Somehow, I received an email from Frances and Keith Smith who run the independent Warwick and Kenilworth bookshops and are running a petition on Change.org calling on Amazon to pay corporation tax on their £2.9 billion UK sales. Article on the campaign HERE. Corporation tax is a hot topic right now.

Somehow, I received an email from Frances and Keith Smith who run the independent Warwick and Kenilworth bookshops and are running a petition on Change.org calling on Amazon to pay corporation tax on their £2.9 billion UK sales. Article on the campaign HERE. Corporation tax is a hot topic right now.

Perhaps we need a law that requires you to pay tax in the UK on all profits from property in the UK as part of planning permission, or if you want to be based overseas you pay a levy on business rates of 500%

It's called Land Value Taxation, something I've advocated for years.

Buildings have proved remarkably difficult to offshore

First, the EU should step in here and tell any company that if they want to sell goods in the EU, they have to pay corporation tax in the EU, otherwise shove off.
Second, Fiscal Union should ensure that Ireland and Lichstenstein etc don't undercut on Corporation Tax rates (Can't see Gideon liking that though).
Third, where large scale complex tax avoidance is noted, the tax authorities should bill the companies for the amount that would have been paid if the company had no such scheme ... and then the companies can present their case for a refund rather than the officials having to unravel a string of offshore transactions to find out whether the reasons for the scheme were other than simply for tax avoidance. Or, before using the scheme, it should be put forward in clear detail with the reasons, by the company for approval by the tax authorities, with the companies paying the cost of HMRC's time and effort.

Unless you're the Duchy of Cornwall, and thus not part of the UK at all.

This.


Isn't that, on paper, the system we're supposed to have now? Yet as Private Eye keeps pointing out, no large corporation has ever been brought to book on their complex tax-dodging webs of sham arrangements. This is so, even when the dodge is blatant - like Starbucks not making a profit "because what we make we have to pay in royalties to our sister company in Holland". The mystery is not how they do it, but how the feck they are allowed to get away with it, when any person reqarding of the arrangement can see it is a blatant tax dodge. And I see the issue of whether it is "legal" as a complete red herring. The only question should be "is it effective". The resoundingly clear answer should be "NO, because although perfectly legal, it's for no reason other than to dodge tax, and so we're not having it".

You might see it as a "red herring", but the current recourse for HMRC if it believes tax is being avoided is via the tax tribunal system and ultimately the courts.

Their consideration is very much a case of "is it legal", rather than is it morally or ethically correct. As courts, that's all they can do.

The proposed "General Anti-Abuse Rule" which is going through consultation at the moment seeks to address this by looking through any transaction that HMRC considers does not match both the letter and the intent of the legislation.

How well it operates in practice is still to be seen, and quite how it will apply to existing arrangements like transfer pricing (what Starbucks does) should create lots of money for lawyers and accountants running test cases.

And I'll say again - if your business does not have a "permanent establishment" in the UK, the fact you sell products or services to UK customers is not enough on its own to render you liable to UK Corporation Tax on your profits. If the UK wants to tax these companies on the profits they make selling to UK customers, they should be prepared to lose out when UK companies make profits selling to customers in other countries and their governments want a share of the pot.

Please don't twist what I said, I obviously was referring to my view of what the position "SHOULD" be, which is why I used the word "should".

I even said it twice. I closed my remarks with:
"The resoundingly clear answer should be "NO, because although perfectly legal, it's for no reason other than to dodge tax, and so we're not having it".


Not really. While the costs in a test case might look a lot, compared with your shopping bill at Asda, they are peanuts compared with the tax take (or non-take) that any precedent would set. And i don't know why you included accountants in that - surely they are the ones already making millions out of setting up these scams and have been for many years?


Interesting but not on the point, I thought we were discussing Starbucks et al, who certainly do have such a permanent establishment, and are liable to UK corporation tax. But don't actually pay any.


You're again completely avoiding the point. Which is that it is hardly a case of any government "wanting a share of the pot" for its own sake, but of a company which is established in Britain making big profits in Britain but by means of accounting dodges paying no tax on those profits in Britain.

If you can give me an example of where the converse might apply, I'll be happy to think about it.

One question that hasn't been asked is: How come UK based idependent Starbucks franchisees can make enough profit to be subject to UK CT, HTF can't the parent (franchisor) company make similar profits?