Let me run through the concerns. First, it looks like the Irish sales operation is going to survive intact. If true this is a disaster: the focus of the OECD BEPS process was to force companies like Google to recognise their sales in countries like the UK by requiring that they be recognised as having what are called permanent establishments in this country. If that is not going to happen then HMRC and the Treasury have given back dated approval to Google’s avoidance and have accepted it for the future, which virtually kicks the legs from under BEPS process before it has had a chance to get going. The Diverted Profits Tax was a deliberate BEPS spoiler by George Osborne and now he is doing it again. If true that is utterly irresponsible to the world community.
This gives rise to the second concern. The UK is clearly endorsing tax competition with this deal. In the process it endorses the shift of tax from multinational companies to individuals and harms the cause of equality and fair commercial competition in the process.
The third concern is that the basis of this deal is bizarre: it is apparently technically cost plus pricing plus a little proportion of turnover. When the OECD has begun to move towards endorsing profit split arrangements the logic of this bizarre transfer pricing arrangement is hard to fathom.
Fourth, this suggests the culture of cutting dodgy deals with large companies is still very much alive and kicking at HMRC. The sheer incompetence of doing that is hard to fathom. The politics are even harder to grasp unless they are of contempt for the ordinary people and the small business community of the UK. Crickhowell, eat your heart out.
Fifth, other countries will rightly hate us for this. The EU will, I imagine, be livid. Washington will not be. Nor will a host of US multinationals.
And last? This deal is a great one for the tax abuse industry. That is the last thing we wanted.
And here’s the basic problem. The company hasn’t done anything wrong by the law. And no, we do not want governments to be able to monster people into doing something that the law says they don’t have to. You know, that idea of the rule of law?
And that’s always been the problem with Ritchie’s campaign. No one is actually doing anything wrong by the law: maybe the odd small infringement but not the gross abuses he claims. Thus, when people are investigated there’s nothing to his stories.
The Swiss bank account deal raised spit compared to his claims. Vodafone wasn’t even a deal, the £6 billion simply wan’t ever owed at all. Starbucks really wasn’t making a profit in the UK. And so on and on.
He’s simply wrong.