But the strangest comment was by BAT, which paid no tax in the UK in 2007:
A spokeswoman for BAT, the twelfth-biggest company in the UK by market value and the owner of the cigarette brands Lucky Strike and Pall Mall, said that its head office operated at a loss and that 99 per cent of its profits were earned overseas.
There is only one commercial response to this. If a head office loses money it cannot add value. In that case the group is not worthwhile mainatining and should be broken up on commercial grounds. Shareholder value must be increased in this case if it were.
Bit odd for an accountant to miss that making a profit and adding value are not quite the same thing, isn\’t it? Fire stations don\’t make a profit but we accept that they add value, Parliament doesn\’t make a profit but we accept that (sometimes) it adds value, the courts system doesn\’t make a profit but definitely adds value.
Head Offices are a cost to a business, one that (may) add value to said business, but there\’s no reason on earth to compare that to whether the head office makes a profit or not.
To take it a little futher, does he accept that audting adds value to a company? But does it make a profit? Human Resources? The canteen?
Would the canteen being subsidised (ie, making a loss) mean that the company was therefore ripe for breaking up? Anyone want to tell that to Google?
What worries me is that this man actually has public influence!