Polly on tax

The protests have brought to public attention Vodafone\’s deal with HM Revenue & Customs that let them pay £6bn less in tax than some experts expected.

Erm, no. For a start, the \”expert\” is a retired tax inspector who estimated that the total bill should have been £6 billion, of which £1.25 billion is being paid. So the gap is £4.75 billion.

Secondly, the expectation seems to have come from who knows where? That £6 billion has been calculated by noting £18 billion in the Luxembourg company and charging 30% UK corporation tax to it. Entirely missing the point that the dividends paid in will already have paid German tax (higher than UK, so no further UK tax payable) and the interest will have paid Luzembourg tax (21%, lower than the 30% UK).

The total payable, according to tax peeps who one might expect to know, appears, well is at least likely to be, the £1.25 billion actually being coughed up.

Do note that no one at all has managed to replicate the calculation that leads to a £6 billion owing. No one has even attempted it either: none of the self-proclaimed tax experts have had the courage to put their heads above the parapet on this.

Philip Green, quite legally, put the ownership of his Arcadia empire into his wife\’s name in Monaco and paid her £1.2bn, tax free. (If only some gigolo would sweep Lady Green off her feet and so make off with all her husband\’s untaxed billions). Arcadia is not some flighty finance company, easy to base anywhere: its money is earned in UK high streets from British pockets and the law could make it pay British tax – as it should Cadbury, whose profits Kraft is moving to tax haven Switzerland.

Er, Arcadia does pay its tax in the UK. It\’s a UK domiciled company nd it pays UK tax on its profits just like any other UK domiciled company does. There is absolutely no \”tax dodging\” going on by the company at all. As to Lady Green, she is in exactly the same position as any other foreigner who owns shares in a UK domiciled company. We do not tax their dividends.

There\’s a good reason for this too: we rather like foreigners investing in Britain. Capital coming in boosts productivity and therefore wages and the general wealth of the populace.

More important is the setting up of a review to \”study a General Anti Avoidance Rule (GAAR) that could both deter and counter tax avoidance whilst … retaining a tax regime that is attractive to businesses\”. An effective rule that prevented anyone taking action purely to avoid tax could rake in much of the missing £25bn that is currently avoided.

Perhaps Richard Murphy should have a little word with Polly. For none of the three examples she uses, Vodafone, Cadbury or Lady Green, would be affected in the slightest by the existence of such a general provision. It simply wouldn\’t catch any more money at all in any of these cases. The first two are about freedom of establishment, the core and bedrock of the EU, the third about taxing foreigners who don\’t live in the UK. Just not affected in any manner at all.

And, of course, we have the great flatpackhamster making the second comment below Polly\’s piece (the rest of which is rather R. Murphy garbled through the PollyMachine):

Will you be supporting the full payment of avoided tax by Guardian Media Group? In 2008 GMG made a profit of £300Million and paid no tax on it. Do you yourself have any \’tax efficient\’ financial arrangements that you need to change in order to stop tearing the bread from the mouths of shoeless infants?

Enquiring minds want to know whether this is a true crusade or the same tired socialist hypocrisy.

A comment which gets 448 recommendations, around double the number of actual comments to the piece.

7 thoughts on “Polly on tax”

  1. “A comment which gets 448 recommendations, around double the number of actual comments to the piece.”

    Better copy it quick: the laughably-named Comment is Free has a moderation policy approaching that of Ritchie Boy. The Guardianistas can accept no criticism.

    I am absolutely sure La Toynbee will be using all kinds of tax wheezes to ensure her property portfolio pays the least tax.

    I also note that Guido picked up on Ritchie avoiding Business Rates. Months after it got an airing here. Perhaps he is leading up to a protest outside Ritchie’s business headquarters by “right-wingers” with placards. Perhaps they would break into his house (“peacefully” of course) and superglue themselves to his windows (“peacefully”) while trashing papers and his computer (“peacefully”). Oh, irony, thy name is socialism.

  2. The Daily Mail was moaning about Cadbury shifting their operations to Zurich to save on tax. I presume they won’t be mentioning the non-dom status of Viscount Rothermere, Chairman of Daily Mail and General.

  3. I know it’s a small thing, but it amazes me how so many people use the £6bn figure without even noticing that even if you believe it, it means £4.75m was avoided, not £6bn.

    Exaggeration and sloppiness in the service of a cause you favour: that’s how you end up warning Parliament Iraq could deploy weapons of mass destruction within 45 minutes.

  4. What kind of smear is this? A “retired tax inspector.” Well, that makes him unusually well qualified, doesn’t it. The author of that figure is Richard Brooks of Private Eye, who has a history of getting all his stories right, every time.

    there is so much technically wrong with your post that I can’t be bothered to even start dealing with them. Work it out for yourself.

    UKliberty – um, er, no. He says they have done nothing illegal, not that they’ve done nothing wrong. it;s different. think apartheid in its day, or slavery.

  5. Ahh the old tried and failed ‘There’s so much wrong I wont explain it’ gambit.

    You do know that sort of thing only undermines your argument don’t you?

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