So, well, no, we\’ll subcontract this one out shall we?
Yes, Ritchie forgot double taxation relief. No, Ritchie won\’t admit to having done so.
Quite why he cannot simply admit to an \”Ooopsie Moment\” I don\’t know. We all have them sometimes and most of us realise at some point that the best response is to simply declare \”Ah, yes, sorry, Ooopsie Moment there. Sorry, try harder next time\”.
But I have to say further that what I really love about this is that Ritchie\’s own plans, those country by country reporting ones, would lead to a much larger double taxation relief. And thus, by the measurements he uses, a larger tax gap in the UK.
Bear with me here a moment. The aim of country by country reporting is to make sure that companies are properly tax compliant.
Tax compliance – the duty of the taxpayer
For the individual taxpayer tax justice is about tax compliance. This happens when the individual seeks to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions they undertake coincides with the place and form in which they report them for taxation purposes.
What this means for large, international, companies is that they should be paying tax where the economic substance of the transaction takes place. Profits made from oil in Angola should be taxed in Angola. From flogging mustard in Poland in Poland. Country by country reporting is an aid to making sure that this happens.
I\’ve not misrepresented his views here: this is absolutely what he is campaigning for.
Excellent: now we come to double taxation relief. The money that BP makes in Angola should be taxed. righteously, in Angola. Mustard sales in Poland by Tesco\’s should be taxed in Poland. But of course BP and Tesco\’s should not be taxed in the UK on such profits because the economic substance of the transaction is not in the UK. And thus, under Ritchie\’s preferred tax and information scheme, double taxation relief will rise.
And thus, given that Ritchie uses the existence of double taxation relief as proof perfect that there is a tax gap, the tax gap will rise. That very tax gap which Ritchie is campaigning to close.