Government enlists fashion chain billionaire to head team of officials in Cabinet Office and Treasury carrying out audit ...

Green ... will head a team of officials in the Cabinet Office and Treasury looking at the last three years of spending to identify inefficiencies and savings.

In particular, he will look at whether leases and contracts entered into in 2007 were good value.

Green will report to the minister for the Cabinet Office, Francis Maude, and chief secretary to the Treasury, Danny Alexander, before the end of the spending review.

The review winds up on 20 October and will set out cuts of 25% to 40% in Whitehall departments that are not ringfenced.

The coalition moved quickly within days of taking office to commit to making immediate savings of £6.2bn this year, but the appointment could cause some discomfort within the financial echelons of government.

Vince Cable, now the business, innovation and skills secretary, vehemently criticised Green's appointment to advise the previous Labour government on account of his tax status ...

Guardian  12 Aug 2010    Corporate State Britain    Wealth Log

Why are deficit-cutters so afraid to talk about tax?

Because the rich would take a bigger hit. There should be a third tax band for those 'earning' over £250k: 80 per cent. Premier League footballers would then start to pay a fairer share, along with greedy banksters.

'I like paying taxes," the US supreme court Justice Oliver Wendell Holmes once remarked, "with them I buy civilisation." ...

... as the TUC's Duncan Weldon has pointed out, the UK's Office for Budget Responsibility, the non-partisan US Congressional Budget Office and the International Monetary Fund all estimate that "cuts in government spending have a higher [fiscal] multiplier than increases in taxation".

Thus, cutting spending has a much bigger, more negative impact on GDP growth than raising taxes.

Is it any wonder, then, that previous chancellors who tried to cut the deficit, including Tories such as Norman Lamont and Kenneth Clarke, relied on a 50:50 ratio between spending cuts and tax rises, rather than the growth-choking 77:23 ratio adopted by George Osborne?

Second, the fact is that, compared with our continental cousins, Britain is a relatively low-taxed nation.

Take total tax revenue as a percentage of GDP: OECD figures for 2010 confirm that the UK (at 35%) remained below Germany (36.3%), France (42.9%) and Italy (43%) – and at almost the exact same level as in 1990, when Margaret Thatcher left office ...

... poll after poll shows overwhelming public support for a tax on bankers' bonuses; a mansion tax on multimillion-pound properties; a windfall levy on the oil and utility companies; a Robin Hood tax on financial transactions; and a one-off wealth tax of 20% on the richest 10% of households (which would raise a whopping £800bn and, according to YouGov, is backed by three out of four voters).

Gdn  29 Jan 2012    Alternatives to Borrowing    Cutting the Deficit    

Nick Clegg tax proposals

'White Flag' Labour?

Tax and spending

Tax havens must name evaders, says Ed Miliband

Social 1 - 0 Global

Miliband will this week call for negotiations to begin with the governments on the three islands.

He will also demand ministers follow up the talks with threats to shame the islands on the international stage by placing them on a globally recognised blacklist drawn up the Organisation for Economic Co-operation and Development (OECD)..

The move is part of the Labour leader's attempt to define himself as the foremost campaigner in British politics against the excesses of capitalism.

He will claim that every £1m raised by his policy on tax havens is equivalent to a year's salary for 50 newly qualified teachers.

UK residents with money abroad are required to pay tax in Britain on the income they receive, but many do not declare that they have money stashed away.

Jersey, Guernsey and the Isle of Man have not been co-operating with UK authorities' requests for the identity of people with money on the islands.

Richard Murphy, of Tax Research UK, said the country could recoup £2.4bn ...

Obs  15 Jan 2012    Labour's Dilemma    

Barclays stockpiles 'losses' to soften tax obligations

The European Banking Authority has estimated that Barclays will have €4bn (£3.3bn) of "deferred tax assets" this year, compared with €5bn at Royal Bank of Scotland, and €7.3bn at Lloyds Banking Group.

Deferred tax assets are highly prized by companies because they can be set against tax claims to reduce the final bill ...

Barclays has run into controversy before over its tax arrangements. Two years ago a whistleblower leaked documents which purported to show that Barclays was using a network of subsidiaries in the Cayman Islands and Luxembourg to reduce its tax bill.

Earlier this year, chief executive Bob Diamond was forced to reveal that the bank operated nearly 300 subsidiaries in tax havens and had paid just £113m of corporation tax in the UK in 2009 – a year in which it handed out £3.4bn in bonuses ...

Tel  01 Jan 2012    Bankocracy Log    Corporate Sociopathy

Barclays 'risks backlash' ...

Lloyds Banking Group's bosses were 'reckless'

HMRC criticised for 'cosy' deals by committee of MPs

In which the democratic deficit at the heart of British government is exposed: the weakness of the legislature vis-a-viz the executive.

Chancers like Dave Hartnett and Anthony Inglese wouldn't get away with their ...

" ... imprecise, inconsistent and potentially misleading ... "

... answers in front of a hearing in the US Congress.

The report by the committee contains some of the most severe criticism of a civil servant yet published.

The MPs accuse Dave Hartnett of mishandling tax negotiations with some big companies such as Goldman Sachs, letting it off millions of pounds in interest on its tax bill.

He had also, the MPs said, tried to stonewall their questions when they quizzed him at committee hearings during October and November this year.

The MPs say he:

* authorised a large tax settlement whose negotiation he had been involved in, breaching HMRC's internal rules

* had given "imprecise, inconsistent and potentially misleading answers" to MPs

* had relationships with big companies that were "too cosy", resulting in the appearance they received "preferential treatment"

* had used a bogus excuse of observing taxpayer confidentiality to avoid explaining the tax deals he had been involved in ...

BBC NEWS  20 Dec 2011

HMRC hid 'sweetheart' tax deals for big business

A report by the Commons public accounts committee says it has uncovered "specific and systemic" failures in Britain's tax-gathering agency while investigating deals with Vodaphone and Goldman Sachs which have attracted mass protests.

Owing to a "mistake", admitted by HM Revenue & Customs, Goldman paid up to £20m less tax than had been due on its bonus payments.

Vodafone settled a long dispute by paying £1.25bn, but the committee heard allegations that the tax bill should have been £6bn or more.

Its hearings also found that two undisclosed firms had struck similar deals.

Committee members suspect that there may be other questionable deals among £25bn of outstanding unresolved tax bills, but they are unable to find out because officials are hiding behind claims of "taxpayer confidentiality", they said ...

The 170-page report ... reserves some of its strongest criticisms for Dave Hartnett, the permanent secretary for tax, and Anthony Inglese, the department's chief lawyer, for having given evidence MPs found was "imprecise, inconsistent and potentially misleading" ...

Gdn  20 Dec 2011

Why double standards by HM Revenue and Customs mean you pay more

Margaret Hodge, the former Labour minister who chairs the committee, said:

“This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations.

"We uncovered both specific and systemic failures which must be addressed.

“There is more than £25 billion outstanding in unresolved tax bills and it is essential there should be proper accountability to Parliament for the settlements reached.

“Parliament and the public have legitimate concerns that large companies are being treated more favourably than ordinary taxpayers.

“The department’s working practices must be seen by the taxpaying public to be absolutely impartial.

"The impression being given at the moment is quite the opposite, of far too cosy a relationship between HMRC and large companies.”

Richard Bacon, a Tory MP on the public accounts committee, said it appeared that the revenue took “a softer approach to powerful firms while being tougher on small businesses.

“Whether accurate or not, this notion is toxic for HMRC’s relationship with the vast majority of taxpayers,” he said ...

Tel  19 Dec 2011    Alternatives to Borrowing    Coalition Log    Losing Democracy Log

'HMRC treats all taxpayers even-handedly'

Collect the evaded tax, avoid the cuts

Taxman accused of letting Vodafone off £8 billion

HMRC have all the data we need to assess tax risk – so why don’t they publish it?

Tax avoidance trade puts Square Mile in spotlight again

Some of the city of London's biggest banks are behind a huge tax avoidance trade "cheating" European countries of hundreds of millions of euros a year, in a development that sheds fresh light on David Cameron's decision to wield Britain's EU veto to protect the Square Mile.

A two-month study by the Bureau of Investigative Journalism has uncovered a £65.7bn market in European equity dividends whose "central" purpose is tax avoidance ...

Dividend arbitrage is complex.

But at its heart, a bank or hedge fund lends equities in often high-yielding French, German or Italian companies to another institution.

The receiving institution then passes the equities through a network of low- or no-tax jurisdictions, before returning the equities to the original owner using a subsidiary in another tax haven.

In this way, banks can avoid the 15% average "withholding tax" levied on dividends in European countries ...

Lord Oakeshott called for the Financial Services Authority (FSA), the Treasury and the European commission to launch an investigation to ensure full disclosure of all dividend arbitrage transactions ...

Icap, the brokerage run by the former Conservative party treasurer and outspoken critic of the EU's financial transaction tax proposal, Michael Spencer, is the broking firm most used by banks to buy and sell equities for the purpose of "dividend washing", as the trade is more commonly known, according to four well-placed City sources ...

Obs  18 Dec 2011    A Two Speed Europe Log    Bankocracy Log    Corporate Sociopathy Log    Hedge Funds

Icap

Michael Spencer

Revealed: how City fees are eating into our pensions

Collect the evaded tax, avoid the cuts

The Tax Justice Network has published new research I have undertaken on its behalf.

Using data sourced from the World Bank, CIA World Factbook, the Heritage Foundation and World Health Organisation this research – for the first time ever as far as we know – estimates tax evasion for 145 countries in the world covering 98% of world GDP between them.

The result is astonishing: between them these countries lose $3.1 trillion to illegal tax evasion. That is more than 5% of their GDP ... the findings show that tax evaded in the UK might be £69.9bn a year.

This is extraordinarily close ... to my 2010 estimate ...

The US has an evasion rateabout two thirds that of the UK.

If we had reduced our tax evasion rate to US levels in the last decade we might owe £200bn less in debt now.

Alternatively, cuts of more than £20bn a year could be avoided in the UK economy now with our debt still being tackled at the current rate ...

Tax Research UK  25 Nov 2011    George Osborne    

Judge to examine Goldman Sachs tax deal

The judge is expected to be given the power to examine the private accounts of Goldman Sachs and Vodafone to establish whether senior inspectors wrongly "let them off" multi-million-pound tax bills ...

The National Audit Office ... is also considering whether to examine the tax affairs of other big companies to establish whether HMRC officials routinely signed off deals which underestimated the true liabilities of the companies.

The move comes after the House of Commons Public Accounts Committee accused Britain's top Revenue official, Dave Hartnett, of misleading Parliament following a deal with Goldman Sachs that allowed the US investment bank to avoid more than £10m in tax penalties.

It also accused officials of allowing Vodafone to pay just £1.25bn in a tax dispute with the Government, despite a potential tax bill of £8bn ...

Ind  22 Nov 2011    Coalition Log

Dave Hartnett accused of lying to Parliament ...

On The Town With Dave Hartnett

HMRC Controversies

Tax evasion crackdown will raise £62bn for G20 nations, says OECD

A tougher crackdown on tax evasion by the world's wealthiest individuals could provide cash-strapped G20 governments with up to $100bn (£62bn) in much-needed tax revenue, the Organisation for Economic Cooperation and Development said on Thursday night.

The Paris-based thinktank told the leaders of developed and developing countries that they could fill black holes in their public finances and improve social cohesion by co-operating to remove tax loopholes and by exchanging information.

A survey of 20 rich and poor countries conducted by the OECD showed that earlier measures to deter tax evasion had resulted in 100,000 individuals paying a total of $14bn in unpaid tax on assets worth between $120-150bn.

Jeffrey Owens, director of the OECD's centre for tax policy and administration, said:

"That is just the tip of the iceberg. There is probably $1tn in assets held offshore."

The call came as all G20 governments agreed on Thursday to a multilateral convention to tackle tax evasion more effectively ...

Gdn  03 Nov 2011    

G20

Tax avoidance

Goldman Sachs let off paying £10m interest on failed tax avoidance scheme

Documents leaked to Private Eye magazine and published in full by the Guardian record that Britain's top tax official, HMRC's permanent secretary Dave Hartnett, personally shook hands on a secret settlement last December.

Hartnett is due to be questioned on Wednesday by the Commons public accounts committee.

The leaked documents suggest that a previous PAC chairman, Edward Leigh, was misled when he was told it was illegal to reveal details of such cases to parliament.

Leaked legal advice from James Eadie QC, which the Guardian also publishes today, says the opposite.

Hartnett has discretion to reveal such facts to the parliamentary watchdog, according to the advice.

Leigh said: "It just underlines the absurd culture of secrecy that still pervades Whitehall." ...

The £10m Christmas gift for Goldman was the culmination of a prolonged attempt by the US firm to avoid paying national insurance on huge bonuses for its bankers working in London.

The sum was pocket change to Goldman, whose employees received $15.3bn (£9.5bn) in pay and bonuses last year ...

Gdn  11 Oct 2011    Corporate Sociopathy Log    'Doing God's Work'    Third Meltdown    

Minutes of meeting on Goldman Sachs settlement

Discussion of legal advice on disclosure to parliament

Quarter of FTSE 100 subsidiaries located in tax havens

The 100 largest groups registered on the London Stock Exchange have more than 34,000 subsidiaries and joint ventures between them.

A quarter of these, over 8,000, are located in jurisdictions that offer low tax rates or require limited disclosure to other tax authorities.

UK companies are required by law to report a list of their subsidiary companies together with their country of registration to Companies House.

However, many of the FTSE 100 have failed to do so in the past.

Disclosure of the full list by all 100 groups is the result of a formal complaint made by ActionAid to Companies House and a subsequent investigation by the business secretary, Vince Cable ...

... it emerges that 98 of the FTSE 100 companies use tax havens, with only Fresnillo, a Mexican-based mining company, and Hargreaves Lansdown, a Bristol-based financial services group, declaring no offshore subsidiaries ...

Gdn  11 Oct 2011    Corporate Sociopathy Log    Third Meltdown    

Tax havens and the FTSE 100: the full list

Action Aid

Tax Research UK

UK and Switzerland agree tax treaty

The deal is part of a wider agreement that will see UK taxpayers with Swiss accounts pay a withholding tax of 48pc on investment income and 27pc on capital gains.

The levies will apply to accounts that are not fully disclosed to HM Revenue & Customs.

Exchequer Secretary, David Gauke, said:

"This is an excellent agreement which tackles a problem many people thought would never be solved.

"Working with the Swiss Government we have delivered a highly effective solution which will benefit both countries and recover billions of pounds of unpaid tax for the UK."

However, the agreement comes as concerns were raised about Swiss banks transferring customer accounts to subsidiaries in jurisdictions that do not have the same tax agreements.

HMRC said any bank caught encouraging clients to move their money to avoid tax would become liable for that tax.

Mike Warburton, Grant Thornton tax partner, said:

"Between a bank actively encouraging their clients to put money into a convenient offshore jurisdiction and a client asking to transfer their money is a very wide grey area. How HMRC will police this remains to be seen." ...

Tel  07 Oct 2011    Coalition Log    Corporate Sociopathy Log

UK signs agreement to tax Swiss bank accounts

Germany has set back the fight against tax evasion

Deal reached on Swiss-German tax treaty

End Tax Haven Secrecy

UK signs agreement to tax Swiss bank accounts

A 'third face of power' job.

In 2013, the Swiss banks will hand over a one-off levy of more than £5bn to settle past tax liabilities of Britons with money salted away in the country.

From then on, Switzerland will impose a withholding tax of 48 per cent on income such as interest and 27 per cent on capital gains such as shares rising in value. It is unclear how much this will raise because some Britons may move their assets elsewhere.

Ind  25 Aug 2011    

Germany has set back the fight against tax evasion

Deal reached on Swiss-German tax treaty

End Tax Haven Secrecy

Germany has set back the fight against tax evasion

German tax dodgers with money hidden in Swiss banks can sleep easy tonight.

For the German government this week initialled a beggar-thy-neighbour deal that undermines years of diplomatic work to penetrate Switzerland's globally corrosive banking secrecy.

The agreement, which is due to be signed by both governments over the next few weeks, sees Germany accepting a paltry $2.8bn upfront from the Swiss banks said to hold some $276bn of Germans' undeclared wealth ...

Here in the UK, HM Treasury is negotiating a similar agreement with Switzerland. It has simply been biding its time to see what kind of deal Germany gets.

With the UK government pursuing such a self-interested and myopic policy, it is no surprise that senior UK diplomats appear distinctly disinterested in playing ball at the G20, where a truly global deal to end tax haven secrecy could be brokered.

A former senior US Treasury official, who used to negotiate tax treaties for the US, recently told me of his fury about how these dirty deals are undoing a whole career's worth of work against financial secrecy ...

Gdn  12 Aug 2011    Coalition Log

Deal reached on Swiss-German tax treaty

End Tax Haven Secrecy

David Miliband is back in (tax-efficient) business

Former Foreign Secretary David Miliband has set up a company in his name that will greatly reduce the amount of tax he will pay on his earnings ...

Once a cabinet minister under Gordon Brown, Miliband recently set up a company called The Office of David Miliband, a report in the Daily Mail has revealed.

By paying all his commercial earnings into the company, Miliband will pay 20 per cent corporation tax, rather than the 40 per cent he would pay as an individual taxpayer ...

He is thought to earn thousands of pounds from speaking engagements around the world, and is represented by the London Speaker Bureau, a company that provides high-profile speakers for conferences and events.

Mr Miliband's other earnings come from his role as vice-chairman of the Premier League football club Sunderland, which pays £75,000 a year.

In addition to other earnings, Mr Miliband receives £65,738 for his role as Member of Parliament for South Shields.

Ind  05 Apr 2011

MPs to investigate corporate tax avoidance

Tax avoidance has been thrust into the spotlight recently by campaigners such as those from UK Uncut, alleging that multinationals such as Vodafone and individuals such as Arcadia's chief, Sir Philip Green, have avoided huge sums in tax through complicated structures often based offshore.

Critics allege that HM Revenue & Customs let Vodafone off a £6bn tax bill on profits funnelled through a Luxembourg subsidiary, a claim denied by the tax agency.

Green's shops have been the subject of sit-ins by UK Uncut, unhappy about a £1.2bn dividend Green paid out of retail group Arcadia in 2005 to a family trust, which campaigners say was in reality his income and should have been taxed as such.

Barclays has faced criticism and direct action too, not least after disclosing that it paid £113m in UK corporation tax in 2009 after making profits globally of almost £12bn ...

Guardian  28 Mar 2011    Party Funding    Westons' Tory donations

This is why UK Uncut picked on Fortnum’s

AstraZeneca settles tax dispute and saves $1bn

Osborne's tax avoidance 'crackdown' will have the opposite effect

£1bn tax avoidance crackdown ... 'token gesture'

Tax Research UK

Sir Philip Green

Tax Avoidance

Companies let off hook for up to £16bn in tax

The Treasury could be missing out on £16bn in unpaid taxes, according to an in-depth report that has found more than half a million companies disappeared last year without paying tax and in most cases without filing accounts ...

The study, released today, found more than 500,000 companies were dissolved in the year to March 2010, with most removed from the official register because they failed to file accounts ...

Richard Murphy, director of Tax Research and author of the report, said cuts in staff numbers at HM Revenue & Customs and at Companies House, which oversees company registrations, had allowed thousands of businesses to escape detection and avoid billions in unpaid taxes ...

Murphy said the government should demand information from banks offering business accounts.

Banks already pass information to HMRC on individuals' savings interest and could do something similar with business accounts, he said.

"The consequences of these failures are enormous," he said.

"It is inevitable that significant amounts of tax are being lost to the exchequer.

"In the meantime companies trading fraudulently undermine honest business in the UK and consumers are bound to be the subject of fraud by unscrupulous traders who will never account for their actions." ...

Guardian  14 Mar 2011

What to do about 500,000 missing companies

500,000 missing people: £16 billion of lost tax

Barclays bank forced to admit it paid just £113m in corporation tax in 2009

Treasury minister Lord Sassoon admitted this week, in response to a question by former City minister Lord Myners, that while the banks would pay around £20bn in tax in 2010-11 most of that total would be income tax and national insurance paid by employees which the banks hand over on their behalf.

Only 20%, said Sassoon, which would come from corporation tax ...

Guardian  18 Feb 2011

Barclays - paying tax, but where?

First note that Barclays does not pay tax at the expected rate of 28%. It pays tax at 23% - by its own admission.

All its tax planning activity delivers some benefit.

But second, note from its accounts that its biggest retail operation is in the UK.

Admittedly its biggest commercial loan book is in the US, but also note that 78% of its profits (or thereabouts) come from Barclays Capital which, if publicly available information is to be believed is largely located in London and New York.

And yet, just 10% of Barclays worldwide corporate tax is paid in the UK ...

Tax Research UK  19 Feb 2011

UK Uncut target Barclays

How the Guardian was gagged

To the City, it's the heist of the century

At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country.

If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%.

But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches ...

Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor’s show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system.

Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.

Guardian  08 Feb 2011

Monbiot on the great UK corporate tax heist

The UK’s 8% corporation tax

Hunt ruling will be open to legal challenge after past Murdoch support

David Cameron's decision to hand responsibility for ruling on BSkyB's future from Vince Cable to Mr Hunt caused surprise and anger at Westminster ... critics claim that Mr Hunt is equally compromised – specifically by his remarks lauding Mr Murdoch for his contribution to British television and apparently backing Mr Murdoch's planned takeover ...

It also emerged that Mr Hunt held a private meeting with the tycoon's son, James, the chief executive of News Corp in Europe and Asia, shortly after the takeover bid was launched in June.

Meanwhile, BSkyB shares rose 2 per cent yesterday, up 14.5p to 743p, as investors judged that the chances of News Corp's takeover going ahead had soared with Mr Hunt's appointment.

Andrew Neil, the former Sunday Times editor, said News Corp had pulled a "very expensive ad campaign" to lobby support for its bid to acquire the 61 per cent of BSkyB shares that it does not own ...

truthseeker

Pick-up any one of Rupert Murdoch's newspapers (he owns 175 titles worldwide including The Sun, News of the World and The Times in the UK), or tune in to any one of his TV Channels (he owns the Twentieth Century Fox Studio, Sky/BskyB, Fox Network, and 35 TV stations, fast-growing Fox News and Fox Entertainment, and 19 regional sports channels) and you are likely to come across hysterical stories screaming of "benefit fraudsters and "dole scroungers".

This may make you not only believe the overwhelming scale of "benefit culture" and burden on the State but that Murdoch's media empire is firmly on the side of decent hard-working tax payers.

There is just one problem - Rupert Murdoch's media empire fails to pay it's tax!!!

Media tycoon Murdoch may run one of the most profitable businesses in the UK, but it appears that he has somehow managed to avoid running up a tax bill over the past two decades.

Mr Murdoch thinks it is acceptable for a Billionaire to shirk his tax bill whilst at the same time stigmatising the poor as "benefit cheats" and "dole scum".

According to a previous report in The Economist, Mr Murdoch in the 1990's saved at least £350m in tax - enough to pay for seven new hospitals, 50 secondary schools or 300 primary schools.

How he has done it remains a mystery - and News Corporation is certainly loath to give away any financial secrets.

But it appears that Mr Murdoch's tax accountants have surpassed themselves - making full use of tax loopholes to protect profits in offshore havens.

Mr Murdoch also has the luxury of shifting funds from country to country across his sprawling media empire to foil the taxman.

It is not just the Inland Revenue that has been left empty-handed by News Corporation's clever financial engineering.

Mr Murdoch "hands very little of his profits to governments" according to The Economist.

Overall, News Corporation paid just £146m ($238m) in corporate taxes on profits of more than £2bn.

In other words he is paying tax at a paltry rate of just 6%. That compares with normal company tax rates of 30% and upwards.

The financial secrecy that has characterised Mr Murdoch's empire could turn out to be a double-edged sword.

On the one hand he has managed to hold on to more money.

But News Corporation's complex structure, which includes 60 incorporated tax havens, such as the British Virgin Islands and the Cayman Islands, has confused analysts and investors alike.

Independent  23 Dec 2010    Corporate Media    Corporate State Britain    Rupert Murdoch

Jeremy Hunt's links with Rupert Murdoch empire under scrutiny

West remains on life support

... while the rise in inflation is routinely regarded by some as a sign that the Bank of England has lost the plot, the rise in prices has, to date, not been matched by any significant rise in wages.

This latest dose of inflation is, therefore, not like the inflations of the 1970s, when both prices and wage rose rapidly.

Indeed, the bigger worry at the moment is not so much that inflation will continue to rise but, instead, that the higher cost of living will erode real incomes and spending, thereby threatening the pace of economic recovery in 2011 and beyond.

Combine that with the ongoing austerity in the public sector and it becomes abundantly clear that the UK economy, like other Western economies, is not yet out of the woods.

Indeed, the Western world remains on economic and financial life support ...

lettus

The UK economy is bleeding to death because big companies pay far less than they should in tax.

Until that is cured - and the only cure I can think of is a turnover tax - nothing will change.

In addition to bringing in much-needed public funds, a turnover tax would have a second advantage which is even more important: it would level the playing fields between big companies and smaller companies.

Encouraging smaller companies is vital to economic growth because smaller companies employ proportionately more people.

My analysis is that the whole of the UK's economic woes have arisen because of the disproportionately high power of the big companies.

Over the past fifteen years, the power of the biggest companies has surged. That's why the crash happened - because the banks had become so big and powerful that they could simply lean on the government not to regulate.

And the other big corporates simply lean on the government to change laws in their favour and to cosy up to the tax man so that their tax avoidance measures remain nicely protected.

Big companies spend a lot of their money overseas - in the form of investment in overseas subsidiaries and overseas workers, and investment in machinery to replace what would otherwise have been jobs for UK workers.

So, a lot of the economic activity of bigger companies goes overseas and that's why the economy of the UK is bleeding to death.

Smaller companies, by contrast, can't afford to operate on a world scale and so their economic activity is concentrated on the UK and benefits our country.

Independent  20 Dec 2010    Alternatives to FRB    Corporate State Britain    

The proverbial have taken over the asylum

The philosophical significance of UK-Uncut

UK-Uncut challenges the roots of the coalition's austerity programme: without closing tax loopholes, it is an atack solely on the public space, and the weakest in our society. It also confirms that the coalition does not believe in the concept of society, despite Cameron's bogus assertion that 'we are all in it together'!

Consider for a moment the real implications of the proposition that no act can justly be criticized unless it is against the law.

The implication is that law is a full and total expression of moral values. Only totalitarians think that.

Everybody else recognises that, while certainly informed by morality, the function of the law is to provide a framework within which civil society can function and can debate the rights and wrongs of actions.

And it would be a cold and brittle society that relied on the law for the expression and support of all values, and that could not tolerate citizens sorting things out between themselves.

Just as in sport we recognize that something can be within the rules yet still condemned as unsporting, so too most people recognize that behaviour can be wrong even when it isn’t actually illegal.

In fact only one social group regularly seeks to justify actions simply by insisting that they don’t break the formal rules.

And that group is the one that rules us ...

openDemocracy  17 Dec 2010    Contesting Austerity    Moral Indifference Log    'We are all in together'

UK-Uncut

Moving Cadbury HQ to Switzerland could save Kraft millions in UK tax

The Kraft restructuring plan involves inserting a Swiss holding company above Cadbury's UK operations.

The UK offshoots will then effectively become sales and manufacturing service businesses paid commissions by the parent.

The British subsidiaries will almost certainly employ roughly the same number of people as under the old structure.

However, as key staff are being relocated to Switzerland, and the UK companies will technically no longer own the raw materials or products they make and sell, much of the tax liability will be transferred to Zurich ...

Richard Murphy, a director at Tax Research UK, said:

"We have seen this kind of structure before with [crisp company] Walkers where, after being acquired, the UK operation is moved to a Swiss holding company.

"The advantages are twofold. First, if you actually locate the management in Switzerland, you'll have an argument with the Revenue but you can move profit from the UK and save tax.

"Second, as the brand is vital to profits, you can also transfer that value out of the UK to Switzerland. The UK company will then pay royalties to use the brand, which is also tax deductible." ...

Guardian  03 Dec 2010    Branch Office Britain    

Moody's affirms the ascent of Man

While Ireland teeters on the brink of financial distress, there's better news across the water on the Isle of Man.

The ratings agency Moody's last week affirmed an AAA rating on the modest isle of 80,000 people, ending a year-long review for possible negative downgrade.

The reason?

The tone of international debate on offshore economies "seems recently to have eased", according to Moody's experts, ending a threat to the Isle of Man's "business model".

In other words, an anticipated global crackdown on tax havens has failed to materialise ...

Observer  14 Nov 2010    Wealth Log

Offshore tax evasion crackdown expected to raise £10bn

A Treasury official said: "These agreements, by allowing us to get information from tax havens, means British tax authorities are gaining complete access to details of bank accounts. We are discovering much more than we had assumed we would."

The Treasury said it could not predict whether individuals would be prosecuted as a result of the discoveries, but said in clear cases of tax evasion it is likely to lead to court action.

The cash is being raised through a mixture of imposing tax on accounts and by demanding back payments of unpaid tax that should have been paid to the Treasury.

Osborne said: "We are in this together and that includes those who try to evade tax. We are in the process of striking a deal with Switzerland and more will follow. This will raise many billions of pounds that the previous government failed to do. This is tough but fair."

sam007 13 November 2010 12:39AM

"The officials said that the Cayman Islands, one of the biggest offshore tax havens, was not among them"

Under British law, hedge funds are able to register in the Caymans—and make their deals tax-free through the islands.

This is allowed even though most of those running the funds work thousands of miles away, mainly in central London.

If you delve into the public records in the Caymans—as researchers for the Channel 4 Dispatches programme I have just produced did—you will find lists containing many hedge fund names, many of them based in London.

Some of the names of owners of these funds can also be found on the electoral commission’s record of Conservative party donors.

Indeed, just a few weeks before the government U-turn on the Caymans, a number of British hedge-fund owners handed over large sums of money to the Conservative party, in the run-up to the general election.

Some had also given up to six-figure sums to George Osborne to pay for his office in opposition. No laws have been broken.

But would it be getting a little carried away to wonder if they were all in it together?

Guardian  13 Nov 2010    Cutting the Deficit    We're all in it together

Tax avoidance: the Cayman question

Secrecy deal with Switzerland could let Britons avoid £40bn in taxes

Richard Murphy, head of Tax Research, said:

"No indication is given as to how these accounts are to be regularised. Indeed, there is no prospect they can be because the £40bn or so of evaded assets will not have to be declared by name by the Swiss. In that case there is no prospect of UK interest or penalties being charged.

"In other words David Gauke has just announced his intention to sign a total tax amnesty for UK tax evaders who have used Switzerland.

"Given that penalties and interest would have added well over 100% to the tax bills it is highly likely that all these evaded assets should have been due to HM Treasury. But Gauke looks like he will give away the whole lot."

Murphy is a former KPMG accountant who wrote a report for the TUC in 2008 detailing how wealthy individuals and corporations based in the UK were avoiding £25bn a year in taxes.

He said losses to the taxpayer could balloon over the next few years as more people move their accounts to Switzerland's lower tax regime.

"This could have knock on effects for British banks which lose their competitive edge to Swiss banks offering the same savings rates, but much lower taxes," he said.

Murphy said the agreement amounted to Gauke handing British tax sovereignty to Switzerland ...

Guardian  26 Oct 2010    

Alan Johnson: Bankers should pay £3.5bn more to tackle deficit

In the only major change to the party's pre-election policy, Johnson said that banks should pay £3.5bn on top of the government's forthcoming £2.4bn banks levy.

He said he accepted the coalition's freezing of the basic rate limit for income tax from 2013, and added that the recent rise in capital gains tax should not be reversed.

Taken together, the three measures would raise £7.5bn more than Johnson's predecessor, Alistair Darling, had planned.

Johnson said that overall he wanted spending cuts to take up the strain of 60% of the deficit reduction, with 40% to come from tax rises – compared with Labour's pre-election plans of 66% to 33%.

The coalition's plan will see spending cuts make up about 77% of the deficit eradication programme, and tax rises 23%.

Johnson claimed that overall his plan of extra spending and a slower deficit reduction programme would mean all departmental spending, including capital and current, over the next four years would have to be cut by £27bn less than under the coalition plan.

This represents 8% cuts at departmental level as opposed to 14% ...

VinoRouge 18 October 2010 9:40PM

Interesting Dispatches tonight on CH4.

Seems the Cayman Islands almost went bust after the financial crash, came begging to the Labour government who said 'fine you can have some cash if you bring in direct taxation' (basicaly stop being a tax haven), they declined.

As soon as the Tories got in they came back and the Tories said 'here's the cash and you know that silly taxation stuff? Just forget about it'.

I'm sure it had nothing whatsoever to do with the hundreds of thousands the Tories receive both individualy (Osborne) and as a party from their Hedge fund mates registered in the Caymans to avoid tax.

And they're saying they'll crack down on tax avoidance? Will they bollocks.

They'll happily demonise everyone on benefits while accepting handouts from their rich mates who cost this country billions.

Guardian  18 Oct 2010    Alan Johnson

Osborne’s cuts will allow the private sector to generate more jobs

How the Rich Beat the Taxman

Treasury 'will lose hundreds of millions of pounds' in tax as hedge funds move abroad

One-in-four hedge fund employees has already left London to move to Switzerland, which is said to have a more stable tax regime, according to consultancy Kinetic partners.

Calculations by the company claim the UK could have already forgone about £500m in tax revenues, based on the 1,000 or so hedge fund managers it says have already left the country.

France threatens to veto EU hedge fund legislation The introduction of the 50pc tax rate on earnings above £150,000 is thought to have triggered the departure of many hedge fund managers.

Political attacks and regulatory uncertainty have also been cited as key reasons.

City hedge fund managers are estimated to earn up to £2m a year.

High-profile departures this year include Alan Howard, founder of Brevan Howard, and Mike Platt, founder of BlueCrest Capital.

Telegraph  02 Oct 2010        

Cameron's strange choices for a council of business advisers

... the long list of advisers includes a few names that may raise eyebrows.

Take Sir Martin Sorrell, the chief executive of WPP ... his decision to move the headquarters of WPP to Dublin two years ago to save on tax leaves a rather sour taste in the mouth.

Then there's Paul Walsh, the chief executive of drinks company Diageo ... [his] membership of the taskforce will give him ample opportunity to repeat privately to Mr Cameron what he has been saying publicly of late: that any adverse changes to the corporation tax regime might prompt his company to go elsewhere too.

One might argue it is to Mr Cameron's credit that he is prepared to seek the counsel of those who have chosen to be confrontational about particular policies.

The row over the appointment of Sir Philip Green as agovernment adviser, despite his well-documented tax avoidance strategies, does not seem to have put the Prime Minister off making further appointments that have potential for embarrassment ...

Independent  01 Oct 2010    David Cameron

Cameron appoints new business advice council

Lord Ashcroft 'avoided £3.4m in tax' ahead of rule change

Tory peer accused of financial manoeuvre the day before new legislation would have forced him to pay tax on all income ...

The BBC programme Panorama will tomorrow report that the peer, who steps down from his party role tomorrow, transferred the ownership of his main UK company, the Impellam Group, on 5 April.

The 64-year-old peer transferred shares worth £17m in the company to a trust to benefit his children.

The following day, a law came into force compelling all members of the Lords and Commons to be registered in the UK for tax purposes and pay tax on all their worldwide income. The law had been in large measure prompted by the controversy over his tax status.

Tax lawyer Richard Frimston is quoted telling the programme that Lord Ashcroft would have faced a large inheritance tax bill under the new legislation.

Frimston said: "If that had been done on the following day, assets worth say £17m going into trust would have been subject to tax at 20%, which would have created an immediate inheritance tax charge of something in the region of £3.4m. So that was avoided by doing it on 5 April as opposed to waiting until 6 April." ...

Senior Conservatives are understood to have put pressure on Mark Thompson, the BBC director general and Sir Michael Lyons, the chairman of the BBC Trust, not to broadcast the programme in the lead-up to the general election ...

Guardian  27 Sept 2010    

Ashcroft investigation pulled by BBC Panorama over legal problems

Conservative Lord Ashcroft 'avoids' full UK tax bill

Alexander launches 'ruthless' tax evasion clampdown

Unveiling plans agreed with the Chancellor George Osborne, Mr Alexander said the authorities would get £900m extra in financial support for the "ruthless" pursuit of tax evaders and those who use legal loopholes to minimise their tax bills.

Ministers want to see a fivefold increase in prosecution for tax evasion and Revenue & Customs will be given in extra resources to create a dedicated team of investigators to bare down on offshore tax havens and online tax evasion.

"There are some people who seem to believe that not paying their fair share of tax is a lifestyle choice that is socially acceptable," he said.

"Just like the benefit cheat, they take resources from those who need them most. Tax avoidance and evasion are unacceptable in the best of times but in today's circumstances it is morally indefensible.

"We will be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra."

Tax evasion and avoidance cost the Treasury an estimated £14bn a year and successive governments have vowed to take action against it ...

BBC NEWS  19 Sept 2010    Autumn Spending Review

The tax authorities are investigating Lloyds Banking Group after evidence emerged that the bank, kept alive by £17bn of taxpayers' money, encourages wealthy customers to avoid tax by channelling money through China.

In an undercover film obtained by Panorama, a banker at the Jersey branch of Lloyds TSB Offshore is shown telling a "customer" working for BBC Panorama how income is paid to clients via Hong Kong to "get around" the European Savings Tax Directive. He also admitted that he and his colleagues spent time "brainstorming" tax avoidance schemes.

The "customer" made it clear that he did not want to pay tax but when he asked about reporting to Revenue & Customs (HMRC), the banker said: "It's of no interest to us whether you tell the taxman or not. It is not our business." ...

The affair is not just embarrassing for Lloyds and its chief executive, Eric Daniels, who is under pressure after the bank's disastrous takeover of HBOS. At the last G20 meeting, Gordon Brown announced: "There will be an end to tax havens." But not, it seems, for banks funded by UK taxpayers offering tax avoidance schemes.

Other publicly funded banks are also thriving in the Channel Island tax havens. Northern Rock – bailed out by the taxpayer with £27bn of taxpayers' money – has an offshore subsidiary in Guernsey that has seen deposits almost double to £2bn since the bank was nationalised ...

Guardian  21 September 2009

Tax inquiry into Lloyds off-shore

PricewaterhouseCoopers, the accountant, last week held a meeting with finance directors of private equity houses to help them work out how to get around the tax, introduced in this year's Budget.

Strategies to get around the tax include bringing forward payment dates for bonuses or dividends to pre-empt the introduction of the tax in April next year or deferring payments until after the general election.

Advent and Charterhouse, two City private equity firms, are planning to circumvent the new top rate tax by paying three years' worth of salaries and bonuses to top employees this year. Employees would then loan the salaries and bonuses back to the private equity houses for a pre-arranged rate of interest over three years ...

Telegraph  18 July 2009

GOOGLE, the internet giant with the motto “don’t be evil”, avoids paying more than £100m a year in UK tax despite pulling in annual revenues of more than £1.25 billion.

Even though the web search engine operates as Google UK Ltd in London, British firms which advertise with it pay their subscriptions to a subsidiary based in Ireland, where corporation tax is far lower than in the UK.

This structure, condemned this weekend as “unfair” and “unacceptable”, allowed Google legally to avoid paying £110m of UK tax in 2007, according to research by an expert on corporate tax avoidance ...

Sunday Times 19 April 2009

Google is accused of UK tax avoidance

LORD MYNERS, the minister in charge of the government’s assault on tax havens, has used a blind trust to conceal £250,000 of his own money in an offshore shelter.

Details of the secret holding have been obtained by The Sunday Times as G20 leaders gather in London pledging to stamp out tax abuses.

Myners transferred 500,000 of his own shares in the Ermitage hedge fund, based in Jersey, into a blind trust when he became a minister in October ...

In 2006 Myners backed the £40m acquisition of Ermitage. He was appointed chairman and had a 5% stake for which he paid £250,000.

The shares were held in his blind trust and it is believed they were quietly sold on his behalf by a private bank in the past few weeks. Ministers typically create blind trusts to avoid possible conflicts of interest over their financial affairs, but critics say they can be used as a means of concealment.

Hedge funds operating in Jersey can avoid paying corporate tax on profits and are not required to comply with the tougher regulations of the City of London. They manage more than £40 billion of funds.

Myners resigned from his business roles when he was appointed City minister. These included his chairmanship of the Guardian Media Group and his role at Ermitage.

Documents filed with the Jersey Financial Services Commission reveal that he still had a stake in the hedge fund as recently as January. His stake was the fifth largest in the company, which in 2006 was managing more than £1.5 billion of investments ...

Sunday Times 29 March 2009

Lord Myners under pressure over Sir Fred Goodwin's pension deal

Lord Myners suffers new blow with discovery of offshore holdings

Lord Myners ‘knew about massive pension payout for disgraced banker’

• Bank of America and BB&T repay loans early

• Project Knight meant to generate £100m next year

The banks' three loans, totalling $17bn, were made in 2007 and designed to generate tax benefits to Barclays over three years equivalent to approximately $270m a year, at the expense of the UK exchequer. The US counterparty banks were not avoiding US taxes but received a fee in kind from Barclays - in the form of cheap loans - in return for their involvement.

Under the elaborate scheme drawn up by Michael Keeley, an executive at Barclays' secretive Structured Capital Markets division, a series of Cayman Islands and Luxembourg entities and partnerships were created. Three sets of triple entities were used, named Alymere, Claudas and Pelleas, according to accounts held in Luxembourg and at Companies House.

Tax experts say these devices enabled Barclays to accumulate profits virtually tax-free in Luxembourg, through a process known as "double dipping". The sums of capital involved needed to be large, in order to generate worthwhile amounts of 30% tax relief on the loan interest, typically running at about 5% ...

Guardian 27 March 2009

Lib Dem spokesman dodges gag order

• Judge upholds ban on publishing bank's documents
• Insider says tax avoidance central to firm's business

Further detailed allegations about tax avoidance schemes set up by Barclays Bank emerged tonight from whistleblowers who said the bank made close to £1bn profit a year from a series of elaborate deals.

The schemes are similar to those detailed in documents published by the Guardian this week which have been the centre of a three-day hearing at the high court, and are the subject of a gagging order.

The internal Barclays memos were leaked by a mole to the Liberal Democrats. The new allegations reiterate claims that the bank's main purpose in entering into these schemes was to make profit from tax avoidance through an intricate circuit of offshore Cayman Islands and Luxembourg companies. The profits are said to be enormous and the deals so complex that HM Revenue & Customs (HMRC) struggles to unravel them ...

Guardian 20 March 2009

Judge upholds Barclays' attempt to gag Guardian

The seven secret Barclays tax documents

Roger the Dodger - £40m king of tax

Macho poker bets

The Streisand effect

The bank, the judge, the secret

Barclays' millions help to prop up Mugabe

As world leaders finally get around to doing something about international tax evasion, a strange counter argument is forming: tax is a red herring, say the sceptics; better to focus first on sorting out the banking crisis rather than get bogged down in an "irrelevance" ...

While it is true there were many other causes of the financial crisis - too much debt, being the most obvious - it is wrong to pretend that systemic tax avoidance of the sort practiced on a huge scale by our banks is unconnected with their eventual demise. Here are five reasons the two issues should be seen as intimately related.

1) Offshore = out of mind

The offshore vehicles used by banks to hide their activities from the taxman also served to obscure their extent from investors and regulators.

Granite, the Jersey-based trust operated by Northern Rock, is exhibit A.

Tax havens are also breeding grounds for corruption.

2) Pushing rules to the limit is infectious

As the FSA points out there is no point in having principles-based regulation when you are dealing with people with no principles.

Similarly when you encourage bankers to ignore the spirit of tax law and only heed the letter, you encourage them to look for loopholes and shortcuts everywhere.

3) Everyone must pay their fair share

We are all going to have to pay more taxes to clean up this mess, but public support for government bank bail-outs could be fatally undermined if voters believe that only little people pay taxes.

The sight of the super-rich swanning about in tax havens should be of more concern to the CBI than anything else right now - without public support, banking is toast.

4) Complexity confuses everyone

One reason why the world of finance became so convoluted was to stay one step ahead of the taxman. The "double dips" and other tax-efficient structures described here ultimately baffled everyone: including their creators. Just ask AIG.

5) Avoidance fuels unsustainable growth expectations

Hiding the true source of your wealth can give your investors a dangerous false sense of security. General Electric, for example, grew lending for years by keeping its tax rate shrinking, until suddenly it lost its credit rating.

Far from being "dead money", structured finance vehicles also require large amounts of borrowing to sustain: when the debt market dries up, they are the first to go under.

Guardian 20 March 2009

BARCLAYS, the high street bank, is alleged to be making about £1 billion a year from an international web of financial schemes designed to avoid paying tax in the UK and abroad.

The claim has been made by a whistle-blower who passed internal Barclays documents to Vince Cable, the deputy leader of the Liberal Democrats.

The documents — seen by The Sunday Times — detail a trail of transactions allegedly created to legally avoid tax by a team within Barclays Capital, a subsidiary of the bank.

One 2007 scheme, named Project Valiha, was allegedly designed to help Barclays save £99m in UK tax by embarking on a rapid series of transactions across just three days and involving a Swiss bank and companies in the Cayman Islands and Luxembourg ...

Sunday Times 15 March 2009

Tax havens cost the UK at least £4 billion a year

The UK is losing at least £4bn a year through residents holding money in offshore tax havens, research claims.

Jersey, Guernsey and the Isle of Man were among popular spots for the wealthy to hold savings, the TUC said.

EU rules allow UK residents to declare interest earned overseas or to have 15% withheld from interest in the country where the account is held.

Separately, a report says MPs are calling for a review into the use of havens by taxpayer-backed banks.

Under the EU rules, three-quarters of the 15% in tax on interest that is withheld offshore is eventually paid to the UK government.

But this means that the effective amount collected by HM Revenue and Customs was 11.25% - rather than the 40% which would typically be paid, the TUC says ...

BBC NEWS 01 March 2009

TUC

TUC calls on banks to come clean

The chancellor, Alistair Darling, yesterday promised further action to stop corporate tax abuse when he was challenged by MPs over allegations of "cynical tax avoidance schemes" by Lloyds bank. ...

David Taylor, the Labour MP for North West Leicestershire, raised the Lloyds allegations at Commons question time, saying HMRC was investigating the bank for "double dipping and tax avoidance via Cayman Island companies".

He asked the chancellor to explain "what access the government had to Lloyds books before pumping in billions of pounds of public money and whether any conditions, such as an end to all tax avoidance activity, were attached to our cash being used to save a bank".

Darling said that as the matter was before the courts, there was a limit to what he could say. Ministers did not normally comment on the circumstances of any corporate or individual taxpayer ...

Lloyds was accused at a tribunal of using a subsidiary of Hill Samuel Investments to pour hundreds of millions into transatlantic tax avoidance schemes.

Huge loans to the financial products section of US insurer AIG and to Bank of America were allegedly disguised as commercial investments for tax purposes.

As a result, the money from the deals was treated differently for tax purposes on each side of the Atlantic. HMRC alleges that millions of pounds of income, received in the UK as distributions from US investments, was granted tax relief on the basis that US tax had already been paid.

But in the US, where the cash was treated as interest payments on a debt, it was also granted tax relief. This type of practice is known as "double dipping" ...

Guardian 13 February 2009

The tax gap

THE financier who has been appointed to protect taxpayers’ money in Britain’s bailed-out banks is a former trustee of a secretive Liechtenstein bank accused of facilitating massive tax evasion.

Glen Moreno, who chairs the powerful body that oversees the government’s £37 billion shareholding in the banks, was paid hundreds of thousands of pounds during a nine-year association with Liechtenstein Global Trust (LGT), a private bank based in the tax haven.

The disclosures are an embarrassment for Gordon Brown, who last week criticised offshore tax havens and called for international action to stamp out tax evasion.

“Advising the rich to exploit tax loopholes is unpatriotic,” the prime minister has said in the past. The bank was strongly criticised by name by President Barack Obama when he was a senator.

LGT, owned by the Liechtenstein royal family, became the subject of international scandal last year when a former employee blew the whistle on its dubious practices.

Moreno quit as a trustee last April, two months after it was first reported that financial details of thousands of clients had been passed to the German tax authorities by Heinrich Kieber, a bank technician.

HM Revenue & Customs was reported to have paid £100,000 for the information and said last night that it was investigating about 150 British clients of LGT.

The bank was condemned in a report last summer by a committee of the US Senate, whose members included Obama. “Ordinary Americans pick up the slack for tax cheats who hide assets in offshore tax havens, often with the help of foreign banks like . . . LGT,” Obama said ...

The Times 08 February 2009

Bail-out chief under fire

Where the missing billions go

UK Financial Investments Ltd

The latest ploy by big businesses anxious to avoid UK tax, is to claim that they have changed residence to low-tax Ireland. But when the Guardian went in search of new company headquarters on the Liffey, we found there sometimes seemed to be a touch of blarney involved in the claims ...

In order to escape the British tax net, companies who claim they have shifted to Ireland are required to show that their firm is not "centrally managed and controlled" in the UK. This does not seem to be regarded as an onerous hurdle to overcome, particularly as the companies can continue to be listed on the London Stock Exchange while claiming foreign status.

Tax advisers tell companies that the legal requirements may be satisfied merely by flying to Dublin airport to hold board meetings. They advise companies also to keep some staff in Ireland, designated as helping the board reach strategic decisions or managing its tax affairs.

Migrating companies do not even need to submit to Irish company law. Firms such as WPP have technically re-incorporated themselves as offshore entities in Jersey, in the Channel islands, as part of their move. Tax experts say this use of a tax haven saves the cost of stamp duty.

Dublin's heavily-advertised 12.5% low rate of corporation tax is not the real reason for company flight, taxation experts say. Subsidiaries which remain in the UK in any case continue to be taxed in Britain.

What is crucial, especially for firms which hold "intellectual property" such as patents or brands offshore, is that they can take advantage of Ireland's lack of rules on taxing the profits of multinationals' offshore operations ...

Guardian 10 February 2009

The tax gap

Tax and the bonus culture

Britain has a rubbish infrastructure. The road network gets clogged up and the rail network is a relic of the 19th century. We know this because business bangs on incessantly about the money it is losing through congestion and delay. UK plc is not up to the job, it says.

Britain has a substandard workforce. Too many people lack the skills necessary for them to be as productive as employees in other parts of the world. We know this because employers' organisations such as the CBI constantly complain about systemic deficiencies in literacy and numeracy, together with failings in so-called soft skills such as punctuality and attitude. UK plc needs to sharpen up its act to meet cut-throat international competition ...

To listen to corporate lobbying groups, you would imagine that companies are more than happy to do their bit but are forced into offshore arrangements by the demands of a punitive tax regime. Britain does not have an onerous corporation tax regime, especially once account is taken of the labyrinth of allowances that companies can claim.

Treasury estimates suggest that corporation tax receipts amounted to £45bn of the £545bn harvested by HM Revenue & Customs last year. That's just over 8% of the tax take, slightly lower than a decade ago. Of course, corporation tax is not the only levy on companies; among other things they pay business rates, stamp duty land tax and fuel duties. Again, these are passed on to individuals, who bear the brunt of revenue raising in the UK. Income tax and national insurance contributions are expected to bring in £250bn this year - more than five times as much as business pays in corporation tax on its profits.

One justification for corporate tax avoidance raised by some of those commenting on last week's series of Guardian articles was that business gets such terrible value for money that it is somehow entitled to set up complex offshore arrangements to reduce its bills.

This is not an argument that an individual could use: when social security claimants are hauled up before the beak for failing to tell the authorities that they have found a job, it is not an excuse to say that the government was squandering tax revenues on Trident, the war in Afghanistan, the NHS computerisation project, ID cards or any of the other brilliant ideas ministers have had for shovelling money into a black hole.

No, the real reason that business avoids paying tax is because it can. Many of the best brains in Britain are employed picking holes in the UK's tax code, so much so that a 2006 study cited tax planning as one of the hidden manifestations of British innovation (Nesta: The Innovation Gap, October 2006; www.nesta.org.uk). What's more, they do an extremely effective job; some estimates of the tax saved in 2005 are in excess of £13bn, almost a third of the corporation tax take ...

Guardian 09 February 2009

The poor take the biggest hit

Boots

The Tax Gap

Tax Research UK

Barclays Bank is said by some industry insiders to be Britain's most active legal tax avoider.

It rewards players in the tax game staggeringly well ...

... The bank managed to obtain £30m of UK tax allowances with a sale and leaseback arrangement over a pipeline. It split the proceeds with the original owners, the Irish gas board. The price paid for the bank's so-called investment appeared to go round in an offshore circle, ending up back at Barclays via the Isle of Man and Jersey. Barclays won a lengthy legal battle when in 2003 law lords finally ruled the scheme permissible.

Another circular scheme was sold to US bulldozer manufacturer Caterpillar. The firm transferred ownership of £165m worth of plant to a UK subsidiary, Caterpillar International Leasing LLC, which then sold it to a Barclays company called BMBF (No.24) Ltd. This Barclays "special purpose vehicle" immediately leased the kit back to the UK Caterpillar company, which itself then rented it back to original owner Caterpillar Inc.

At all times the plant remained at Caterpillar's Illinois base, while most of the price that Barclays paid over was deposited back with Barclays in Bermuda. The only purpose was to generate UK tax allowances worth around £50m. That scheme did fail, in the appeal court ...

Another reported Barclays tax scheme involved selling its customers payment protection insurance via low-tax Ireland.

The policies, from Barclays Insurance (Dublin) Ltd and Barclays Assurance (Dublin) Ltd, generated profits up to £200m a year, taxed at just 10% ...

Guardian 06 February 2009

The top poacher

Three FTSE100 companies have quietly "offshored" legal ownership of their valuable trademarks to low-tax locations, the Guardian's tax gap investigation has found. Two drug firms, GlaxoSmithKline, and AstraZeneca, both headquartered in London, have moved title to their drug brands to Puerto Rico in the Caribbean. The Anglo-Dutch oil giant Shell, although it is still a British plc operating under UK company law, has shifted its trademarks to Switzerland and its main tax residence to the Netherlands.

These are three of Britain's most successful corporations, continuing to generate huge profits and returns for their shareholders despite the global downturn. AstraZeneca has been one of the best performing shares on the FTSE over the last year, seeing its share price go from around £21.50 to around £28.60. At the same time, its market capitalisation has gone up by more than £10bn from £31.3bn to £41.4bn. Glaxo has also been one of the few companies to see its share price go up as the economic storm rages - from around £11 a year ago to around £12.50 now.

Last week Shell revealed that its profits in the final three months of 2008 were down by more than a quarter on the previous year. The oil giant still made more than £25,000 a minute in profits and is forecasted to achieve record earnings this year of £21.5bn. ...

All three enjoy the benefits of being a UK plc - access to capital, enhanced reputation, proper regulation and political stability. Yet they have moved the rights to their intellectual property to tax havens. This means they can reduce their UK-based profits and hence their British tax bills by paying royalties to the subsidiary in the tax haven for use of the trademarks ...

Guardian 03 February 2009

This crisis must spur us to take on the tax avoiders

The tax gap

British taxpayers are being left to plug a multibillion-pound hole in the public finances as hundreds of the country's biggest companies increasingly employ complex and secretive tax arrangements to limit the amount they hand over to the exchequer.

An extensive Guardian investigation has examined the accounts of the UK's biggest companies - many of them household names - and discovered a series of sophisticated tax strategies which, critics say, amount to an almost unstoppable tide of perfectly legal corporate tax avoidance.

The veil of confidentiality that covers these tax avoidance schemes is so difficult to penetrate that nobody knows exactly how much tax goes missing each year. But HM Revenue & Customs estimated that the size of the tax gap could be anything between £3.7bn and £13bn. The Commons public accounts committee put it at a possible £8.5bn and the TUC said £12bn ...

Guardian 02 February 2009

Going Dutch ... outward domestication

Diageo plc ... has been paying very little UK corporation tax ...

Despite average annual profits of almost £2bn over the last decade, its accounts disclose a mere £43m a year in average UK corporation tax charges. This is little more than 2% of its profits ...

Guardian 02 February 2009

What is the tax gap?

If you want to know why Britain has never completed the process of decolonisation, look at two lists side by side.

One is the official register of tax havens, compiled by the OECD. The other is the list of British overseas territories and crown dependencies.

Over a quarter of the world's tax havens are British property. More than half of Britain's colonial territories and dependencies are tax havens.

Strip out Antarctica, the military bases and the scarcely habited rocks and atolls and, of the 11 remaining properties, only the Falkland Islands is not a recognised haven.

The obvious conclusion is that Britain retains these colonies for one purpose: to help banks, corporations and the ultra-rich to avoid tax. ...

The website Shelter Offshore, which helps people to avoid their obligations to society, has just published its list of the world's "top 5 tax havens". Jersey, Guernsey and the Isle of Man come first.

"These highly respectable British offshore tax havens," the site tells us, "can be very attractive indeed", offering "superior levels of investor privacy".

Privacy is the polite word for the secrecy and obstruction that helped to bring down the world's financial systems ...

Boris Johnson has issued a new report on the future of London as a finance centre. I assume this is pretty much what the Conservatives think on this issue. So let’s look at what it and the associated press release says. It begins with classic tax competition rhetoric:

London must radically up its game or face losing its status as the world’s top financial centre, the Mayor of London Boris Johnson was warned today. The Mayor has vowed to protect the capital’s position and ensure London’s successful fight-back.

London’s position was at risk before the start of current economic downturn - it faces a real and serious threat from competitor cities that have developed aggressive strategies to steal business away from the capital.

... What’s the message: low regulation and no tax. The message is unambiguous.

The report might as well say ‘Let’s make London into a tax haven’.

Just see how many times they say ‘zero income tax’ and appreciate what their real aim is ...

... let’s be blunt about what this economic policy promoted by Boris Johnson is.

It is a further blatant attempt to divert the resources of the state for the benefit of the 1% or so in the population who command our corporate entities whilst at the same time loosening democratic control of the processes that might constrain their pillaging of our common-wealth.

Since it is perfectly obvious that these policies have completely failed us there can be no justification for their promotion except that which has always motivated Conservative politicians, which is the blatant favouring of their own nests.

This is a policy based on greed. It will not work. It undermines any prospect that the City of London could again hold its head high in the international financial community. And it blatantly seeks to reduce the taxation on the very wealthiest in our society and the companies they own cost to the majority.

Welcome to the world of 21st century Conservative Party economics ...

Tax Research UK 12 December 2008

London: winning in a changing world

Mayor acts to protect the global capital of finance

35,000 jobs cut at Bank of America

The Oxford Centre for Business Taxation

The Monaco Boys

The Guardian has reported:

Revenue and Customs has disclosed that 57 barristers have been caught evading tax. Thirty-six reached a private settlement with Revenue and Customs and agreed to return £605,000 between them in unpaid tax and fines. Some 21 are still being investigated.

As the Commons Public Accounts Committee has said, HM Revenue & Customs must be given the resources to prosecute tax fraud amongst those who should know better. Not innocent error on tax returns, I stress, but deliberate abuse, of which there is plenty.

It is madness to be cutting staff when this abuse is known to exist.

It is politically inappropriate to be advertising on television about benefit fraud (the value of which is much lower and the risk of prosecution for which is thirty times higher) when tax abuse, often by the wealthiest in society continues with such low risk attached to it that it is considered acceptable to live in the grey margin between tax avoidance and tax evasion, neither of which is socially acceptable.

Let’s pay for an appropriate tax authority now: the yield on the investment is substantial, for the government, but most of all for society as a whole which wins from a fair tax system where each pays what they owe, reducing the overall burden for all honest tax payers.

Tax Research UK 09 Dec 2008

MPs condemn failure to prosecute rich tax dodgers

Offshore centres that attract untaxed wealth from developing countries are depriving poorer nations of revenues they need to weather the global economic crisis, a top OECD official said on Friday.

Governments in advanced economies such as the United States and the European Union are toughening their stance against tax dodgers in a bid to catch as much taxable income as possible in their net.

But developing countries with less sophisticated tax authorities and few resources are finding that task much harder.

"Tax havens have a bigger impact on developing countries than on developed countries," Jeffrey Owens, director of the Centre for Tax Policy Administration at the Organisation for Economic Cooperation and Development, told Reuters.

"There is an enormous drainage of revenues to tax havens. This is equivalent to around 7 to 8 percent of gross domestic product for the African continent and a multiple of the aid it gets from developed countries."

Owens said issues surrounding tax collection had been rising on the agenda of world leaders and would be tackled at a United Nation gathering this weekend in Doha on development aid.

He said a parallel push to reduce barriers to trade through the Doha world trade round -- which has no relationship to the weekend U.N. meeting in the Qatari capital -- also stood to deprive poorer countries of key tariff revenues ...

AlertNet.org 28 November 2008

The global economic slowdown will hit the poorest nations hardest. Demand for their exports is falling. Prices of raw materials are plunging. Flows of money from migrant workers to families back home will shrink as unemployment rises elsewhere. In these circumstances it is more important than ever that rich countries deliver on aid promises. That is why the OECD has called on the world's main donors to join an Aid Pledge to stick by their commitments.

As world leaders head to Doha for a UN meeting on financing for development this Saturday, however, another dimension of the issue needs urgent attention: tax systems. ...

Guardian 27 November 2008

The Barclays Bank fiasco, of it accepting an offer of funding from Middle East investors at an interest rate of 14%, at a tax cost to the UK government of £120 million a year, all as an alternative to lower cost, better term UK government finance, is astonishing.

So too is the fact that they have committed themselves to fees of £300 million in connection with this deal, whether it is approved by shareholders or not.

Actually, it is more than astonishing: what it represents is the end of shareholder interest.

Barclays have convincingly proved that managements do not run their quoted companies on behalf of their shareholders.

They run them on behalf of themselves.

There is little doubt that this deal has been created by arch tax avoiders Roger Jenkins and Bob Diamond, who appear to have effective control of this bank, and that they have acted with the sole intention of preserving their £20 million plus annual employment packages ...

Tax Research UK 18 November 2008

Investor fury puts Barclays plan in danger

Barclays shares collapse to 14-year low

Barclays protects its bankers' pay

Barclays Bank

Mauritius has jumped into the top 25 of countries where it is easiest to do business and now comes second only to Singapore in the “Small Island Developing States” category, the World Bank said on Wednesday.

The Indian Ocean island has undertaken a raft of reforms since Prime Minister Navin Ramgoolam took office in 2005, slashing red tape to make it easier for local entrepreneurs and foreign investors alike to set up and run businesses.

... Mauritius’ so called business friendly environment simply hides a deeply abusive tax haven used to fund much of the inward investment into India and well known as the honey pot for much deep seated corruption in that state ...

Tax Research UK 16 November 2008

Tax treaties with other countries must be honoured

Source-based taxation regime on capital gains for FIIs

Mauritius as a tax haven

Indo-Mauritius Tax Pact Taxing Treaty

From the Mirror

The New Labour experiment deserves to die. There are many reasons. But let me offer just one: it has failed to deliver tax justice.

Tax justice can be defined in various ways. It can be horizontal justice, so that all those on similar income pay similar overall rates of tax. It can be vertical justice, so that those with greater income and gains pay more tax. It can be assessed domestically or internationally. But it doesn't matter how you look at, New Labour has failed to deliver it ...

When it came to power New Labour realised it was going to promote financial services as the basis of the UK's wealth. You could argue it had no choice. I do not agree. But that meant two things.

The first was that it would run a trade deficit and secondly, if it was to have its own currency that meant it had to attract "hot money" to the UK to make up the difference. Labour promoted tax haven UK to achieve this, combining lax regulation and low taxes to bring money to our shores.

So the domicile rules stayed for the very rich: for them tax was an option, not an obligation ...

For those not able to exploit such loopholes there were ... more stealth taxes as the tax base was expanded to collect revenue whilst Labour claimed to be cutting tax rates. In the end that dishonesty has not fooled anyone.

But now New Labour's support of tax havens is catching up on it – whether that support is for the Euromarket based in London, where no questions are asked and no data on the people to whom interest is paid is collected, or New Labour's blatant support of abuse in locations such as Jersey which have acted as conduits to channel money, tax free to London.

The consequence of these policies for house price inflation, inequality and the undermining of the state, let alone in promoting corruption and kleptocracy amongst the rulers and elites of developing and former Soviet countries, a is becoming apparent. The BAe affair was a very public example of a very widespread problem ...

Observer 02 November 2008

There was some excellent research in the Sunday Herald today, to which I was pleased to have contributed. Take this:

The Royal Bank of Scotland Group, one of the so-called “jewels” of the Scottish economy, has beneficial shareholdings in at least 128 companies incorporated in tax havens, according to its annual return.

Included in its portfolio are 62 firms in the Cayman Islands, 29 in Jersey, 11 in Guernsey, seven in the British Virgin Islands (BVI) and four in the Bahamas.

There’s much more here.

Then you’ll realise why I said:

I think these banks should close down their offshore subsidiaries. This is because the government cannot have a stake in companies that undermine the government. Closing them down could be done as it is a commercial choice to operate in tax havens.

I think it’s a position for which there is growing support. As the Herald concluded in the second part of the story:

It’s time to make our banks honest again. As a condition of our continuing to pay public money to save financial institutions, they must agree to pay their taxes like the rest of us.

Tax Research UK 26 October 2008

Christian Aid's new report seeks to expose the scandal of a global tax system that allows the world's richest to duck their responsibilities while condemning the poorest to stunted development, even premature death.

The situation is stark and urgent. Our report predicts that illegal, trade-related tax evasion alone will be responsible for some 5.6 million deaths of young children in the developing world between 2000 and 2015.

That's almost 1,000 a day.

Half are already dead.

Christian Aid 12 May 2008

Download report .pdf

Sir: Your leading article "A competitive edge that Britain needs to preserve" (6 May) makes an overwhelming case for EU tax harmonisation, which I am sure was not your intention. The piece was a locus classicus of liberal economic theory: the UK should lower tax rates on business or else these itinerant gentlemen will go to a country which offers a lower rate of taxation.
The logical outcome of such a policy is a race to the bottom in terms of corporation tax, wage levels, working conditions and social services (this is generally referred to as "flexibility"). I suppose the final goal would be zero taxation and/or slavery. Maybe we should even pay multinational companies to set up in the UK.
That is always the problem with this argument. For every low-tax, low-wage regime, there is an even lower tax, lower wage regime waiting to undercut it. Tax harmonisation directives are the only solution to this problem.
It doesn't surprise me that neo-liberal economists – those high priests of monied interests – put forward such arguments; it does come as a surprise, however, that an otherwise putatively progressive publication such as The Independent gives them houseroom.

Frank Lee, Wallington Surrey

Independent 07 May 2008

The work and pensions select committee's report Benefits Simplification ... slammed the current system as "stunningly complicated".

The Department for Work and Pensions alone administers around 40 benefits, each with different rules ... Such is the overall complexity that the taxpayer now loses more money to official and claimant error than to fraud.

We once had less means-testing for benefits (not more, as Williams suggests) alongside more for taxation.

This has been reversed, with substantial means-testing of benefits and tax credits, and the value of the remaining universal benefits falling well behind earnings.

Meanwhile, taxation has shifted to indirect taxes, which hit the poorest harder.

The consequences for poor children are dire ... the most recent figures show child poverty rising again, with 3.8 million children living in poverty.

The Joseph Rowntree Foundation has predicted that if we continue to rely primarily on means-tested tax credits to end child poverty, it will cost us around £30bn more a year by 2020.

So means-testing will continue to nibble at the edges, whereas universal benefits in tandem with progressive taxation can address the underlying inequalities ... a return to progressive taxation, universal benefits could reduce inequality, without the problems brought by means-testing.

Guardian 19 September 2007

Southern countries lose billions of dollars of potential income every year. Some of the main causes of those leaks are the following:

• Ineffective tax systems fail to reach landowners, foreign corporations and wealthy individuals. This comes hand in hand with a corrupt financial administration that is not in a condition to actually stop tax revenue from falling.

• Through tax cuts and frequent tax exemptions for foreign investors, developing countries forego revenues without ensuring the corresponding development benefits of the investments thus promoted. This is particularly true in the more than 3,000 currently existing export processing zones (sometimes called “special economic zones”), where workers’ rights and environmental regulations are frequently abolished. The competition to attract foreign investment becomes a “race to the bottom” in tax terms. Transnational corporations profit from this practice, but the local populations seldom see the benefits.

• The globalization of corporate activities allows firms with a transnational presence to manipulate the prices of their internal transactions so that the profits are accounted for in the countries where the taxes are lower, in a move known as “transfer pricing”. While markets and production are globalized and money can circulate around the world in seconds, tax policy is confined within national borders.

• Even countries with properly functioning tax systems lose billions of dollars every year due to capital flight to tax havens.

• Finally, the pressure towards trade liberalization and tariff reduction deprives many countries in the South from vital income. In Africa in particular, customs revenues provide an important percentage of government income. Dropping tariffs and providing no replacement leaves a gap in the budget. ...

globalpolicy.org 2006