Just glorious!

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.

15 thoughts on “Just glorious!”

  1. In any case, he can’t have what he wants if the UK is in the EU.

    Unless the Single Market is dismantled (which has already started with VAT on digital goods, of course).

  2. RM scores six but there’s a disappointing lack of spittle for such a high score.

    Is he taking bipolar medication?

  3. Soarer

    Just a little technical point: He can’t have what he wants even if the UK quits the EU and, very unlikely, the EEA single market. The tax rules are set by a very wide portfolio of bilateral tax treaties, nearly all based upon the OECD model. These are entirely independent of the EU/EEA.

  4. Ritchie writes:

    “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…”

    If they are not recognised as having “what are called” permanent establishments then they would absolutely never pay any CT. Fucking Hell!!!!

    So you have heard the term “permanent establishment”. Now go and find out what it means you Tax Expert you.

  5. “The UK is clearly endorsing tax competition with this deal.”

    What? What information about this deal do you hold to support that statement? Because it doesn’t feature anywhere in your post.

  6. “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”

    Just what gives you the ability to suggest corruption and incompetence. As far as I am aware – and please anyone provide evidence to the contrary – Richard Murphy has no tax qualification to his name and has never worked as an advisor in large corporate tax let alone any transfer pricing experience or expertise.

    He simply has no competence to make this sort of claim.

  7. OK, far from the worst thing about his rant, but “world community”? The community of… Everyone?

    When basically arguing multinationals should pay more tax in one country and less in another?

    The man displays the intellectual rigour of weeks old lettuce.

  8. Bloke in North Dorset

    Slightly OT but in this Week’s Free Exchange in the Economist they are reporting research in to the biases of Economists and apparently lefties outnumber righties 3:1. (Its 30:1 for Anthropologists)

  9. Let’s take this point by point:

    “First, it looks like the Irish sales operation is going to survive intact.”
    Up until the end of the period under investigation, yes. Because the rules didn’t change under April 2015, so you can’t apply them to earlier periods. All you can do is accept the structure works, but challenge the pricing of the fee paid to the UK by Google Ireland. It appears that HMRC got a big win there.

    “If that [BEPS] 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”
    It IS going to happen. The rules are coming in. Just not retrospectively to apply to 10 years ago – they will apply going forwards. Which is the only correct answer.

    “The Diverted Profits Tax was a deliberate BEPS spoiler by George Osborne and now he is doing it again.”
    It’s stopped nothing. As well as this tax (which is actually more than anybody else has introduced), the UK is going to introduce other BEPS proposals too. Including the exact permanent establishment definition change that Murph wants.

    “This gives rise to the second concern. The UK is clearly endorsing tax competition with this deal.”
    No, because they spent 10 years arguing the point, getting as much money as they could under the old rules, then changed the rule going forwards to get more.

    “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.”
    It’s not bizarre, it’s entirely standard. It’s sounds like it’s basically priced like a commission arrangement – a low fee to cover costs with the real profit being made on sales. Wholly standard for a specialist sales and marketing centre.

    “Fourth, this suggests the culture of cutting dodgy deals with large companies is still very much alive and kicking at HMRC”
    Only if you think that the old rules allowed HMRC to tax the amounts Murph wants them to. And Murph doesn’t believe that, because he thinks wholesale tax law changes are required to get the “right” amount of tax.

  10. Ironman

    Am I being a pendant by pointing out he has proven to have no greater expertise in any field (not just taxation) than the man in the Dog & Duck? Is he allowing you to post BTW?

  11. My days of posting on Ritchie’s blog are well over, even he has a certain sense of embarrassment.

    Btw, he has acknowledged in a cent on the thread that his measure of the ‘right’ tax is made up, designed to provoke a public reaction. He thinks that lying is a decent way to behave.

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