Richard Murphy has spent some years telling us that the correct measure of the tax rate faced by a company is cash tax paid in that year. All insistences that this might not be quite true have been angrily shouted down:
The Tesco plc case shows that. In 2021 its income statement suggests that it has a current tax liability for that year of £178 million. Adjustments elsewhere in the accounts changed that into a refund of £10 million. Which figure is right in that case? And what is the appropriate tax rate to suggest that the company was paying in proportion to profit? Was it the 21.6% that the income statement suggested, or was it the negative 1.2% that the overall refund suggested? Just to confuse matters, the company paid £255 million in the year: that provides no reliable alternative in that case.
From Richard Murphy’s latest “research”.