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.