Tax-dodgers, these big companies avoiding UK tax, who are they?

I have noticed a growing noisy little protest group called UK Uncut making a lot of bother about big UK companies who don't pay their taxes, by using complicated tax schemes.

I wonder if we have anyone on here who has a better grasp on this and what this protest group is all about?

I know the owners of Topman and Vodaphone are among those being held to account by Uk uncut. From what I can grasp they have overseas accounts where they avoid paying UK taxes. But I'm not sure exactly which taxes they are avoiding.

A figure was quoted in the Guardian a few months back suggesting all the money we lose out on that ideally we would be paid by these people would cover the deficit and then some, which is telling.

It is very very wrong. They make their money here they should pay their taxes here. The UN should do something about avoidance, it seems to be relatively small countries that allow them to get away with this.

Yes it does seem strange that we are having services cut whilst billion-pound companies owe millions and millions in tax.

US Uncut groups have sprung up from New York to Hawaii in the last three weeks and activists will demonstrate against government cuts and corporate tax avoidance in more than 50 cities on Saturday.

The US protest movement was inspired by UK Uncut, an anti-cuts campaign group that has temporarily closed scores of high street stores accused of tax avoidance since it was set up five months ago.

Last week it staged demonstrations in more than 30 bank branches. On Saturday hundreds of activists across the country hope to stage demonstrations inside more than 40 branches of the Royal Bank of Scotland.

"We spent billions bailing out RBS, yet now the government are cutting our services," said Rosa Brown, 42, from UK Uncut. "They are letting RBS get away with the mistakes they caused and rewarding themselves with massive bonuses but punishing us."

This week it emerged that more than 100 bankers at RBS were paid more than £1m last year and total bonus payouts reached nearly £1bn – even though the bailed-out bank reported losses of £1.1bn for 2010.

"It's just not fair," said Brown. "The government should be making the banks pay, not ordinary people."

http://www.guardian.co.uk/uk/2011/feb/25/uk-uncut-us-groups-cuts

Seren wrote:US Uncut groups have sprung up from New York to Hawaii in the last three weeks and activists will demonstrate against government cuts and corporate tax avoidance in more than 50 cities on Saturday.

The US protest movement was inspired by UK Uncut, an anti-cuts campaign group that has temporarily closed scores of high street stores accused of tax avoidance since it was set up five months ago.

Last week it staged demonstrations in more than 30 bank branches. On Saturday hundreds of activists across the country hope to stage demonstrations inside more than 40 branches of the Royal Bank of Scotland.

"We spent billions bailing out RBS, yet now the government are cutting our services," said Rosa Brown, 42, from UK Uncut. "They are letting RBS get away with the mistakes they caused and rewarding themselves with massive bonuses but punishing us."

This week it emerged that more than 100 bankers at RBS were paid more than £1m last year and total bonus payouts reached nearly £1bn – even though the bailed-out bank reported losses of £1.1bn for 2010.

"It's just not fair," said Brown. "The government should be making the banks pay, not ordinary people."

http://www.guardian.co.uk/uk/2011/feb/25/uk-uncut-us-groups-cuts

Ha! For goodness sake. These bankers we are told (threatened) that we can't live without; the bonuses = the loss, near enough anyway. It is an absolute joke! I'm all for nationalizing the banks. Those who want to strop and leave can do so, there will be plenty willing to step in and let's be honest they can't do a much worse job.

As for this being taken up in the US. Well that can only be a good thing. Because if they start having problems it will become an international issue, then maybe something will get done about it. Certainly our govt wont say out, especially since most of them a millionaires who doubtless have overseas accounts themselves.

Is the owner of Topshop, not that guy Green, and isn't he an advisor to the government?

surely that's a bit of a cheek if he isn't paying his full amount of tax.

I'm the king wrote:Is the owner of Topshop, not that guy Green, and isn't he an advisor to the government?

surely that's a bit of a cheek if he isn't paying his full amount of tax.

It is Green, and it is a lot of cheek. Stupid rules allowing the very ricest and most elite to escape tax are what drive the average man an woman insance. We are told we are all in this together (a fallacy the 'working-class' taboids plug willingly enough); whilst thet get away with all sorts.

These are friends of the Conservatives though, many of who are probably at it as well, so it's no surpirse they get away with it

If I remember correctly the company is actually now in the name of his wife who is a non UK citizen. the tricks people can use to avoid tax is shocking and it is so easy too

As regards to the absolutely unbelievable Vodafone tax dodge, which involves corruption on a tin pot third world dictatorship level that DIRECTLY INVOLVED OSBORNE heres a good link if your blood pressure can withstand reading it:

http://www.dailyfinance.co.uk/2011/03/11/why-vodafone-is-under-fire-over-tax/

It really is incredible what went on over this 'deal.' At last their is some protest about it and people are becoming vocal but really, there was so little fuss about this in the media at the time it was happening [and it wasn't done in secret, it was brazenly, one could say cockily, in the public eye], and I don't know whether it was to do with a RW dominated media complicity in it or it's just seen as 'accepted' practise these days, that tax dodging is to expected and a 'we'd all do it ourselves if we had the chance wouldn't we' attitude, which is an opinion held by an extraordinary number of people on many discussion forums [unless perhaps more likely it's a small number of people with a lot of screen names lol] etc.

That attitude really is shameful and in this situation, considering the amounts, absolutely blatant arrogant corporation power knowing it can do what the hell it wants and f*** the rest of us, particularly as the tax write off alone for vodafone is higher than government cuts in particular benefit areas like disability for example. It really does exasperate me and come on people, we all have to start telling the powers that be that enough is enough and we aren't playing anymore.

Skemster wrote:As regards to the absolutely unbelievable Vodafone tax dodge, which involves corruption on a tin pot third world dictatorship level that DIRECTLY INVOLVED OSBORNE heres a good link if your blood pressure can withstand reading it:

http://www.dailyfinance.co.uk/2011/03/11/why-vodafone-is-under-fire-over-tax/

It really is incredible what went on over this 'deal.' At last their is some protest about it and people are becoming vocal but really, there was so little fuss about this in the media at the time it was happening [and it wasn't done in secret, it was brazenly, one could say cockily, in the public eye], and I don't know whether it was to do with a RW dominated media complicity in it or it's just seen as 'accepted' practise these days, that tax dodging is to expected and a 'we'd all do it ourselves if we had the chance wouldn't we' attitude, which is an opinion held by an extraordinary number of people on many discussion forums [unless perhaps more likely it's a small number of people with a lot of screen names lol] etc.

That attitude really is shameful and in this situation, considering the amounts, absolutely blatant arrogant corporation power knowing it can do what the hell it wants and f*** the rest of us, particularly as the tax write off alone for vodafone is higher than government cuts in particular benefit areas like disability for example. It really does exasperate me and come on people, we all have to start telling the powers that be that enough is enough and we aren't playing anymore.

Hi Skemster.

Sorry the link isn't working, it goes to the story then jumps immediately to a blank page

"'we'd all do it ourselves if we had the chance wouldn't we'" This line pi**es me right off. One of my best mates, otherwise a brilliant guy, is so RW economically it makes me physically sick at times He uses this all the time. And it so infuriating. Is that supposed to make it ok? He said the same of the MPs expenses can you believe it?!

Dodging taxes like this means the poor and those who need money most have to suffer. It is disgusting and yes the heavily RW dominated media just let it pass us by whilst printing patronizing headlines of how we're all in it together. The hell we are. The trouble is Labour were no better here either. I think you are right Skemster when you keep saying true Socialist ideas are what this country needs, because the free market and big businesses are talking us for mugs and as each day goes by the working mans life gets that little bit tougher

Yep sorry Eilzel dodgy link the establishment are clearly trying to disrupt my revolutionary cell but fortunately I am one step ahead and I'd saved it in One Note already lol

Here it is: the last bit about tax effciency- the difference between avoidnace and compliance- is particularly good
Why Vodafone is under fire over tax
Martin Cloake

Mar 11th 2011
Text SizeAAA
Filed under: Tax, Features

We reported yesterday on how Vodafone's corporate responsibility website had been taken over by protestors angry about the phone company's tax affairs. But Vodafone says its done nothing wrong and HMRC dismisses the allegations as an "urban myth". So what's the story?
In the year 2000, Vodafone bought German telecoms operator Mannesmann. It decided that its new acquisition should take on €35bn of debt – a move known in the trade as a debt pushdown. How Vodafone chose to structure the transaction is interesting.

It provided a subsidiary based in Luxembourg, VIL Sarl, with extra equity to finance a loan to Mannesmann. That meant Mannesmann would pay a large amount of interest to VIL Sarl on its debt, therefore reducing taxable profits. This in turn reduced its tax bill in Germany.

Significant interest

As Vodafone did not receive any interest income in the UK, no UK tax was due. But VIL Sarl, earned significant amounts of interest on the loan in the low-tax environment of Luxembourg. Which is where a set of UK regulations called the Controlled Foreign Companies rules comes in.

The CFC rules apply in cases where overseas subsidiaries pay a low amount of tax compared to UK rates, where subsidiaries do not undertake trading activities or where they undertake activities such as lending which could have been done in the UK. Where the rules apply, UK tax is payable on the profits of the foreign company.

The European Court of Justice established in a case involving Cadbury-Schweppes in 2006 that CFC rules can only be applied to establishments in other EU member states where they involve "wholly artificial arrangements" where "no genuine economic activity" has been undertaken.

Luxembourg subsidiary

As the Progressive Tax Blog observed: "You might think that in cases where most of a group's people including its board of directors and treasury function are based in the UK, it is difficult to argue that 'genuine economic activities' would be undertaken by a subsidiary in Luxembourg."

But that's exactly what Vodafone, and other companies, argued. The HMRC took the clear view that the billions built up in interest payments were liable for UK tax and lengthy legal proceedings ensued. Vodafone argued that there was a conflict between UK and EU regulations.

In 2009 the England and Wales Court of Appeal ruled that CFC rules were capable of applying in principle to Vodafone. Tax inspectors pushed ahead. But early in 2010, it's been reported that HMRC permanent secretary Dave Hartnett dismissed HMRC's lawyers and brought in a tax consultant from Deloitte to broker a deal.

On the ropes

Private Eye's investigations reveal that by 2006, Vodafone had set aside £2.1bn to cover settlement of the case. The ruling put it on the ropes. But Hartnett, in an interview with the Financial Times, said his staff were too "black and white about the law". So HMRC and Vodafone cut a deal.

That deal saw Vodafone agree to pay £800m, with another £450m due over five years. HMRC also agreed the arrangement could carry on into the future and promised not to raise any further challenge. Sources inside the HMRC described the move to Private Eye as an "unbelievable cave-in".

What the settlement does, says Progressive Tax Blog, is establish "a de facto (partial) EU exemption from the UK CFC rules on the basis that HMRC has no appetite to take a case to court... multinational groups undertake tax planning in tax friendly EU member states, and then plan for a favourable settlement with HMRC later."

Sour taste

The contrast with how HMRC deals with small companies and individual tax payers has not been lost on many observers. But there are a number of other observations about the case which leave a sour taste. Again, it is true to say that nothing unlawful has happened, but the facts paint an unpleasant picture.

The man who negotiated with HMRC on behalf of Vodafone was John Connors. Before he went to Vodafone he worked for... HMRC. In fact he was the man in charge of the large business services division. Basically, Vodafone hired the man they were negotiating with to work for them.

Just after the deal was announced, Chancellor George Osborne was in India promoting Vodafone, a visit that must have been agreed before the announcement. While in India, Forbes magazine observed, Osborne lobbied against a multibillion dollar tax bill the firm is said to owe there.

Failed to pursue billions

In November 2010, the Parliamentary Public Accounts Committee questioned HMRC Chief Executive Dame Lesley Strathie about why her organisation failed to pursue billions it thought it was owed, and that Vodafone's own provision indicate it thought it owed too.

She said was "satisfied as the accounting officer that the proper process took place here." But she did not know that the Deloitte consultant had been brought in. And when questioned about the forward agreement HMRC struck with Vodafone, the head of the UK's tax authorities told MPs, "I'm sorry, I'm not a tax specialist."

HMRC argues that it is better to get something quickly rather than spend time and money chasing what it is owed. But as journalist Nick Cohen observes, the Vodafone case "shows that the Revenue is prepared to have one law for the wealthy and another for the rest and undermine the moral basis of the system over which it presides".

Tax efficiency

It has been said that Vodafone is merely organising its tax affairs in an efficient manner. But this argument is not convincing the growing number of protestors, especially in the current economic circumstances.

That is because there is a growing awareness of the difference between tax avoidance and tax compliance. Both are legal. But, as tax campaigner Richard Murphy succinctly defines the argument: "A tax avoider seeks to pay less than the tax due as required by the spirit of the law. A tax compliant tax payer seeks to pay the tax due (but no more)."

Yesterday's action, and the continuing protests against Vodafone, take this into account. Because when a company seeks to make much of its charitable work, or to sponsor a conference on public sector efficiency, it cannot be surprised if tough questions are asked about the intent behind its tax affairs.

Eilzel:

Hi Skemster.

Sorry the link isn't working, it goes to the story then jumps immediately to a blank page

"'we'd all do it ourselves if we had the chance wouldn't we'" This line pi**es me right off. One of my best mates, otherwise a brilliant guy, is so RW economically it makes me physically sick at times He uses this all the time. And it so infuriating. Is that supposed to make it ok? He said the same of the MPs expenses can you believe it?!

Dodging taxes like this means the poor and those who need money most have to suffer. It is disgusting and yes the heavily RW dominated media just let it pass us by whilst printing patronizing headlines of how we're all in it together. The hell we are. The trouble is Labour were no better here either. I think you are right Skemster when you keep saying true Socialist ideas are what this country needs, because the free market and big businesses are talking us for mugs and as each day goes by the working mans life gets that little bit tougher

You're right Eilzel you come across it all the time, as a culture we have been so thoroughly brainwashed into accepting the immoral machinations of free-market capitalism as 'acceptable,' and 'expected' and 'it's legal isn't it so what's the problem,' that blatant examples of corruption that goes right to the top of governemnt are almost shrugged off now as 'fair play, good luck to 'em, what more do you expect, and what can we do about it?'

Well I for one expect an awful lot more from not just the establishment that runs our businesses, but certainly, absolutely a lot more in respect of our democratically elected officials. I don't want societal managers which to New Labour's shame they so adeptly turned our political classes into; I want civic minded politicians with ethics and less of the blind 'I'm in it for me and my business contacts alone' attitude so prevelent in Westminster today.

Not that I've ever been with them, but if you have a Vodaphone phone, you know what to do, when it comes to the end of it's contract!

Skemster wrote:Eilzel:

Hi Skemster.

Sorry the link isn't working, it goes to the story then jumps immediately to a blank page

"'we'd all do it ourselves if we had the chance wouldn't we'" This line pi**es me right off. One of my best mates, otherwise a brilliant guy, is so RW economically it makes me physically sick at times He uses this all the time. And it so infuriating. Is that supposed to make it ok? He said the same of the MPs expenses can you believe it?!

Dodging taxes like this means the poor and those who need money most have to suffer. It is disgusting and yes the heavily RW dominated media just let it pass us by whilst printing patronizing headlines of how we're all in it together. The hell we are. The trouble is Labour were no better here either. I think you are right Skemster when you keep saying true Socialist ideas are what this country needs, because the free market and big businesses are talking us for mugs and as each day goes by the working mans life gets that little bit tougher

You're right Eilzel you come across it all the time, as a culture we have been so thoroughly brainwashed into accepting the immoral machinations of free-market capitalism as 'acceptable,' and 'expected' and 'it's legal isn't it so what's the problem,' that blatant examples of corruption that goes right to the top of governemnt are almost shrugged off now as 'fair play, good luck to 'em, what more do you expect, and what can we do about it?'

Well I for one expect an awful lot more from not just the establishment that runs our businesses, but certainly, absolutely a lot more in respect of our democratically elected officials. I don't want societal managers which to New Labour's shame they so adeptly turned our political classes into; I want civic minded politicians with ethics and less of the blind 'I'm in it for me and my business contacts alone' attitude so prevelent in Westminster today.

Exactly. If we had politicians who came across as honestly being in the position purely for the sake of fair government and policies for the people they would win the vote every time. But all we have clearly do not, they all answer to big business or share their thinking.

The article was interesting. The fact it is legal of course is irrelevant, it shouldn't be. But some points stand out as outrageous:

She said was "satisfied as the accounting officer that the proper process took place here." But she did not know that the Deloitte consultant had been brought in. And when questioned about the forward agreement HMRC struck with Vodafone, the head of the UK's tax authorities told MPs, "I'm sorry, I'm not a tax specialist."

This is just not accetable. We are potentially owed billions, and this is all those responsible had to say?

Then this:

HMRC argues that it is better to get something quickly rather than spend time and money chasing what it is owed.

I imagine if the government was after money owed from the average tax paying UK citizen they would badger them for it in definitley. The article then continued to go on how there was one rule for the rich one for everyone else; how true that is.

That is because there is a growing awareness of the difference between tax avoidance and tax compliance. Both are legal. But, as tax campaigner Richard Murphy succinctly defines the argument: "A tax avoider seeks to pay less than the tax due as required by the spirit of the law. A tax compliant tax payer seeks to pay the tax due (but no more)."

This really is the crux of it. And since big business, and bankers (lets not forget about them) refuse to comply to 'the spirit of the law' we ought to have a tough handed govt that will simply make it compulsory to do so.

Long may these protests continue, lord knows these elitists will never listen otherwise.