From the FT:
Britain’s biggest companies set aside £2.7bn last year to cover the cost of tax disputes with UK and international authorities as public anger about aggressive corporate tax avoidance grew. This was a 62 per cent rise on the amount FTSE 100 companies earmarked for tax litigation in 2015, as governments around the world intensified their efforts to make large multinationals pay more tax.
From Spudda:
What can I say, except that tax justice is yielding a positive reward for society.
And this is before country-by-country reporting hits in. I then expect a further increase in yields.
The yield comes from when the provisions are paid in tax. Not when they’re arguing through the courts as to whether HMRC has the power to demand those provisions. As, you know, Google won in France?
Depends what you mean by yield, Tim. There’ll be a lot of dosh lining the pockets of tax lawyers, both sides of the disputes, whatever the outcomes. And this is rather the point of the system, isn’t it?. To keep the middle, administrative classes living in the lap of luxury. What other purpose could it have?
And a drop in the ocean compared to the £55 bn contingent liabilities recognised by HMRC which are repayable to taxpayers based on cases they are currently losing.
http://www.moneyweek.com/hmrcs-budget-busting-battle/
his use of the word “yield” is illuminating – companies are merely fields of grain to be harvested by the noble and selfless unionised civil service, the yield of which is to be turned into the one true bread of public spending
From The Daily Spud’s column on “Boris is a bullshitter”
“Charles Stanhope says:
As perhaps the biggest bullshitter on the internet, you are of course well placed to comment.
Reply
Richard Murphy says:
September 18 2017 at 8:21 am
That was your first and last comment here”
It was worth it. There’s plenty more where Charles came from.
You don’t even need a genuine email address.
Has he got a gig with the tax lawyer union or something?
We do need to get this tax. It can pay for hospitals, social services, redistribution.
now I stand to be corrected here but one of Murph’s acolytes is claiming that it is legal for a company to declare zero profit for “tax avoidance purposes” and still pay dividends. As I understand it, dividends can only legally be paid out of current profit or retained earnings, both of which are post-tax. Am I wrong on this?
https://twitter.com/stevexrees/status/909693389838471168
“Bob Aberdeen
We do need to get this tax. It can pay for hospitals, social services, redistribution.”
No, we don’t NEED it. If we are short of £2-3bn we can just print it. Prof Spud has said so.
There IS a magic money tree.
@Flatcap Army
It is indeed illegal to pay dividends if there are no distributable reserves.
I suppose a scenario could be envisaged where a company made £1bn profits in year one and paid no dividends and then in year two it could make 0 profits but would still have distributable reserves from year one from which it could pay a dividend.
So in theory in year 2 it would have no profit and pay a dividend.
But I very much doubt that this nuance is in the mind of any of Spud’s acolytes.
Although it is the sort of backward flip-flop about turn nuance on which the Spud often relies when he is backed into an intellectual corner – (“Of course I knew about X, that’s what I meant, so you agree with me, I win”)
That was your first and last comment here
He can’t even get that right: it was Charles Stanhope’s second post.
There’s plenty more where Charles came from.
How true: most of the erstwhile praesidium of the GDR’s Social Unity Party has trooped across his blog and Florence Foster Jenkins put in an appearance too. Anagrams of “Not Tim Worstall” started appearing when he levelled the base accusation that a commenter was an emissary from this place.
I’ve been trying to work out whether pilgrim slight return is an anagram but I can’t find it. If he really is a public sector worker who had a pay cut inflicted upon him, he really seems too sincere to be a toady. Besides he never says anything with a double-meaning
Bob Aberdeen – how sure are you that this tax is really due and collectable? Most of this virtue signalling bullshit about people wanting corporations to pay more tax tends to evaporate under the scrutiny of the law.
What’s the usual formula for this set aside amount?
As a law abiding corporate citizen you obviously think the figure is Zero otherwise you would have paid up. But when you’re put on notice the revenue men have applied to the court you report a contingency figure to your owners.
Is that figure exactly what the revenue men claim or is it some formula based on the likelihood of that amount having to be paid?
@bob aberdeen – keep up – per spudda tax is only there to control inflation-we don’t need no tax for public spending- which begs the question why is he always going on about the tax gap and yields when inflation has been pretty low for several years ? – or is it all bullshit.
@Diogenes – Pilgrim slight return – seems like a man crush to me. – break out the mind bleach.
A couple of points on the tax contingencies. First, given the recovery, I would expect the size of any disputed tax calculation to rise. If companies are making losses, there’s no tax liability, but if profits are rising….
Secondly, accounting practice is to recognise expenses and potential costs as soon as they arise. It doesn’t mean that such sums will actually be paid. Didn’t we see that with the “tax-dodging” mega-merger a year or two back? There was a provision of billions, but eventually, the courts decided no tax was due.
Hallowed Be, the important thing is to remember that the legal people will claim a lot of money, so first of all you have to estimate how much to set aside to cover their fees. Then you have to assess how likely it is that HMRC will win. If there is any real probability, you would set aside the amount claimed plus penalties and interest. If you think you have a good case, you would just put a note in the accounts as a contingent liability. If you think a compromise will be reached , you put a reserve for some amount of your choice in between nil and the full value claimed
http://www.investopedia.com/terms/c/contingentliability.asp
Thanks Diogenes & Nautical Nick.
And this is before country-by-country reporting hits in. I then expect a further increase in yields.
Not quite sure how country-by-country reporting of financial results a non-tax basis (IFRS) will result in increased tax revenue, but then again, I don’t live in Ely.
Do a home swap with Snippa, Dennis
I’ve seen photos of his home… I’m not trading that far down.
Spud’s endless cry is that the latest X Y or X he advocates will bring in gazillions of pounds.
He clings to his story that clever accountants are outwitting dumb HMRC and getting away without paying all the tax that would fall into our laps if only a couple of simple changes were made which he knows how to put in place.
And that the gazillions gained would have no impact on any other taxes.
CBCR is likely to bring in SFA in extra tax.
Andrew, there is a possibility that it might mean that UK is sucking up too much tax and will have to send it back to those evil tax havens. How will Snippa react to the win win scenario? Lol