UKUncut: blithering idiots once again

UKUncut really are remarkable. They\’ve managed to once again take as their target a company which isn\’t doing anything wrong with tax: Barclays.

Think through their targets so far: Arcadia does pay all of its corporation tax, Lady Green isn\’t British and doesn\’t live here, so there\’s no tax system on the planet which would tax her income here.

They\’re insisting that Vodafone should pay tax in the UK on phones sold in Germany to Germans from German shops. Boots hasn\’t dodged anything, they\’ve just replaced equity with debt, meaning that it\’s the people who receive the interest who pay the tax, not the company issuing the dividends: it\’s not even clear that the total tax take has fallen.

And now there\’s Barclays:

Protesters have targeted more than 35 branches of Barclays bank, with pickets, poetry readings and even colouring competitions, in another of a series of days of direct action organised by the UK Uncut group.

They were highlighting Barclays\’ admission that it paid just £113m in UK corporation tax in 2009 – a year when it rang up a record £11.6bn in profits.

There\’s two major reasons that bill was so low. The first is the one that people have already cottoned on to, that the previous year they\’d made losses, losses can be carried forward. There is no rational tax system possible which would not allow this. You pay tax on your cumulative profits over time, not just the profits in any one arbitrary time period.

But the other one is this:

Barclays\’ $13.5 billion sale of its asset management business to BlackRock relieves the immediate worries over the bank\’s capital, analysts said, though it will also increase the group\’s reliance on investment banking to generate earnings.

Ooooh, what\’s that? They sold off a subsidiary.

said it will book an $8.8 billion net gain on the cash and shares deal.

$8.8 billion? Mebbe £5 billion then as a capital gain on that? Hmm, is that liable to corporation tax?

The Substantial Shareholding Exemption applies only to trading companies, or trading groups, who sell or otherwise dispose of shares, interests in shares and certain assets related to shares in other trading companies or holding companies of trading groups. There’s no Corporation Tax to pay on any gain on these disposals, and any losses are not allowable to set off against gains on the disposal of shareholdings outside of the Substantial Shareholdings Exemption or any other assets.

Oh, no it isn\’t is it?

Umm, gosh, can we think of anyone who has used exactly this provision of the law?

Err, yes, actually we can.

For the record, though, some comments have completely missed the mark on GMG\’s corporation tax position. The reason such a low CT bill is found in the latest figures is that the proceeds of the profitable sale of GMG\’s Autotrader business were reinvested and thus attracted a tax relief aimed specifically at transactions of that sort. Taking reliefs as intended by parliament is not tax avoidance.

Yes, that\’s right: the Guardian Media Group made use of exactly this provision. And that isn\’t, at all, tax avoidance. It\’s using, as they say, a tax provision specifically enacted by Parliament for the purpose meant by Parliament.

Guess who the guy saying that is? It\’s Richard Brooks: yes, the guy who writes the Vodafone tax stories for Private eye. You know, the guy whose reporting started off the whole UKUncut teenage Trot nonsense in the first place.

And as Murphy R reports:

No complicated planning was needed to produce the low tax charge on the sale of this interest: the government has since 2002 provided that Substantial Shareholdings Relief is due when an asset of this sort is sold and no tax is due. The Guardian was, therefore, being tax compliant: the company is doing what the government wants, and for which it provides a relief. It would appropriate to criticise the government for introducing a tax relief of this sort: the Guardian cannot be criticised for using it when the law required that it be applied.

Not only isn\’t this not tax avoidance, it\’s not even tax planning: it is, as we get from the keyboard of the oracle himself, tax compliance.

So given all of this, given the way that Brooks and Murphy so strongly defend GMG (recall, Murph tells us that not only was there nothing wrong in The Guardian doing this, they had to do it!), what in buggery are those idiots doing hanging around the bank branches yesterday?

And why isn\’t Chuka Ummuna being forced to wear a Dunce\’s Cap?

Answers on a postcard please…..

Update: There\’s a more reasoned and accurate description here.

25 comments on “UKUncut: blithering idiots once again

  1. Pingback: Tweets that mention UKUncut: blithering idiots once again -- Topsy.com

  2. Candidly Tim, you’ve missed the whole point of the keyboard oracle’s arguments.

    Guardian = Force for good

    Barclays = Pure Evil

    It doesn’t matter what the law says – how childish of you to attribute any importance to such a corrupt and useless institution as the law. No, what matters is ‘tax compliance’. Some might argue it’s a laughably nebulous concept dreamed up by Richard Murphy. To such right wing extremists, I would say can your cynicism. Tax compliance is whatever the Keyboard Oracle deems moral at any given point in time. This is the gold standard to which we all must aspire.

    The Oracle has spoken. Barclays is not compliant, and shall be smited. GMG is compliant, and shall be blessed eternally. How vain of you to question Him.

  3. You can’t assume tha these people care about tax law at all.

    I went to Barlcays yesterday to find socialists on the floor singing songs, and they weren’t criticising Barclays tax system, they were criticising the entire nature of capitalism.

    Even if the CT rate was 80% and they’d paid that on their entire year’s profit, they’d still be unhappy.

    If only Midas Mulligan rank the banks in this country

  4. Love the way ukuncut & Richie want media to examine all this, but Richie still won’t allow a fair an open debate on his blog.

    What is he frightened of? Surely if his argument holds water, then he’d welcome an open unmoderated debate….

  5. “I went to Barlcays yesterday to find socialists on the floor singing songs”

    How many have jobs I wonder? And how many live off the sweat of the brow of their comrades?

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  7. Pingback: The Guardian: Uncut and Full of Cant - Guy Fawkes' blog

  8. You are right about this situation but calling the other side names doesnt help, it just inflames anger.

    To convince people you have to be courteous.

  9. Tim,

    There is a large grain of truth about what you say about the hypocrisy of the Guardian (although given that GMG has historically been unprofitable so the extent of its tax avoidance pales into insignificance against Barclays and others) and some of the childish tactics of UKCut, but what you fail to recognise is the underlying seriousness of the situation. There are a number of major corporates and others that use a variety of loopholes and allowances which mean that they are able to pay substantially lower tax – and the consequence of this is that others who do not have access to such loopholes (e.g. the bulk of us on PAYE) have to pay more tax or there are cuts in public expenditure.

    I think anyone would struggle to justify the current current exemptions and loopholes given to corporates (and some of the self employed for that matter) on any intellectual basis. And the only defence I can really see for the present arrangements is one of vested interest.

    I do find it particularly galling that the UK tax payer having bailed out the UK banking industry by covering its losses now has to grant loss relief for those same losses – particularly to Banks such as Barclays which have had a massive increase in their wages bill since 2007, unlikle the rest of the country. I’d also be more than a little pissed off with Diamond and co if I were a Barclay’s shareholder – compare 2007 and 2010 results and share prices if you don’t believe me, but then we have a pretty supine investment management sector in the UK.

  10. Pingback: Guardian’s tax hypocrisy, continued « Autonomous Mind

  11. @ tory boys never grow up: You are aware I take it that Barclays, whatever their other sins, refused to take a bail out despite reputed pressure to do so.

  12. Falco

    Yes I’m of course I aware of that – but they did benefit from the bail out, as I’m sure there would have been a pretty big hole in their balance sheet if HBOS, RBS et al had been allowed to collapse.

  13. @toryboys – oh, you’re “sure” they benefited from the bail-outs so they should pay for it? That’s like saying that if I have two mates, Andy and Bob, for a night out and Andy has no money, and I give Andy some money so we can all go enjoy ourselves then Bob should also pay me back, because he got some kind of secondary benefit from it too.

    I also don’t exactly see how Barclays benefits in the long run from the government propping up its loss-making, inefficient competitors.

    And finally, if you think people should pay for the bail-outs based on what fringe benefits they received then I expect your cheque to HMRC is in the mail. After all, you also benefited from the bank system not collapsing, so you should be paying your bailout money back.

  14. Pingback: The difference between Barclays Bank and the Gardian Media Group « Ampers' Rants

  15. @ tory boys never grow up
    You are right that this is indeed a serious situation. You are also probably right that there are transgressors. And by all means carry right on to name them and shame them – just don’t pick on firms who fully comply with UK tax law as set out by the Labour govt.

    Find a proper example (GMG keeps coming up as an excellent example) and run with it. This random, arbitrary drive by shooting of Barclays makes the cause look innumerate.

  16. MarkM

    So Barclays didn’t benefit in the long run from the bail outs? And what exposures do you think Barclays carried in the interbank market to RBS and HBOS – or to banks that were exposed to those banks? Don’t you understand that if the Government hadn’t stepped in then there would have been a domino effect and that Barclays would have been one of the first dominoes to fall. Look at what a mess happened when teh US Govt adopted your thinking and allowed Lehmans to fail.

    As for me personally having to pay extra to the HMRC for the benefits gained from saving the banking system – perhaps you haven’t looked at tax bills recently but I’m afraid you will see that millions of ordinary tax payers are picking up the bills.

    Perhaps the analogy you need is if Andy’s life was saved as a result of a blood transfusion given by others, which was necessary as a result of drunk driving while Bob was at the wheel (or sharing the wheel with Andy if you wish)- then do you think that Bob as some moral recompense should be a blood donor in the future?

  17. Gary

    I haven’t argured that Barclays have done anything illegal – I just think that the tax laws should be changed to prevent Barclays using some of the tax avoidance schemes that it does and not allowing tax relief for losses during the banking crisis when the taxpayer had to step in as lender of last resort. I have no problems in tackling tax avoidance by the Guardian or any others – but given their relative scale I would suggest going after the big fish first, rather than using the deviousness of the small fish as an argument for not going fishing at all.

  18. Perhaps those who think Barclays are so innocent should ask themselves why Barclay’s needs so many subsisidiaries in countries where they undertake minimal business??

  19. @ TBNGU I suspect it’s because they are a world-wide bank. It would be rather embarrassing for them to have to tell customers that certain transfers would have to be handled using competitor banks.

    If you’re suggesting that these subsidiaries only exist for tax purposes, which is evasion under current tax law, then say so but no one has put forward any evidence for this.

  20. Falco

    So is HSBC – we are not talking about operating entities here but intermediate holding companies – of course they have a purpose other than tax, they are holding companies so nothing illegal has been done. The evidence is there Barclays has significantly more of them than other UK companies with a similar range and scale of operations.

  21. Pingback: The Five howlers made by The Guardian in reporting tax paid by Barclays « A Tory Pier’s Blog

  22. Love TBNGU argument. Penalties apply if you benefit from bank bailout.

    Why did GB bail out the banks then? Shurely for the citizens of the State. Should we all pay an additional moral tax for the benefit we received?

  23. John

    I think you will find that all UK tax payers are paying more taxes as a consequence of the bank bail out – all I ask is that Barclays be required to make a fair contribution as a very direct beneficiary.

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