Ragging on Ritchie

He tells us that the Oxford report on corporation tax proves that his estimate of the tax gap is correct:

Now let’s pull this data together. 90% of companies paying 90% of all corporation tax do not pay at the expected rate of 28% but instead probably pay at a rate less than 21%. Of course that’s an extrapolation of what Oxford say, but it seems a fair one based on what they say. So, currently £32.4bn of corporation tax paid is the result of tax charged on large companies at a rate of less than 21% (let’s call it 20.5% – we don’t want to over-egg this) when as Oxford note (and they would not note this unless they thought it reasonable to surmise this) a rate of 28% was expected, irrespective of allowances and reliefs.

So let’s gross up £32.4 billion and see how much tax would have been paid if settlement had been at 28% and not 20.5%, and the answer is £44.3billion. Take off the sum we first thought of – i.e. £32.4 billion – and the difference is £11.9 billion. Which give or take is near enough £12 billion. In fact if I’d assumed the rate was 20% and not 20.5% the gap  would have been £13 billion.

In the Missing Billions I said the expectation gap – the difference between the sum we’d expect large companies to pay and the amount they actually pay – was £12 billion a year at the time. And now it’s near enough almost exactly £12 billion.

The fact is the Missing Billions was right all along.

See what he\’s done there?

Yup. He\’s entirely ignored the existence of allowances.

And there are a number of such allowances. Capital allowances, R&D tax credits, for all I know there\’s a sucking up to Ed Balls tax allowance.

So, he\’s made here exactly the same mistake he made those years ago in The Missing Billions. He is comparing headline tax rates with paid tax rates and then calling the difference the tax gap. When some (how much is of course still at issue) is the result not of tax avoidance, tax abuse, but is the entirely righteous practice of tax compliance. Using the reliefs mandated by Parliament as Parliament intended those allowances to be used.

And that really cannot be part of any \”tax gap\”, can it?

Do read through the comments over there as he gets a right going over on this point.

And now, for my party trick, I shall show that UK companies are actually paying too much in corporation tax. Far from there being a tax gap, there is in fact a very large overpayment of tax.

So, using Ritchie\’s numbers above, there should be £44 billion paid in corporation tax. But only £32 billion is. That\’s the source of his £12 billion.

But, as we\’ve already noted, no allowance has been made for allowances. Those bits that Parliament deliberately puts into the tax law to get companies to do what Parliament wants companies to do.

As an example, let us take capital allowances. How much, for example, do capital allowances cost the Treasury?

We can take our answer from Hansard.

Matthew Hancock: To ask the Chancellor of the Exchequer what estimate he has made of the annual cost to the Exchequer of maintaining company capital allowances at May 2010 levels. [15222]

Mr Gauke: The annual cost to the Exchequer of maintaining capital allowances at May 2010 levels is currently around £20 billion around 85% of which relates to companies.

My word, that is interesting, eh?

£17 billion in capital allowances to companies.

So, back to our sums. At 28% there should be £44 billion righteously paid in corporation tax. But we\’ve also got £17 billion in capital allowances. The cost to the Treasury is, I assume, at least similar to if not equal to (and please do correct me if I\’m wrong here) the reduction that companies get on their tax bills.

So, we would expect there to be £27 billion paid in corporation tax. Yet, as Ritchie notes, actual tax paid is £32 billion.

Thus companies are over paying tax by £5 billion.

There is no corporate tax gap in short.

Now, please note, not even I actually believe this result in detail, I mean it just as an example of why that £12 billion estimate is entirely Ritchiebollocks.

Just to hammer it home. The Murphmeister tells us that the gap between the headline rate and the rate paid shows that there is a tax gap. Yet he does not adjust for the allowances that are there in the law which reduce the amounts that are righteously and legally owed. And we seem to be able to show that those allowances are larger than his purported tax gap.

That is, that there is no tax gap at all.

Now, given that I am not an expert in tax there may well be some problem with this numerical example. The logic is sound but the numbers may not be: in which case please do correct me.

Ritchie:

This is an extraordinary statement. How odd it is that the CEO of an multinational corporation – the sort of organisation that says it only thinks globally – uses the pretext of local law to claim……

And he claims that it is local law – and not the law of the state where his company is quoted – and not the power of international regulation – that must apply.

Umm, he seems to be saying that a multi-national company should deliberately break the local laws in a/some of the countries in which it operates.

If, for example, Angola passes a law stating that an oil company must not reveal what it is paying in royalties for oil (which, if memeory serves, they did at one point) then BP and any other company operating in Angola must break that law.

There is something of a problem with this attitude. With a company operating in the UK Richard insists that both the letter of the law and its spirit must be obeyed by all. For this is the law of the land.

Apparently laws passed by darkies elsewhere don\’t have the same power, are not subject to the same test of sovereignty, as those written by us pink types.

There are countries where women may not drive. This is of course in breach of (and quite rightly in breach of) our own laws on sex/gender discrimination. Must all UK companies now deliberately break Saudi Arabian law by insisting that their female employees there may drive?

Insert example of your choice, but he really does seem to be being colonial here. The laws around the world, whatever the independence or otherwise of other nations, should be determined in a Norfolk parsonage.

The tax debate has reached the level of farce if this is the benchmark Gauke wants to use. But it gets worse:

The second challenge we face is that people believe – or at least give the impression they do – that corporation tax is somehow a victimless tax, not paid by real people.

Of course, as with any tax, the incidence will ultimately fall on someone.

As far as corporation tax is concerned, the question is whether the burden falls on shareholders (largely in the form of pension funds) employees (through lower wages) or consumers (as a result of higher prices).

The consensus, among economists at least, is that it’s predominantly the employee who foots the bill.

This is based on the work of Professor Mike Devereux at the Oxford Centre for the Non-Taxation of Business. Mike is so neoliberal and so open minded he’s banned me from his Centre for a) questioning his assumptions and b) challenging his objectivity when doing so. But ministers still listen to him because it suits their purpose to do so.

Devereux’s work is, however, fatally flawed. What he has argued is that when corporate taxes increase then wages fall. There’s a problem with this though. First, corporate tax rates have fallen almost universally for the last twenty years so he had to work really hard to find his data. Second, he tested only one way even though the hypothesis would have been vastly easier to test the other way – did wages rise when corporate taxes fell? If they didn’t then clearly the relationship when corporate taxes rise is explained by other factors and the correlation he finds is just coincidence. Devereux must have known corporate tax decreases do not result in wage increases, but he chose to ignore the evidence running his tests in this direction could have given to ensure he could deliver the desired result of his work – that corporate taxes are, in accordance with his neoliberal mantra, and that of his funders (for the FTSE 1000 Group of Finance Directors do fund the Oxford centre) desired.

There are many other flaws in his work – but this is the fundamental one – and it reveals (in my opinion, but I know not his) clear political bias to the work which of course also appeals to David Gauke.

No, it isn\’t based on the work of Mike Deveraux.

Up to you whether you ascribe Richard\’s insistence here to malice or ignorance. Entirely your choice.

This is the absolutely standard economics of taxation. It is not a left point, a right point, a neoliberal, classical, Keynesian, New Keynesian, RBC, New Classical nor even a social democratic point.

It is simply an observation about the universe which we inhabit.

Mike Deveraux\’s contribution here has been to make an estimate of what the incidence is here in the UK. NOT, in the underlying theory, but to try and work through the numbers as to whether the workers carry 10%, 90%, more than 100%, of the economic burden of the corporation tax. His answer is arguable, depends upon some assumptions you may or may not be happy in accepting and is that the incidence is more than 100% on wages. That UK workers lose more in lower wages than the amount raised in corporation tax.

That companies do not pay tax we know. That the burden is carried by some combination of shareholders, workers and customers we similarly know absolutely. We even know, again as a matter of fact, not opinion, that the more open the economy and the smaller the economy with regard to the world economy, the more of that burden will be carried by the workers and the less of it by capital.

This is not negotiable and Richard is simply flat out wrong as he wriggles to try and deny it.

How much by whom is certainly still arguable: but not that companies do not pay tax and others do carry that burden

I\’m directed to this:

Richard Murphy (Tax Research LLP) has been providing a lot of technical support. But please note he is a freelance consultant, so there are limits on what support he can provide without remuneration!

Seems entirely fair to me.

I was asked to do a quick paper just recently and I had to point out that part of my living comes from scribbling for people. If you want a few hundred words of stream of consciousness stuff, as with a blog post, sure, fine.

You want a few thousand of something more considered then yes, you do need to make a contribution to my mortgage/beer bill.

There\’s all sorts of things to pound the man for but making a living isn\’t one of them.

Ritchie asks us a question today. An important question too.

Why do we allow the free movement of capital?

We do not allow the free movement of people.

So why do we choose to let capital roam as it wishes? Why is it acceptable to let capital minimise its tax? Why can capital use artifice, from the limited liability entity to the tax haven, and yet we impose the cost of supporting its errors on people?

What is the reason for condemning 5 billion of the 6 billion or so people in the world to poverty to make sure capital can make money?

Why have we made this choice?

The answer is here:

Because it works.

As the good little liberals that we all are we desire that the poorest and most destitute of our fellow human beings rise up out of the child killing poverty, the miserable hand to mouth existence, which is the Third World peasant lifestyle.

Depending upon where are roots are, our forefathers managed this some several centuries ago (for, say, England, other parts of the UK following hard behind), Sweden managed it starting at the turn of the last century, Hong Kong starting in the 1950s perhaps, and so on, to China and India in the late 70s, early 90s, and as you can see, Africa in the mid 90s. Do, just for a moment, note what rising \”Sen Welfare\” means. It means that both inequality is falling and that average incomes are rising.

We can all also note that, while we can happily argue about how much government was needed to prepare for these various lift offs, each and every one of those lift offs was correlated with a move to a more liberal economic policy. Freer trade, fewer restrictions upon what people could do with their lives, more capital movement.

And this more liberal set of policies is what is known today as \”neoliberalism\”. If you wish, the rediscovery of the classical liberals: Smith\’s leaving the money to fructify in the pockets of the populace.

All of which is why all us good little liberals might sign up for things like the Washington Consensus. Yes, including the free movement of capital.

Because these last 30, 40 years of the triumph of neoliberalism has led to the greatest reduction in poverty in the history of our whole species. The poor are getting richer, global inequality is falling.

Which means that we can answer Ritchie\’s question: why do we allow the free movement of capital?

Because it fucking works, dunderhead.

That\’s the question Ritchie asks so let\’s try and provide an answer, shall we?

Britain said it was revoking the diplomatic immunity of the Libyan leader and his family, including his high-profile son Saif al-Islam, who has had close links with the UK. David Cameron echoed Barack Obama in calling on him to go. The PM said: \”All of this sends a clear message to this regime: it is time for Colonel Gaddafi to go and to go now. There is no future for Libya that includes him.\”

OK, that\’s a start. Prior to this move as the de facto and de jure ruler of a sovereign state, Gaddafi enjoyed immunity.

This is a pretty basic piece of international diplomacy. We really may not like having to o this but it is necessary to deal with the world as it is, not as we would wish it to be. Some arrogant little creep comes to power somewhere: Gaddafi, Mao, Stalin, Herr Hitler and all the rest. And if we\’re not actually at war with them, we\’ve got to accept that, however they gained their state power, they do in fact have that state power.

The gravity of the crisis was reflected in Saturday night\’s vote by the UN security council to impose travel and asset sanctions on Gaddafi and his entourage and a belated arms embargo on Libya – even if these moves are now largely symbolic. Gaddafi also became the first sitting head of state to be referred to the international criminal court by unanimous vote of the often-divided UN security council. British officials also said his exclusion from the UK was an unprecedented act.

See, we\’ve got international laws about these things.

Britain froze the assets of Muammar Gaddafi and his five children on Sunday evening at an emergency meeting of the Privy Council at Windsor castle presided over by the Queen.

Yup.

We may know that someone\’s an arrogant thieving thug, that he routinely steals power from the people along with their cash. But as sovereign, we have to deal with them. So we do. We may all wish to see Gaddafi hanging from his heels from the light fittings of downtown Tripoli but while he\’s a seat at the UN, is acknoweldged by the \”international community\” as The Bloke, we cannot do anything else.

Once he\’s not so regarded, of course we can.

So that\’s the \”why now?\” answer. He had both diplomatic and sovereign immunity. Now he doesn\’t.

And shouldn’t we now freeze the assets of the leaders of a great many more states?

And if not, why not?

Because Richard, in order to do so, you\’ve got to get the UN, that guardian of international law (I know, snigger) to vote that you can.

The Guardian has reported in the last few minutes:

Bailed out Royal Bank of Scotland reported losses of £1.1bn for 2010 – but still plans to pay out bonuses of £950m to its bankers.

The contempt bankers have for society is evident in the comments made by Stephen Hester made. The Guardian reports:

He admitted that he was not able to hire staff as easily as he hoped because the bank has often become a “political football”.

“Our ability to attract, retain and motivate the best people is still not what we want it to be. Our business challenges and the external environment lead to management compromises that add risk to the achievement of our business goals. We are working hard to move forward and balance staff motivation with external acceptance that past mistakes have been addressed,” he said.

Motivation is not created by £950 million in bonuses?

Just think.

If RBS had paid no bonuses, then there would be just a small little loss. Which would mean that the government would get no tax money: you don\’t pay 28% corporation tax on a profit that hasn\’t been made.

If you pay out £950 million in bonuses then of that £950 million, 63.8%* will go in tax to the government.

So, the government, all those front line services, are better off by £606.1 million.

Well done the Royal Bank of Scotland!

In more detail, we might look at the actual results:

Hmm, no, that\’s not formatting, so have a look at page 23.

You will see that the City style stuff, the markets, the investment bank style bits where people do get large chunks of wonga as a bonus made huge great big gobs of money.

You will also see that the losses came from \”impairments\”, losses on past activities, and these losses were in retail and commercial (Ulster Bank did something very wrong there).

That is, the peeps getting bonuses made huge amounts for the bank, the people who don\’t normally get huge bonuses (retail and mortgage managers etc) in the past lost huge amounts.

At which point I defy you to tell me that paying bonuses is a bad idea.

* Assume, a not unlikely assumption, that all those getting bonuses are already at the top tax rate of 50%, add 13.8% employer\’s national insurance.

I can\’t see it here.

Your comment is absurd

If you genuinely think that there is no room for misunderstanding in the interpretation of the written word you’re either a) naive or b) deceiving yourself

In which case perfect legsilation is not possible – but the spirit of the law remains intact none the less

So how are we to divine the spirit of the law without recourse to that inevitably potentially misunderstood written word?

Hmm, the only way I can see this being done is that we have some group of, oooh, I dunno, senior and well respected people to do this for us.

Mebbe something along the lines of lawyers who have been lawyering for a few decades? Get \’em together, anyone who has a problem with what the law actually is, you know what\’s the real meaning of this not quite clear piece of prose, can go and ask them.

Mebbe even if people are having an argument about what the law is, they could pay some fees and end up in front of these experienced lawyers?

And these greybeards, they could, when deciding what that law really means, have a look around the world at other, similar, systems and see how other, similar, systems have decided in other, similar, such arguments about that true meaning?

Heck, we\’ll even let them look at Hansard so that they can try and divine what the politicians thought they were doing rather than what they\’ve actually written down.

Sounds like an entirely reasonable and effective system of deciding what is in fact the law, sorting through these arguments about what is the spirit and the letter of said law, no?

The only remaining question I suppose is why we don\’t go off an build such a system. To which the answer is:

This is exactly what our current legal system does.

We have \”judges\” who sit in \”courts\” and use \”cases\” in which they sort through \”legislation\” and where the \”letter\” and \”spirit\” of the law seem to diverge they look at the \”proceedings of Parliament\” and \”other jurisdictions\” and \”precedent\” to see both what was \”intended\” and what was \”written\”.

And then they tell us what the law is, having reconciled both spirit and letter of it.

What really bugs Ritchie is that what the judges think the spirit of the law is (ie, every Englishman has an absolute right to order his affairs so as to reduce his tax bill) isn\’t what Ritchie thinks the spirit of the law ought to be.

But then who do you think knows what it is better? 20 odd old farts in wigs or a retired accountant from Wandsworth?

Your call.

The Guardian’s editorial today seems worth noting in full.

Apologists for abuse and those who just want to abuse need not comment.

Your repeating of a copyrighted newspaper article in full is indeed gross abuse of copyright.

Did you ask permission before breaking said law?

Pay them?

You know, before stealing the property of another?

Today:

It is I think quite fair to say that a great many people who callled me yesterday afternoon were stunned by the news that Barclays paid just £113 million in tax in the UK in 2009.

And off we go into a discussion of how they\’re tax dodging bastards.

Yet we actually know the answer, Ritchie kindly provided it to us only one week ago:

So let’s get back to the one tax the banks do pay as a charge on the income they make – which is corporation tax. As the Mail on Sunday notes today, based on research I did for them, the likelihood that any of our big banks will be paying any serious sums in corporation tax for a while to come is remote in the extreme. That’s because the 2009 accounts of each of the major banks shows just how much deferred tax asset they’re sitting on relating to tax losses that they can offset against their future profits – including those subject to Project Merlin. The figures are:

HSBC _ £4.2 billion

Barclays – £1 billion

Lloyds – £4 billion

RBS – £5.1 billion

Add them together and that’s more than £14.3 billion of tax that’s not going to be paid any time soon. Or at UK current corporate tax rates some £51 bn of profit that needs to be earned before tax is paid.

They made losses which they can carry forward and offset against tax.

There\’s no mystery here, just the simple and obvious point that you pay profits tax on your cumulative profits, offsetting losses, as will be true in any not entirely insane system of taxing profits.

Toby Young in The Spectator:

But even if you bracket that question, Murphy’s definition of “tax compliance” doesn’t get us very far. For instance, it lets Vodafone off the hook since “the economic substance” of the company’s “transactions” were carried out in Germany, not the UK. Non-doms, too, wriggle free since the tax they avoid paying is that due on their non-UK earnings. The only miscreant Murphy catches in his “compliance” net is Sir Philip Green – not a particularly impressive haul.

For anyone wishing to continue this debate with Murphy, I should warn you that his self-righteousness knows no bounds. In one of his blogs, he accuses me of “failing to understand morality” and says the fact that I’m hoping to set up a free school with taxpayers’ money “adds insult to injury”. “He’s not a person with whom I really wish to be acquainted,” he harrumphs.

Needless to say, he’s not averse to a bit of careful tax planning himself. The indefatigable conservative blogger Tim Worstall has dug around in Companies House and discovered that Murphy has taken advantage of a tax avoidance strategy that he himself condemns as an “abuse” in one of his blogs. Nothing illegal about it – and not immoral, either, since we all have a right to pay no more tax than the law demands of us. But it’s quite astonishing that Murphy accuses me of “failing to understand morality” for merely defending a practice that he himself indulges in.

With the greatest pf respect for Sean O’Grady who wrote this he’s wrong. It’s obvious he knows he is too. These places – all part of the UK and issuing UK passports – are not self governing any more than the Isle of Wight is.

Turks and Caicos, Bermuda, Bahamas, Jersey, Isle of Man, Guernsey, Cayman the list goes on, all part of the UK now are they? Nairu, Hong Kong, Panama, Netherlands Antilles, Delaware, Switzerland, Leichtenstein?

An interesting word for Ritchie to consider: jurisdiction.

Civil society organizations Christian Aid, Eurodad, Global Financial Integrity, Global Witness, Transparency International, Tax Justice Network and Tax Research will be meeting with several Task Force government partners and representatives of non-partner governments who will be attending the FATF meetings next week.

Kneel before me ye mighty and tremble in fear!

Christian Aid, (which Ritchie writes reports for) Eurodad (UK members, Christian Aid and nef, which Ritchie writes reports for), Global Financial Integrity (funded by the Ford Foundation which funds Ritchie), Global Witness (no known Ritchie connection), Transparency International (no known connection), Tax Justice Network (Ritchie founded it) and Tax Research (this is Ritchie).

Click here (PDF) to download a full copy of the Task Force’s recommendations to the FATF.

Yes, that\’s right, Ritchie and a few mates have written a report.

This is an interesting thought:

And there is a third piece of information that I can now reveal. They had told me that the City Corporation owns about 20% of the property in the Square Mile, and they said

3. “The reference to the City Corporation owing approximately 20% of the property in the Square Mile covers all three funds.”

Again, new information.

I did some playing around with numbers, and wasn’t immediately able to square part 3 with parts 1 and 2. I came up with figures of 70-80 million square feet of rental property in the square mile (see here), with a current going rate of about 50 pounds per square foot – this figure would produce, property income adding up to about 3.5 billion annually in the City; 20 percent of which would be 700 million, a 25ish percent rate of return on 3 billion. That’s a lot. What is more, the City owns quite a lot of property outside the Square Mile, which is presumably worth quite a bit too – so that widens the question.

Darn those capitalist bloodsuckers, eh?

Except (and I do hope that someone who knows more than me will confirm or deny this) I don\’t actually think that The City itself owns and runs the property. I have a feeling that they are more likely to own the underlying land, and that they let this out on long leases to developers who are the people who actually build the buildings and thus gain the lion\’s share of the rental stream. The City getting the ground rent, not the property rent.

Certainly, in The City accounts which Shaxson links to, the rental figure seems to be (although I admit I might only be looking at one fund, not all of them) more like £35 million, about 5% of his estimate.

Anyone able to confirm?

Either that or he simply doesn\’t understand what he\’s talking about.

Nick Shaxson has done more digging on the City of London.

They tell him they’ve only got £3 billion of assets.

That’s £3 billion they don’t need to promote banking and £3 billion we need to save libraries, and so much more.

It’s so obvious what needs to be done – and the last thing that this money need do is promote global banking, but that’s what it’s being used for.

It really is time this tax haven within the UK was abolished.

See that? The City\’s got £3 billion of cash so we should abolish it, take the money and spend it on, well, public services like.

Hmm, well, so what is it that Nick Shaxson himself links to then?

What does City Cash pay for?

Parks perhaps?

Today, within the Square Mile there are approximately 200 small parks and gardens, green oases in the middle of the world’s leading international financial and business centre.

The City of London’s green fingers extend far beyond the Square Mile too. It owns and manages some of Londoners’ favourite leisure spots – such as Hampstead Heath, Highgate Wood and Epping Forest.

Further afield, Burnham Beeches and a crescent of commons in the South Croydon and Bromley area all enjoy the same expert care and protection, benefiting humans and wildlife alike.

Ooooh, goodie, yes, let\’s sell these!

Schools mebbe? Yup, City\’s Cash pays for these too.

Damn these capitalist pig dogs, using money from investments to pay for free to the user schooling! Sell them off immediately!

Public services maybe?

This Fund meets the cost of the City of London’s local authority, police authority and port health authority activities. The Fund generates rental and interest income to help finance these activities. In addition, in common with other local authorities, it receives grants from central government, a share of business rates income and the proceeds of the local council tax.

Bastards! Sell them all!

But, umm, hang about, why are they financing these from investment returns? Why aren\’t they just using council tax and business rates like everyone else?

The City of London retains only a small proportion of the business rates collected from its area, in accordance with the national arrangements. The remainder has to be paid over to the national non-domestic rates pool and is redistributed to local authorities throughout the country by central government.

Because of its special circumstances – notably its very low resident population and high daytime population – the City of London is allowed uniquely to set its own business rate. It may set this rate, subject to certain constraints, at a higher or lower level than the National Non-Domestic Rate determined by central government for the rest of the country. The proceeds of the additional rate of 0.4p levied in financial year 2006/07 are used to provide enhanced policing, security and contingency planning for the Square Mile.

Oh, that\’s why: because what they do raise in business rates gets sent off to Burnley instead.

Yes, that\’s right children. The City Cash, investments and a property portfolio built up over the centuries, pays for parks, schools, police and the like. It\’s a pretty close simulacrum of a land value tax actually: the governing authority gets the rent value created by the governing authority to pay for other public services.

And Ritchie, our retired accountant from Wandsworth, wants to take all of this money, in effect, force the privatisation of those currently public assets. Like, you know, Hampstead Heath.

Another way of looking at it would be to insist that The City\’s business rates pay for these public services and we send the City\’s Cash off to Burnley: which rather misses the point that Burnley will then lose the City\’s business rates which it currently gets.

There\’s no end to this man\’s genius is there?

Savour, for a moment, this line.

In responding I will ignore his pomposity

No, wait, just roll that around and savour it.

Now, watch Ritchie entirely destroy the UKUncut position on both Phillip Green and Vodafone.

Then let’s move on to his argument  that Philip Green, or anyone else,  may use a tax haven structure to avoid  tax despite the origin of their profits being within the United Kingdom.  Toby Young  says that this argument is remarkably similar to one Nick Shaxson uses in his book. I’ve no doubt it is. We work closely together.  The logic of the argument is quite straightforward. First of all, we believe in source taxation i.e. that profits should be taxed where they arise.  I am not, incidentally, making any argument with regard to Philip Green in the observations that follow –  none of which relate to his companies.  Our argument is a quite straightforward one, and that is that a UK-based trading operation has a duty to pay tax, in accordance with the spirit of UK law, because if it takes advantage of UK limited liability then in the act of incorporation it assumes an obligation to be accountable, both transparently through the publication of accounts, and financially through the payment of tax, to the authority that gave it the right to use limited liability with regard to its debt i.e. the right to avoid payment of those debts to people to whom they are owed in the event that it becomes insolvent through no fault of its own.  The authority that granted that right was, of course, parliament, through the passing of the Companies Acts.  The authority demands tax is exactly the same,   and it used the same legislative to  create that tax demand as was used to create the right of limited liability:  it is the UK parliament.  The rights and obligations counterbalance each other.

Arcadia is a limited liability corporation both resident and domiciled in the UK and doing business in the UK. It pays corporation tax upon the profits it makes in doing so in the UK. No one at all has suggested at any time that Arcadia does not pay the correct amount of corporation tax, either by the letter or the spirit of the law. Richard is thus stating that Arcadia is entirely tax compliant.

As is Phillip Green: he pays UK tax on his income. As is Lady Green tax compliant: her income arises in Monaco, because that is where she is resident. Richard, UKUncut, the TJN, none of them have ever even hinted at the idea that already taxed corporate profits, when paid out as dividends, should be taxed in the UK when they are paid to non-residents of the UK. That is, rightly, a matter for the tax jurisdictions of residence.

Just as dividends paid out by foreign companies to residents of the UK are subject to UK taxation.

Good.

And as to Vodafone? The numbers under dispute were profits made from shops in Germany, used to sell phones and air time in Germany to Germans. Under Ritchie\’s rules these profits should be taxed in Germany, not anywhere else.

So Vodafone, in arguing that such profits should not be taxed in the UK, was and is totally tax compliant.

And we have this from the pen of one of the country\’s leading tax experts to boot.

Good, glad that\’s settled then.

What can one say, except it’s only going to get worse?

It will until an alternative is adopted.

That alternative is possible. None of this unemployment is necessary. And those young people need not have blighted hopes. That’s what’s so depressing about all this.

He\’s absolutely right you know, this needn\’t happen.

Us bastard capitalist neoliberal pig dogs said that the effect of a minimum wage would be to push the lowest skilled people out of the employed, into the unemployed, part of the labour force.

We now have that minimum wage and in our first proper recession since we have had, we\’ve got 20% unemployment among the least skilled, the young, as opposed to 8% more generally.

We said this would happen and lo and behold, it has come to pass.

The solution is therefore obvious: abolish the minimum wage.

There is a spirit of the law, we know it, it is widely acknowledged, it is interpreted, appropriately, by the courts, and people have a duty to try to comply with it.

Exactly!

There are two positions regarding tax. There is obeying the law upon tax and there is not obeying the law upon tax.

We can make up all sorts of lovely names, tax compliance, avoidance, abuse, dodging, evasion.

But when it comes down to it we have a system which determines which of the two possible categories tax behaviour falls into:

interpreted, appropriately, by the courts

And that\’s it.

If the courts say that every Englishman has an absolute right to order their affairs so as to reduce their tax bills then ordering your affairs so as to reduce your tax bills is obeying the law of the land on tax.

If the courts say that paying your staff in fine wine is not obeying the law on national insurance then that is not obeying the law.

At which point Ritchie\’s entire campaign falls flat on its face.

We need a system to determine which behaviour is obeying the law and which is not. We have such a system, the Law Courts.

Game over, end of.

Tax planning, tax compliance, tax abuse, tax avoidance, tax evasion, they all, once seen by the courts, collapse down into either obeying the law or not obeying the law.

Finis.