked.
‘I expect better from the BBC’
I don’t.
And Hodge smeared some lad from one of her childrens homes in Islington who complained about his being abused.
Lessons were learned-she`s got out of Saviles line of hypocrisy, and has now moved into the current spotlight that will show her to be “moral”.
Thought we were all meant to be amoral Madge…you know …”inclusive”, non-judgemental” and “tolerant”..
so next time Hattie or Dodgy Hodgy play “the moral card”, think of husbands getting on all women shortlists, think of Press Releases for the Paedophile Exchange …and think of abused kids being “disbelieved” by her lot at Islington Council…and of course all those yummy Trust Funds so beloved of Labour Lefties like Milibands, Benns and the Hodges…and her husband a top judge too…very cosy!
I’m waiting for the BBC to point out that these mechanisms used to legally reduce tax liability were granted by the politicians who were either incompetent or understood very well what they had done when they passed tax legislation. I’m waiting, waiting, waiting……
I do so love the fuss over some companies, meaning the multi-nationals so despised by socialist haters of any successful business, working within the tax laws to only pay the amount of tax they are forced to pay. The terms avoidance, which is perfectly legal, with evasion darkly hinted at to make it sound terrible, criminal and illegal, amuse me greatly.
Yesterday I, most immorally, evaded having to pay a fine for breaking a speed limit by driving at 29.99 MPH in a 30 MPH zone. I then, again behaving most immorally and despicably evaded having to pay a fine for depositing litter by placing the said litter in a nearby Litter Bin.
The number of people, and I have no doubt the bBBC will join them, who decried my shocking avoidance of paying a monetary penalty by not deliberately handing money to the Government I was not obliged to, was quite amazing. It seems my shocking behaviour has sentenced several poor starving children in the third world to years of starvation and suffering due to my depriving the Government of the fines I didn’t have to pay.
It seems the consensus was that I should pay the fines even though I have nothing illegal and the law allows me not to pay them because I have done nothing I should not have done. Oh, and I don’t feel in the least bit immoral for not having paid money to the Government I was not obliged to pay because I acted within the law.
What I wonder is just how many of those busily complaining about companies paying the minimum amount of tax they legally can are volunteering to pay more tax themselves than they are obliged to pay or are deliberately not claiming all the benefits they know they are legally allowed to? Perhaps they should take a good look at their own behaviour and attitudes before the pontificate about the behaviour of others.
I find this whole issue really annoying. Under EU law, a company can post returns in any European country it chooses. So these countries are simply obeying EU law. If I could legally submit my personal tax return in Monaco, I would, it is common sense.
Yet no publications are mentioning that it is our membership of the EU that enables / encourages these anomalies, and Starbucks / Amazon / Google / Microsoft etc. are completely law abiding corporations with a duty to their shareholders to minimise their tax returns, and absolutely no obligation to anyone to maximise the tax they pay.
You mean to say that the bBC has not been shouting aloud the tax avoiding actions of the Guardian, whatever next!!!!