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.