In which Richard Murphy agrees that both Phillip Green and Vodafone are tax compliant

Savour, for a moment, this line.

In responding I will ignore his pomposity

No, wait, just roll that around and savour it.

Now, watch Ritchie entirely destroy the UKUncut position on both Phillip Green and Vodafone.

Then let’s move on to his argument  that Philip Green, or anyone else,  may use a tax haven structure to avoid  tax despite the origin of their profits being within the United Kingdom.  Toby Young  says that this argument is remarkably similar to one Nick Shaxson uses in his book. I’ve no doubt it is. We work closely together.  The logic of the argument is quite straightforward. First of all, we believe in source taxation i.e. that profits should be taxed where they arise.  I am not, incidentally, making any argument with regard to Philip Green in the observations that follow –  none of which relate to his companies.  Our argument is a quite straightforward one, and that is that a UK-based trading operation has a duty to pay tax, in accordance with the spirit of UK law, because if it takes advantage of UK limited liability then in the act of incorporation it assumes an obligation to be accountable, both transparently through the publication of accounts, and financially through the payment of tax, to the authority that gave it the right to use limited liability with regard to its debt i.e. the right to avoid payment of those debts to people to whom they are owed in the event that it becomes insolvent through no fault of its own.  The authority that granted that right was, of course, parliament, through the passing of the Companies Acts.  The authority demands tax is exactly the same,   and it used the same legislative to  create that tax demand as was used to create the right of limited liability:  it is the UK parliament.  The rights and obligations counterbalance each other.

Arcadia is a limited liability corporation both resident and domiciled in the UK and doing business in the UK. It pays corporation tax upon the profits it makes in doing so in the UK. No one at all has suggested at any time that Arcadia does not pay the correct amount of corporation tax, either by the letter or the spirit of the law. Richard is thus stating that Arcadia is entirely tax compliant.

As is Phillip Green: he pays UK tax on his income. As is Lady Green tax compliant: her income arises in Monaco, because that is where she is resident. Richard, UKUncut, the TJN, none of them have ever even hinted at the idea that already taxed corporate profits, when paid out as dividends, should be taxed in the UK when they are paid to non-residents of the UK. That is, rightly, a matter for the tax jurisdictions of residence.

Just as dividends paid out by foreign companies to residents of the UK are subject to UK taxation.

Good.

And as to Vodafone? The numbers under dispute were profits made from shops in Germany, used to sell phones and air time in Germany to Germans. Under Ritchie\’s rules these profits should be taxed in Germany, not anywhere else.

So Vodafone, in arguing that such profits should not be taxed in the UK, was and is totally tax compliant.

And we have this from the pen of one of the country\’s leading tax experts to boot.

Good, glad that\’s settled then.

18 comments on “In which Richard Murphy agrees that both Phillip Green and Vodafone are tax compliant

  1. He’s done more than that – he’s said that the reason a company has to pay UK tax is that it is incorporated under the UK Companies Acts.

    So if I incorporate in Jersey?…

  2. but again, The Murph-meister makes the claim that paying tax is a condition of citizenship – eg part of the price of incorporating in the UK is that you pay tax in the UK to thank the beneficent government for merely letting you incorporate.

    Does he really not understand that tax is just a way of paying for state activities? I believe that Marx believed that, in the ideal world, tax would be unnecessary because the state would have withered away.

  3. “The duty to pay tax is to democratic society, no more, or less, because it grants the right to trade, it upholds property rights, and it demands tax in exchange. Undermine one of those and you undermine them all, including the democratic process itself.”

    Does this mean I should or should not pay taxes if a country isn’t a democracy?

  4. “Does this mean I should or should not pay taxes if a country isn’t a democracy?”

    Or if you can’t vote?

  5. He doesn’t mean democratic, or society, he just means The State, any old form of state so long as it has a reasonable degree of rule of law and the power to impose its will: it “grants the right to trade, it upholds property rights, and it demands tax in exchange.” “Democratic society” are there – why? – they must just be buzzwords, for comfort of some kind. take them out and his argument is unchanged, but a bit stark, a bit Libertarian? I mean if that’s all you provide, and all you demand in return, that’s not bad.

  6. ambrose > I would never use any word beginning with ‘liber’ to describe any argument put forward by Ritchie.

    How’s about “Ritchies blog is liberally filled with inaccurate half-truths and fundamental misunderstandings of basic economic theory”.

    Do I win?

  7. If you read his “theology of taxation” pdf linked in the comments of a previous article, you find that he’s basically using the argument that was once called “the divine right of kings”, but with “kings” scratched out and “the State” written in in crayon. His basic belief, as a devout Christian Socialist, is that God institutes forms of government over us, and so we are duty bound to obey them. See also, Hobbes’s “Leviathan”.

    It follows (for Richard) from the ambiguous “render unto Caesar” quote- which wiser theologians understand is there to demonstrate Jesus’s cunning debating skills in evading his hostile questioners’ rhetorical trap, not an endorsement of Caesar. It also follows more generally from the Old Testament plot structure in which bad kings are overthrown by God and good ones instituted by God, thus showing that God is the active agent in instituting kings. Or, the State, for Richard.

    Hence, so far as he is concerned, paying whatever taxes the State decrees is an absolute moral duty, because the State is the will of God.

    He’s a fucking nutter. And that is all he is.

  8. “He’s a fucking nutter. And that is all he is.”

    If you look at the number & size of the posts on his site, there’s definitely something very strange going on over there. He must be spending most of the day doing it. I imagine his recently found ‘fame’ in the media has gone very much to the Murphy head; hence the personal infallibility theme so central to his writing.
    Seemed he jumped his personal shark a couple of weeks ago & he’s now heading so far into padded cell territory he’s unlikely to return.

  9. Bloke from Spain, grow up, if you want to trade insults, do so somewhere else.

    This is a place for debate, not petty comments.

    Secondly, Devon chap, try living in a dictatorship, say Spain in the 1960’s and you realise that paying taxs in a democracy is such a bad thing.

    Dictatorships don’t tend to have well run economies. In Spain millions of young people left the country under Franco.

  10. I ment to say

    paying taxs in a democracy is not such a bad thing

    Dictatorships tend to have badly run economies. In Spain millions of young people left the country under Franco

  11. Ah, now Tim to be fair, he only says that he will ignore Young’s pomposity. He does not commit to avoid pomposity in his own reply.

  12. Bobski, yes, bizarre isn’t it? Ian B – thanks, interesting. I do suspect, with BiS, that we are trying to noodle out consistency from something basically incoherent. Pavel – I live in a dictatorship, and pay very little (direct) tax. Not a bad short-term bargain, but yes, it does drive home the long-term value of batty inefficent democracy.

  13. He only attacked Young for being pompous because that was Young’s initial response to Ritchie (Ritchie has since edited Young’s response down, it appears, so it now looks like the idea of the antagonist being “pompous” was all Ritchie’s).

    He really is an unspeakable cunt

  14. Pavel Lopez.

    Not quite sure what your point was against me. How you construed that I was suggesting paying taxes in a Democracy was a bad thing is beyond me (the level of taxes we can discuss). I was merely commenting on Ritchie’s arguement that seemed to imply you only had a duty to pay taxes in a democracy.

    You say this is a place for debate. Agreed, but you should read comments before disagreeing with them in that case.

  15. Toby Young has a wonderful item on this in the Speccie, pointing to Murphy’s hypocrisy on the issue of avoidance.

    I hope some major MSM guys do a job on RM. May his demise be a particularly unpleasant one, as Ernst Blofeld might say.

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