Skip to content

Daily Mail and union tax avoidance

Unite’s accounts for the year ending December 2016 showed that despite having a share portfolio of more than £50million, which regularly reports a healthy profit, it paid no corporation tax.

For years, Unite has used a loophole that allows it to offset large sums against costs — such as sick pay, accident compensation and employment tribunal costs.

McDonnell told his embarrassingly small audience in Davos that major auditing companies should have the equivalent of a doctor’s Hippocratic oath so they don’t encourage firms to avoid tax.

A dose of such medicine might prove handy for Len McCluskey and his fellow brothers and sisters in Unite.

Offsetting costs against revenues is a loophole these days, is it?


Although I’ve little doubt that one or more among the Ritchie, Prem Sikka etc set have made exactly the same claim at some point.

11 thoughts on “Daily Mail and union tax avoidance”

  1. I don’t know the full ins and outs of it but I think it’s something along the lines of:

    The spirit of the law (which the Left so love) would see the Trade Union paying for its costs out of its members’ subscriptions, so the investment income would be taxable.

    Instead, the union offsets its costs against its investment income and its subscription income isn’t taxable in any event.

    Something like that.

    If a loophole is an unintended tax consequence, then this is probably one. I doubt that much in the way of investment income was ever anticipated as, well, the union would spend all its members’ subscriptions on its members and not have much left over to invest. Wouldn’t they?

  2. This is to say, given that the top line is so huge (“a share portfolio of more than £50million, which regularly reports a healthy profit” but perhaps did not, in the year in question) and tax payments were so small, We were missing out on some of their money.

    All that is left is a “windfall” or “alternative minimum” tax to extract payments out of taxpayers who did exactly what government (by enacting those loopholes) asked them to.

    PS–The oath to not encourage tax avoidance means that the accountant is bound to advance interests other than those of the client. (Just like doctors.)

  3. Don’t encourage firms to avoid tax?
    But tax avoidance is legal. Why would auditors be required to not encourage firms to take legal actions?

  4. “The spirit of the law (which the Left so love) would see the Trade Union paying for its costs out of its members’ subscriptions, so the investment income would be taxable.”

    Well, that’s also the actual law if you take the NFP tax exemption for ideal income (subs, member fees, etc). You don’t have to do this but you do have to work out long-ish term whether it is cheaper to do this or pay tax on all gross profit. If you do this, you then have to allocate costs to ideal services, these can only be offset against ideal income (subs, fees and so on). Then your costs of commercial activities can be offset against commercial income (in Unite’s case possibly things like consulting, training, posting job adverts). So if Unite does split it cannot claim costs for providing ideal services against profits from commercial activities.

  5. Before GlenDorran points out that “anyone sane” expects premiums paid *plus the investment return on them* to pay for claims for sick pay etc, I shall mention that I do too. One does not need to be sane, merely intelligent…
    The Daily Wail is misleading in calling it “a loophole” – it is the basis of corporate taxation that expenses should be set off against income in order to calculate profits.
    OTOH they may well reckon that McDonnell and Unite are fair game.

  6. It’s bollocks but if the other side have stolen the truth and are beating you with lies you pretty much have to pay them back in kind.

  7. Well Murphy has railed against the banks usinig their losses to offset their taxable profits and also against the heinousness of higher rate taxpayers being allowed to offset pension contributions at the higher rates of income tax. I think he has called the latter a subsidy at various times.


  8. Correct me if I’m wrong, but if Adolf Hitler staggered into a hospital, then no doctor who has taken the Hippocratic oath would turn him down, right? i.e. a doctor does not stand back and think “Hmm, what are the wider social/political implications of healing this man?” – they’d just treat him. And, of course, hand him over to the authorities so that a court could judge him for (the uncountable) actual laws he’s broken.

    So an equivalent to the Hippocratic oath would impact tax advisers….how exactly?

  9. There was a union recently moaning about an employer giving up a DB pension scheme so that the employees would have to swap to DC. It was then revealed that the self-same union had done the same thing to its own employees. It wasn’t Unite, by any chance, was it?

  10. One would expect the income derived from a share portfolio to be dividends. Which are, for the majority of UK companies, exempt from corporation tax.

    So that’s probably why, assuming Unite is charged to corporation tax. And much as I love a good bit of union bashing it isn’t sneaky in the slightest.

  11. @Spike

    You think 50 million is “huge”? It’s 30 quid per member.

    They’d be insolvent in a month if they tried serious industrial action that required supporting members.

Leave a Reply

Your email address will not be published. Required fields are marked *