The UK government explicitly does not tax corporate income in Ireland to an Irish company.

Google is not avoiding tax therefore.

33 thoughts on “Hmmmm”

  1. The Government does not explicitly want every company to gift aid its entire profits to a charity. The choice is there but it is clearly optional. If you DO you get can CLAIM tax relief if you DO NOT you can’t. It’s a company choice.

    As ever Murphy uses his usual twatalogical arguments to twist and turn when things happen he doesn’t have an answer for

  2. I see that the odious Jo is one of those people who believes in the joy of paying tax. And of course he is anti charity, because everything should be provided by a courageous state. Given that he thought that the standard IHT planning of the Cameron tribe verged on tax evasion, I am sure he thinks that Oxfam is evading tax.

  3. Murphy is an impressive contortionist to be able to twist himself into such opposing positions to suit his arguments.

    Or a slug which, not having a skeleton, can do it even more easily.

  4. “Explocitly” Richard? And we’re supposed to understand what goverent “exploctly” wants how? Inference? Or just taking the word of Tax Expert Richard Murphy?

  5. You can trivially avoid gift aid as a donor.

    Don’t tick the box. It’s then illegal to claim it (with some exceptions for low value amounts where there is no box provided – eg church offertory plates.)

    As a recipient you can trivially avoid it – simply not claiming it works quite well.

  6. There’s an added complication, which you’d have expected the tax QC and university professor to mention. The structure works by the trading company dividending its profits to the charity and then claiming Gift Aid for the donation, thus eliminating its corporation tax charge. The Charity Commission used to recommend that charities set up their trading companies this way.

    Then some party pooper noticed that companies were paying dividends even though some of them did not appear to have distributable profits. The Charity Commission had to withdraw its guidance.

    The idea that it’s an automatic relief is a pretty strange one. Charities had to choose this structure and then, in many cases, had to pay illegal dividends to use it.

    Elsewhere, the good professor has written that the use of Gift Aid by the rich is tax avoidance. So it seems his view is coloured by who is doing the claiming.

  7. “So it seems his view is coloured by who is doing the claiming.”

    Not for the first time. In fact it’s about the millionth time.

  8. The point about the dividends being illegal is most likely wrong. Although the tax would be calculated on the adjusted accounting profit from the accounts, the requirement for distributable reserves is at the time the dividend is declared, which is well into the new financial year. Profits not yet subject to tax, but available to be included in the calculation of distributable profits

  9. aaa

    There is a certain QC needs to control his temper, put his ego in a little box, be a little less camp (sorry Jolyon) and re-engage his brain.

    Oh and Jolyon, you don’t know when I might be sitting in conference with you as my real self. So be careful who you insult.

  10. Aaa, read the guidance you linked to. Depends on the calculation of distributable profits at the time of the distribution. The timing of the payment is also important, but it is still possible. The calculation of distributable profits can be a pain, and for companies where directors are also owners HMRC have a vested interest, and will attack. But for bona fide charities?

  11. Given soapy Jo’s supercilious comments about rich people donating to Opera companies, is he in fact in favour of opera companies being funded out of general taxation? I would ask him direct, but like Murph he doesn’t do questions.

  12. I use charitable donations to reduce my contribution to state spending because I think some of my money could be better spent on orphans in Africa than public sector golden pensions in the UK. Which side of Murphy’s ideological imaginary line do I sit on?

  13. @Blue Eyes,

    Easy, you are on the evil side of the line. Ritchie thinks that tax relief on charitable donations (unless you are Oxfam) are tax dodging, and the only way to do charity is to pay more tax to the state so it can do it instead.

  14. Ironman’s being threatening again, I bet Maugham is shitting himself

    “Oh and Jolyon, you don’t know when I might be sitting in conference with you as my real self. So be careful who you insult”

    You’re a wanker, do you want some, do you?

  15. Arnald

    What have I ever done to you? Did I refuse to spare you sone change or something the last time I was on Guernsey?

  16. This whole thing just points up the fact that tax is all about the narrative you can write by reference to the legislation.

    I have terrible trouble with clients thinking “you could read the legislation like this, and regard our facts like that, and so we get the treatment we want.” They ignore the fact that HMRC can equally say “the legislation should be read differently, and/or your facts should be looked at another way, so you don’t”.

    That is, it’s not about finding a narrative that supports the position you want to adopt, it’s about looking to see if there’s another one that contradicts it. If there is, you need to weigh up their relative merits.

    Of course HMRC are just as bad. I recently took them to Tribunal, only for the Solicitor’s Office to drop the case on the grounds that they could not possibly stand up in front of a judge and deliver the case stated, as they’d be laughed out of court. I could see where the Inspector (a technical specialist) was coming from, but it was an incredibly narrow reading of the rules with no regard for the purpose of the legislation.

    In this case, the legislation supports a contrived arrangement that allows a charity (and its trading subsidiary) to write a narrative in which the trading profits are sheltered from tax. It is very easy to show a number of flaws in this sort of thing, and particularly in the implementation in many cases. However, HMRC are currently not particularly interested in pushing an alternative narrative, so charities get away with it unchallenged. That may change in the future – HMRC tends to slide towards being stricter about rules as time goes on.

    It’s another point on the spectrum of tax avoidance. At one end you have tax planning blessed by HMRC and Parliament alike – ISAs, pensions, and so on. Then you have explicit reliefs that HMRC is picky about but accepts that you can have in the right circumstances. Then you go get progressively more artificial and/or abusive (in a variety of ways) about the use of reliefs until you get to clearly egregious avoidance. The position on the spectrum is a function of both artificiality and HMRC’s perception of it.

    This charity thing, an artificial structure that HMRC don’t mind, is off to the good side of the spectrum – the end result is what HMRC think Parliament want, so it goes unchallenged. That is, it demonstrates clearly that abuse is in the eye of the beholder, rather than requiring mens rea.

  17. Blue Eyes said:
    “I use charitable donations to reduce my contribution to state spending because I think some of my money could be better spent on orphans in Africa than public sector golden pensions in the UK.”

    Careful which charities you give to. Last I looked, Oxfam had a £30 million deficit on its UK staff defined benefits pension fund. Charity donations can end up propping up golden UK pensions just as much as tax.

  18. Pellinor said:
    “the end result is what HMRC think Parliament want”

    I agreed with most of your comment, but not sure about that.

    If that’s what Parliament wants, then why doesn’t Parliament say so by changing the law? There’s an annual Finance Act stuffed full with all sorts of changes, it wouldn’t be difficult.

    Currently the law says very explicitly that charities aren’t exempt from tax on trading profits (and there’s supposedly a policy reason for that, to prevent unfair competition with commercial traders), and that you can’t claim gift aid on donated goods (not sure what the policy argument is there, but the law is clear).

    That’s what Parliament passed, and has passed again fairly recently in the last consolidation; if it’s not what they want they should pass something else.

    What was the Supreme Court quote – “people should be taxed by statute, not untaxed by HMRC”? Something like that in the al Fayed case I think.

  19. You make ridiculous threats.

    Really? This:

    Oh and Jolyon, you don’t know when I might be sitting in conference with you as my real self. So be careful who you insult.

    is a threat?

    One tax professional going by their own name potentially insults another commenting anonymously, and being reminded that they may well be in the same room at some point is a threat?

    Sounds like you’d better get back to your safe space pronto and bar the door. Wouldn’t want you to feel threatened by any more statements of the bleedin’ obvious, would we?

  20. biw

    It’s not the first time, Ironman likes throwing threats around, based on his sense of self importance.

    “my real self. So be careful who you insult.”

    Of course it’s a threat.

    You better be careful what you say, sonny, I might be sitting next to you. It’s a clear implication.

    You’re just supporting SWIM, drooling like a Pavlov dog.

  21. Pellinor

    Yes, agreed. However, if an organisation devotes resources es to denouncing another’s planning a evil tax avoidance that is causing suffering for millions, then.perhpas it should be too surprised when it’s own.plannkg gets held to the same scrutiny.

    And perhaps when tax commentators start decrying reliefs for pension contributions and charitable donations, expressly approved by Parliament, as “welfare for the wealthy” they shouldn’t start crying to mummy when people take issue with them.

  22. Richard – it was something like “taxed by statute, not untaxed by concession”, I think.

    I think the thing here is that Parliament have said something clumsily, which means HMRC can interpret it the way they want. So HMRC are happy. Parliament have no incentive to change the law, as it’s not causing many problems. To clarify it in the obvious direction (to stamp out the avoidance schemes) would be politically uncomfortable, and to clarify it in the other direction (to make them acceptable) risks opening up loopholes. Better to let sleeping dogs lie.

    Basically, I suspect HMRC want Parliament to be an oracle that can be interpreted the way HMRC want it to be interpreted. Some vagueness is welcome, as it allows flexibility. The problem comes with false prophets and heretics who seek to interpret the oracle in unacceptable ways.

    Ironman – I agree. But on another level I think that the fault is with the legislation for not being clear, and forcing people to jump through hoops to get to what I consider to be a reasonable result.

  23. Pellinor

    Well yes, would any reason Le person seriously argue that granting the se gift aid relief for a gift in kind as for a gift of cashing not a reasonable result? However, that’s not what the law says. So the charities do what they think they need to do. And Ritchie and Jolyon pat them on the back and tell them their behaviour is just fine. Then those charities join together with Ritchie and Jolyon and form a cavalry, jumping onto very high horses.

    I am.all for a nuanced debate, leading towards a civilised understanding of risk, reward and behavioural incentives. They won’t allow thay though; their double standards poison all discussion on tax. Or as Jolyon might say bit certainly wouldn’t explain: they SKEW the discussion aand hey debase it.

  24. @Richard, I certainly do not give to quasi-state organisations such as Oxfam. I give generously to a small charity which looks after rescued street kids in Tanzania. I have been to their homes in Tanzania and know that their European arms (UK and NL) are run by volunteers.

    If anyone wants the link…

  25. Blue Eyes

    Just post a link and then someone will note it down. And one person will be enough.

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