Ritchie announces that Amazon, Google, Vodafone, Starbucks, are not tax avoiders

This post is simply fascinating. Because the conclusion that Ritchie reaches is that all the people he’s been whining about as tax avoiders are not, by his new definition, tax avoiders.

In other words, tax avoidance always embraces the risk that the wrong amount of tax might be paid, and this is true whether or not the Revenue challenge the position. There is, therefore, always the possibility that the wrong amount of tax might be paid at cost to the rest of society.

Ritchie’s new definition of tax avoidance is that if you plan something which, when HMRC challenges it, it gets reversed then therefore you were attempting to tax avoid. And if it’s not challenged then you have tax avoided: it’s that risk of reversal that makes up the definition of tax avoidance.

All of which is fascinating of course, for it means that Google, Facebook, Amazon, Vodafone, Starbucks and all the rest, all those the Murphmonster has been accusing of tax avoidance, haven’t in fact been tax avoiding. Because absolutely no one is arguing that there’s any risk at all of reversal over any of their actions. Vodafone even had it challenged and HMRC was told to bugger off by the courts.

By Ritchie’s own, new, definition none of them are tax avoiders.

21 comments on “Ritchie announces that Amazon, Google, Vodafone, Starbucks, are not tax avoiders

  1. I think the flowchart is saying that all those cases are, in their view, “effective avoidance”. This, in our brave new world, is a Bad Thing so should still be frowned upon.

    The claim made by Quentin, as I understand it, is that what distinguishes avoidance from compliance is the creation of “tax risk”. By creating tax risk you are already a tax avoider, even if you’re following the law according to its letter and spirit and whether your tax position is challenged (unsuccessfully) by HMRC or not.

    However, all they’ve done here is redefine one term (“tax avoidance”) in terms of another (“tax risk”) in a way that isn’t entirely helpful. It’s unclear to me how “deliberately creating the possibility that your filing position understates your tax liability” applies in situations such as Vodafone, Google, Starbucks, etc, where they have reached agreement with HMRC that, according to the law, they haven’t adopted filing positions that understate their tax liability.

  2. DQ even accepts that at the time of filing nobody will know if there is avoidance because that only happens if the case is decided in Court.

  3. I’m hoping to post up a response to Quentin at lunchtime.

    One point is that I do find it interesting that the flowchart goes from “uncertain tax position” through “correct as a matter of law” to “effective avoidance”. Surely the finding that it was correct has now taken it from being uncertain to being certain, which shifts the transaction up to the “legitimate planning” section of the curve?

    The “effective avoidance” would then only apply to uncertain positions which are correct but not challenged – but how do you ever find that they were correct, in that situation? You’d think that tacit agreement by HMRC is at least a suggestion that the position is correct.

    Quentin is simply begging the question when he has that “is it correct as a matter of law?” box.

    Unless you can use hindsight, of course, and a later case decides the position once the return has been finalised.

  4. If all these incredibly intelligent (quesionable) and expensive (certainly) cunts took themselves off to do something productive instead of arguing how many fucking angels can pay taxes on the head of a pin, we might not be in quite the deep shit we are.

  5. BiN>

    Really? I think we can at least be thankful they don’t have their fingers in anything important, otherwise things would be much worse than they are.

  6. This is Ritchie’s answer to a question about his article recommending setting up domestic help as service companies and was it not recommending tax avoidance schemes,

    ‘I have long explained, if you’re not aware of it, that the whole purpose for writing that article at the time was to expose a tax planning scheme that was then being explained as a good wheeze on the tax lecture circuit, and which I did not like and would never have recommended to a client, and did not’

    Classic!

  7. “By creating tax risk you are already a tax avoider”

    So Courageous State, terrified taxpayer then? Sounds about right.

    Haven’t read it all through yet, but it seems deeply questionable to assume the ‘maximum certainty’ position is the ‘correct amount of tax’. Where are the error bars, and what underlies those? Once you add them, the neat table-top of ‘legitimate/planning’ disappears in a fog of uncertainty, where risk from poor/over-complex tax code overlaps early risk from ‘avoidance’. Game over.

    “Quentin is simply begging the question when he has that “is it correct as a matter of law?” box.”

    Absolutely. The correct filing is assumed when we drop in at the top, and ‘introduce risk’.

    Niels.

  8. I started off trying to read this (Quentin) critically:

    Ie, how can one possibly determine the precise spot – his definition of “planning” versus “avoidance” (within UK plc’s monstrously complex tax system); and is “the filing position correct as a matter of law” something that can always be determined factually in advance, etc…

    Then I got down to Para 37 onwards, and realised that it just looks like the same Murphy style politics.

    For example: Para 46 – Even using a tax haven [ say to legitimately mix profits up to a holding company ] is in itself abusive conduct…

    NielsR – spot on.

  9. The LTHD seems to be asserting that “if you have nothing to hide you have nothing to fear”. He’s descending not so much to the level of petty prodnoses and quasi-Fascists the world over, he’s actually slowly morphing into one of Viz Comic’s “Bottom Inspectors”

  10. Usual lefty nonsense in trying to misappropriate the language and redefine words according to what they want it to mean.

    No point in reading through pages of dense prose which tries to back up their side with facts. There are no facts. They are just using it to bamboozle their followers and tie up the opposition in knots as they attempt to explain the unexplainable.

    Simple repsonse – how would a member of the public use the term.

  11. I don’t think you can accuse Ritchie of ‘redefining words’, as this implies he has defined some words.

    AFAICS words like avoidance, evasion and tax due have random definitions made up on the fly, largely driven by whether the politics are supported or not ; any reason GMG and Stemcor aren’t on this list ?

  12. Good to see Ritchie and his cohorts still grappling (unsuccessfully) with sort of taxation concepts one usually nailed down during Tax 101 (usually taken during one’s junior year in college).

    And it’s not “tax risk”. It’s “noncompliance risk”.

    Morons.

  13. “Because absolutely no one is arguing that there’s any risk at all of reversal over any of their actions.”

    I don’t think this is correct at all. No competent tax advisor in the world would say that is zero risk in any of the quoted cases – nobody would write a tax opinion saying that it WILL be ok and leave themselves open to being sued if it failed. They might say it should be ok, or on the balance of probabilities the best answer is that it’s correct, but there’s some risk that either the filing position is wrong, either on a point of fact or a point of law.

    I actually think the definition is the best once I’ve seen yet, although not perfect. For those who says it’s just rephrasing what we had already – that’s basically what formalising an argument is.

    Let’s take Google, who use an Irish company to sell to the UK. Tim’s view is that there is “no risk” here, because the law says they are allowed to do this. This is true but only to a point.

    From what I can make out, Google Ireland is not taxed in the UK. It would be taxed in the UK if it had people there with the capacity to sign contracts on its behalf, but Google says it doesn’t. However, Google does have (as a matter of fact) people who do almost everything that a sales person would do (which is why they have “sales” in their job title) other than sign contracts. Google says that’s all that counts.

    For example: A court might say that Google Ireland has people who effectively agree contracts, irrespective of where the contract is rubber stamped. Or that the law was intended by Parliament to apply in this case. Or that the Irish company should actually be considered to be a UK company for tax purpose. Or a single administrative cock-up could break the carefully designed system. Or one of many, many other risks. These are risks that Google has introduced to their structure, for no (or negligible) commercial benefit beyond tax.

  14. At least, if nothing else, we have been spared another of Murphy’s asinine Venn Diagrams(tm) but not, alas, the sweet caressing comments of Ivan Horrocks.

  15. @Max

    ‘This is Ritchie’s answer to a question about his article recommending setting up domestic help as service companies and was it not recommending tax avoidance schemes,’

    He’s a terrible liar, in at least two senses of the word ‘terrible’.

    Here’s the original piece, for fuck’s sake. Are you reading this Murphy, you moron? The internet – it saves stuff! Forever!

    I quote directly from the lying tool himself:

    ‘Now, however, there is an alternative and legal way of making the payment – and saving money. This may be the time to set your nanny up in her own private limited company. The Revenue has been attacking most ‘personal service companies’ – companies owned by one person and supplying all their services to one customer. But the law that does this also makes it clear that if the company supplies services to someone who is not in business, such companies are quite legitimate. Parents are not in business as parents, so a nanny can be a one-person personal service company.’

    Here he is trying to help ‘soften the blow’ for those facing capital gains tax bills exposing the evils of CGT avoidance.

    Here he is advising businessmen on how to dodge tax thundering against the evils of tax avoidance by fat cat businessmen.

    Here he is advising people who ‘are seriously wealthy, have family trusts, a range of investments, and so on’ to use ‘one of the large firms of chartered accountants and [to] expect to pay for the expertise they can provide’ exposing the shadowy cabal-like relationship between the wealthy and the evil Big Five accountancy firms.

  16. @Interested

    Surely God will be happy that Murphy changed his tune from an evil tax avoiding scumbag to a crusader speaking truth to power:

    Luke 15:7… I say unto you, that likewise joy shall be in heaven over one sinner that repenteth, more than over ninety and nine just persons, which need no repentance.

    Oh, wait, by lying repeatedly about his previous actions and many other things he’s still actually a sinner. I do like the prospect of what awaits the puffed-up twat:

    Revelation 21:8…and all liars, shall have their part in the lake which burneth with fire and brimstone.

  17. BraveFart

    Sadly Horrocks seems to be like a very bad penny – never going away – I’m not sure whether he or Andrew Dickie qualifies as the most evil contributor on the LHTD’s echo chamber website… An odious individual….

  18. I always enjoy reading Tim’s assaults on the Murph, and the comments below; even though I rarely understand what either one is talking about, I can readily see that Murphy is a Grauniad-suckling cretin and Tim is an evil capitalist just like me.

    However, just how much influence does Murphy have, beyond attractive 60-something Polly? Is he really worth all this effort expended on him, or is it just good fun? Either way is good, by the way.

  19. Libertarian

    It’s not hard to see him having influence as the Chief advisor to the TUC if Miliballs gets in at the next election. Even more concerning (albeit this is a leap) would be if one of his ‘heroes’, the appalling Caroline Lucas (basically a straight gulag advocate) ever took advantage of economic collapse to administer a takeover on ‘environmental’ grounds – he’d be in charge of the entire economy. Never underestimate his ego, or ambition – I’m sure people in Germany in the late 1920s found Hitler quite amusing – they probably weren’t laughing in the mid 1930s….

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