Quite gorgeous wondrousness from Ritchie!

OK, so a column in the Observer says the following about UK Uncut:

Keep up the good work. Your non-violent protests outside high-street chains have shoved tax avoidance on to the political agenda. Sir Philip Green is under pressure to explain why Topshop is registered in the name of his wife, Cristina, who is a tax resident in Monte Carlo. Boots is struggling to justify its domicile in an obscure canton of Switzerland. UK Uncut’s adoption of David Cameron-style language is a masterstroke – the group’s members call themselves “Big Society Revenue & Customs”. The business world is facing a long overdue question – aren’t elaborate tax-avoidance gymnastics just as morally repugnant as tax evasion?

To which we get Ritchie\’s comment:

They won’t be alone in thinking that in the coming year.

And business is not going to like it.

The answer is, of course, that business will have to embrace country by country reporting. Then they will be accountable for their tax. And what is the problem with that?

The problem with this is that country by country reporting is absolutely and entirely irrelevant to any of the three cases being discussed. Indeed, proper country by country reporting would, by highlighting where the economic substance of the transaction is, mean that all this talk about Vodafone would be switching entirely: wht the fuck are they being aksed to pay tax in the UK on their German activities at all?

So, let us go through the three cases.

1) Arcadia and Christina Green. Arcadia is a UK resident and UK domiciled company. It pays UK corporation tax in full on all of the profits it makes in the UK. In fact, as far as I\’m aware, Arcadia only trades in the UK and thus its acounts are prepared on a country by country basis anyway.

That Christina Green is not a UK resident nor UK domiciled and that thus dividend payments to her are untaxed by the UK tax system, as is true of all dividends paid to foreigners, has absolutely nothing at all to do with country by country reporting.

2) Boots in Zug. The low tax bill being paid by Boots is very little indeed to do with where the company is now domiciled. It\’s to do with thin capitalisation. The company has borrowed huge amounts of money: it therefore pays a lot of interest. Thus taxable profits are low because interest is a deductible expense for tax purposes.

This has the square root of fuck all to do with country by country reporting.

3) Vodafone. Now, the purpose of country by country reporting is so that, as Ritchie keeps telling us, we can see that companies are paying the requisite taxes in hte place where the substance of the economic activity has taken place. In Vodafone\’s case the economic activity was in Germany. They were and are selling phones and air time to Germans. Through a company in Luxembourg.

Some of the profits of doing this are taxed in Germany and some of the profits of doing this are then taxed in Luxembourg (but each portion only once, of course). And since the economic substance of the transactions is very definitely in Germany and Luxembourg, not the UK, country by country reporting would enable us to see that the requisite taxes had indeed been paid: whatever was demanded by the tax systems of Germany and Luxembourg.

Under Ritchie\’s preferred system there should be no tax liability at all in the UK: so calling for country by country reporting is in essence stating that UKUncut are deluded fools.

Which they may well be even if it\’s odd to hear Ritchie implying such.

So, err, quite why Ritchie\’s preferred scheme would help in these matters must remain unknown: unless it\’s the simple observation that when all you\’ve got is a hammer then everything looks like a nail.

Oh and this is lovely too:

One of the objects of 2011 is to reclaim politics from the extremists.We all know who they are: the Taxpayer’s Alliance, Policy Exchange, the right wing blogosphere, those who think that the world is a neoliberal experiment from which they can gain……They’re opposed to the state, they build a fantasy world of economics based on wholly false assumptions that they then promote as being an epitome of liberty that actually oppresses the vast majority, and they’re utterly and callously indifferent to the needs of those without wealth…….We need to reclaim politics and especially politics on the web from these dangerous (I use the word wisely) people who wish to cause harm for a majority…….We need to beat the trolls. They’re a threat to our society and the people of Britain.

Not until you\’re able to pull my blog from my cold dead hands matey….

13 thoughts on “Quite gorgeous wondrousness from Ritchie!”

  1. “One of the objects of 2011 is to reclaim politics from the extremists.We all know who they are: the Taxpayer’s Alliance, Policy Exchange, the right wing blogosphere….”

    Spot the fucking irony!!!

  2. I love this UKuncut stuff. Without fail the people supporting it are ignorant about commerce, finance, tax and international issues. It’s a superb way to illustrate that the world is the way it is for darned good reasons.

    I find that tax should be paid to Germany for profits made selling to Germans in Germany goes down well as a point of principle, and that when it’s explained that the Government – and UKuncut – want to tax foreigners living abroad the light very often dawns.

    So more power to Ritchie in highlighting an issue which so perfectly demonstrates the idiocy of the Left.

  3. “Without fail the people supporting it are ignorant about commerce, finance, tax and international issues. “

    There isn’t enough blog space to lost the myriad things they are ignorant about…

  4. “We need to reclaim politics and especially politics on the web from these dangerous (I use the word wisely) people who wish to cause harm for a majority”

    They don’t. They want people to be left alone and be more responsible *for themselves*. Harm *is already being done* to those who have large portions of their earnings confiscated by the State *and* to those who have been sucked into a life on State support to act as an excuse for the aforementioned earnings confiscation.

    Shrinking the State and making people more responsible for more of their own lives does the least number of people the least amount of harm – it would see less money being confiscated and redistributed by force and reduce the numbers of people becoming reliant on handouts.

    Does Dickie not understand this or just ignore it?

  5. Yet despite the fact that the right-wing blogosphere has diminished (hardly surprising as they feel they have a bit less to complain about with Cam in charge), I can’t think of a single left-wing blog that’s taken off since the election.

  6. “We need to reclaim politics … from these dangerous people who wish to cause harm for a majority” – so Ritchie is determinedly ANTI-LABOUR. What a relief !

    Alan Douglas

  7. So Much For Subtlety

    Tim Almond – “Yet despite the fact that the right-wing blogosphere has diminished (hardly surprising as they feel they have a bit less to complain about with Cam in charge)”

    Anyone who can’t find something to complain about in this Lib-Dem-Lib-Dem government is not on the right. This government promises to be Tory but I have not seen any sign of it yet. The best they have offered are promises of welfare and education reform.

  8. “Not until you’re able to pull my blog from my cold dead hands matey….”

    He would if he could mate. He would if only he could…

  9. As a Certified Public Accountant, I have to say I find Ritchie’s obsession with country-by-country disclosure to be one of the most obvious examples of his near complete professional incompetence.

    It is clear that Ritchie thinks country-by-country disclosure would be an important tool in locating and identifying corporate tax avoidance, what eludes him is that country-by-country disclosure would be on the controlling financial accounting standards rather than on an income tax basis. This simple fact would render such reporting meaningless for the purpose for which he intends to use it.

    Not that such a detail would slow him down in the least, mind you…

  10. I’m beginning to think that RM is an undercover right wing agent, who has decided to undermine the left from within. What other conclusion can you come to when confronted with such rampant illiberal views on anyone who disagrees with him? Surely a real left winger would never admit to such views? Its attitudes like this that end up sending people to the gulag, or result in a knock on the door at 4am, and a bullet in the back of the head.

    RM is a living example of the why the left is so dangerous. When you are convinced beyond all doubt that you are ‘right’, then you can safely label your opponents firstly as ‘extremists’ and then (if you get some real power) as ‘enemies of the people’. This allows you to do as you wish to destroy them, intellectually or physically.

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