Joined: Feb 27 2002 Posts: 18060 Location: On the road
Ferocious Aardvark wrote:Of course given a legal opportunity most people would take the not-pay-tax route. That's not the main issue. As for Cameron, sure the family may be avoiding some tax on some trust income but I was frankly surprised at the percentage of tax on "normal" earnings that the disclosed tax return show.
What I think pis.ses people off most is the scams perpetrated by multi billion pound companies (Vodafone, Starbucks, Amazon & co.) whereby they artificially wipe out profits made in the UK by dodgy agreements to pay licencing fees etc to some Luxembourg counterpart, so the latter is taxed at 1% and the UK company never pays any, or any substantial, corporation tax whatsoever.
I directly blame the government for this. I'm no tax expert but they could do for these companies exactly the same as they could do for any company or taxpayer, look at their figures, and raise an assessment. Then, the taxpayer has to pay. Within 7 days. yes, they can appeal and go through the courts if they want, but they still have to immediately pay up.
If they tok it to court, what you'd then need is a judge who agreed with HMRC that "selling" the rights to your business name for $1 and then paying a $1bn (or whatever) annual licence fee for use of name is entirely a matter for you, and perfectly legal, but it's just that it's plainly an internal transaction between group companies and so we disallow the licence fee payment as a taxable expense. Job done.
It would be a laugh to read some justification as to why any commercial company would ever enter into such risibly uneconomic arrangements, save to wipe out a tax liability, and wiping out tax liabilities doesn't cut it as a qualifying ground to qualify as a legitimate expense.
Instead, we have situations like where Harnett the ex-boss in HMRC has cosy meetings and does sweetheart deals for past and future tax dodges, not even running them past government lawyers, and so Vodafone are sorted for years with little or no tax to pay, and the government has no appetite to set the dodgy deals aside.
Hartnett btw was the guy who agreed a tax deal with HSBC that gave immunity from prosecution for any crimes they might have committed relating to tax fraud in Switzerland. And then retired from HMRC and got a job advising on honesty and standards at ... HSBC.
So how do you suggest global companies distribute legitimate central costs? Or do you suggest they don't and move their HQ to a low tax cost country?
Are you suggesting the brand has no value and the marketing expertise to exploit that brand has also no value or the whole cost should be met by the HQ. To suggest Google in the UK doesn't materially benefit from the work done in algorithm development and marketing expertise sat in Google HQ is bonkers in my view.
Your job is to say to yourself on a job interview does the hiring manager likes me or not. If you aren't a particular manager's cup of tea, you haven't failed -- you've dodged a bullet.
Joined: Feb 17 2002 Posts: 28357 Location: MACS0647-JD
Sal Paradise wrote:So how do you suggest global companies distribute legitimate central costs? Or do you suggest they don't and move their HQ to a low tax cost country?
WTF are you on about now?
The scam of selling your proprietary rights for nothing to an associated company and then paying gargantuan "licencing fees" is not what I would call a "legitimate central cost", but a device to pay tax at 1% in one country instead of 20% in another.
If you think that a global brand really makes zero profit in the UK, year after year after year, then you must be truly muddled in the head. Is that what you think? That they have their gargantuan operation over here, but for basically nothing? Can't make it pay? Really?
Sal Paradise wrote:Are you suggesting the brand has no value
No, the UK company that sells the brand to a Luxembourg company for $1 is suggesting that. Wouldn't you agree?
Let me ask you -if you had an asset that could generate (say) £500m pa in licence fees - how much would you sell it for?
Sal Paradise wrote: To suggest Google in the UK doesn't materially benefit from the work done in algorithm development and marketing expertise sat in Google HQ is bonkers in my view.
Very interesting straw man I'm sure, but nobody made any such suggestion.
Last edited by Ferocious Aardvark on stardate Jun 26, 3013 11:27 am, edited 48,562,867,458,300,023 times in total
Joined: Feb 27 2002 Posts: 18060 Location: On the road
Ferocious Aardvark wrote:WTF are you on about now?
The scam of selling your proprietary rights for nothing to an associated company and then paying gargantuan "licencing fees" is not what I would call a "legitimate central cost", but a device to pay tax at 1% in one country instead of 20% in another.
If you think that a global brand really makes zero profit in the UK, year after year after year, then you must be truly muddled in the head. Is that what you think? That they have their gargantuan operation over here, but for basically nothing? Can't make it pay? Really?
No, the UK company that sells the brand to a Luxembourg company for $1 is suggesting that. Wouldn't you agree?
Let me ask you -if you had an asset that could generate (say) £500m pa in licence fees - how much would you sell it for?
Very interesting straw man I'm sure, but nobody made any such suggestion.
I never suggested a global brand doesn't make any profit in the UK - so get that notion out of your head!!
You would admit a brand has some value - so how would you suggest the value of that brand is financially recovered by those entities that benefit from using it?
If Apple in the UK wasn't called Apple but sold the same products do you think it would be as succesful - of course it wouldn't. It is the brand and the perception of what the brand delivers that generates the revenue. So do you think the UK firm should be immune from any costs that enhance that brand globally from which they directly benefit.
Are you suggesting that all these costs should be born by the HQ. Perhaps there needs to be a new IFRS that sets out a mechanism for calculating this brand licencing e.g. sales as a % of global turnover = % of licence fee to pay.
Your job is to say to yourself on a job interview does the hiring manager likes me or not. If you aren't a particular manager's cup of tea, you haven't failed -- you've dodged a bullet.
Joined: Feb 17 2002 Posts: 28357 Location: MACS0647-JD
Sal Paradise wrote:I never suggested a global brand doesn't make any profit in the UK - so get that notion out of your head!!
No I won't, the entire point is they make MAMMOTH profits, but pay zero tax on these profits. How did that escape you?
Sal Paradise wrote:You would admit a brand has some value - so how would you suggest the value of that brand is financially recovered by those entities that benefit from using it?
Why are you harping on about brands? The point is, if your brand is so valuable, why sell it? The answer is you don't "really" sell it, you pretend to sell it, to a group company in a minimal tax jurisdiction, and artificially make all your "profits" there instead of where they are actually earned.
Sal Paradise wrote:..So do you think the UK firm should be immune from any costs that enhance that brand globally from which they directly benefit.
Look, you aren't a stupid person, so why are you trying to construct straw man after straw man? Why not instead just deal with the actual point, which is paying tax to the UK on profits made in the UK?
Sal Paradise wrote:..Are you suggesting that all these costs should be born by the HQ. Perhaps there needs to be a new IFRS that sets out a mechanism for calculating this brand licencing e.g. sales as a % of global turnover = % of licence fee to pay.
No, we all know that a company would never really give away its brand only to licence the use back at astronomical annual rates in perpetuity. If they want to do that between group members for their internal accounts - fine! It just is not or never should be a tax deductable expense. Because it is not a payment made for genuine business purposes, it's a blatant tax scam and nothing else.
Your schoolboy error is in talking about "costs". If you don't GIVE AWAY your brand then you won't have ANY licence costs. These licence costs are just artificially created and for no other reason than avoid paying tax.
Last edited by Ferocious Aardvark on stardate Jun 26, 3013 11:27 am, edited 48,562,867,458,300,023 times in total
Joined: Feb 27 2002 Posts: 18060 Location: On the road
They pay zero tax on those profits in the UK - they do pay huge amounts of tax just not here.
You are not stupid - they are not selling their brand they are licencing the use of it - is that really such a difficult concept for you to grasp?
The straw man is what constitutes profits and what actually constitutes cost. In your mind its just COGS plus expenses - if only it were so simple even for UK only companies
I ask again how is the HQ meant to recover legitimate costs relating to investment in the name/brand that the overseas subsiduary will receive benefit from? Perhaps you would find it more palatable if they included it in higher HQ recharges - it amounts to the same cost.
Your job is to say to yourself on a job interview does the hiring manager likes me or not. If you aren't a particular manager's cup of tea, you haven't failed -- you've dodged a bullet.
Joined: Feb 17 2002 Posts: 28357 Location: MACS0647-JD
Sal Paradise wrote:They pay zero tax on those profits in the UK - they do pay huge amounts of tax just not here.
You are not stupid - they are not selling their brand they are licencing the use of it - is that really such a difficult concept for you to grasp?
The straw man is what constitutes profits and what actually constitutes cost. In your mind its just COGS plus expenses - if only it were so simple even for UK only companies
I ask again how is the HQ meant to recover legitimate costs relating to investment in the name/brand that the overseas subsiduary will receive benefit from? Perhaps you would find it more palatable if they included it in higher HQ recharges - it amounts to the same cost.
You are dropping tons of mud into clear waters.
You somehow fail to grasp that owning the name rights is what an owner does. It costs them nothing. If I invent the name "Aardvark Koffee" and register it then that's it. I pay nothing ever. To anyone. It is mine. Free.
If I make loads of money, I pay tax on the profit.
I should not be allowed to wipe out that profit by artificially creating a situation where I now have huge "licence fees" to pay for what was entirely mine before I gave it away.
It is nothing at all to do with LEGITIMATE COSTS. I don't quite know what legitimate costs being called Aardvark Koffee could conceivably incur but if there were any then fine. But in the example I am using, the cost is NOT "legitimate", it is an unnecessary and artificial dodge to transfer taxable profits from where they are made to somewhere where the tax rate is minuscule.
And you think that's legitimate?
Last edited by Ferocious Aardvark on stardate Jun 26, 3013 11:27 am, edited 48,562,867,458,300,023 times in total
Ferocious Aardvark wrote:Not entirely fair. I have genuinely tried to see things from your point of view, but I can't seem to get my head that far up my arrse.
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Jamie Jones-Buchanan
"I'd never forgive myself if a child of mine was born in Lancashire"
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