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back to article You thought only Google dodges UK taxes? So do all the Brit firms

Big British-based tech firms like Autonomy and BSkyB have subsidiaries in onshore and offshore tax havens, and avoid paying taxes in much the same way as has been highlighted in the case of US firms Google and Amazon. Research shows that most of Blighty's top companies have offshoots in tax havens, according to charity ActionAid …

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If you don't want to contribute to the making of a new generation of genocidal nuclear weapons, you have to evade and avoid UK taxes.

You know it's true...

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We might need these weapons...

... to threaten the Caymans, Bermuda etc.

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Megaphone

News Flash!!

"Shock! Horror! UK companies who do international business aim to minimise their costs"

Big bloody deal. Tax avoidance is a feature of any tax system. It has been going on for centuries and it will continue to go on. The capitalist system is not perfect. It never has been. It never will be. But it's a damn site better than the alternatives. If you don't like it, go and live in France or Sweden or any other Western European country that 'enjoys' taxing the crap out of their citizens.

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But Sweden is a very civilised place to be.

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Anonymous Coward

Re: News Flash!!

"go and live in France or Sweden or any other Western European country". Perhaps not such a bad idea if you look at this list of "the best countries in the world" by Newsweek and a few universities in the US.

Finland, Switzerland and Sweden as the top three.

http://www.thedailybeast.com/newsweek/2010/08/16/best-countries-in-the-world.html

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Re: News Flash!!

"Shock! Horror! UK companies who do international business aim to minimise their costs"

There's a difference between "minimising their costs" and "tax fraud".

Like the man said, if you want to do business here, you pay taxes here. Don't just siphon billions off of the populace and send it to another country. At least the government keeps what they steal here. Big business just steal and you see little to no benefit.

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Gromm

There's a difference between "minimising their costs" and "tax fraud".

That's right there is a big difference "tax fraud" indicates that you have broken a law to avoid taxes. "minimising their costs" indicates they are using existing loop holes in the legalisation to minimise the tax they need to pay.

Typically, the government sits a whines over this "gross" injustice rather than acting on closing the loop hole which they created in the first place.

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Black Helicopters

Sweden?

Not if your name's Assange...

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FAIL

Re: News Flash!!

The UK Govt keeps most of what it steals.....mmmmmmm not sure about that.

Apart of course from the Billions it pays to be part of that corrupt club called the EU and the Millions it contributes in Aid to countries that are growing bigger and faster than the UK, or that have such endemic corruption that the Aid doesn't actually benefit anyone other than the Tyrants and WarLords......

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Trollface

Re: News Flash!!

Would that be the same corrupt European club that has just unveiled a 10 year long price fixing scam in the UK oil fuel industry?

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FAIL

I doubt most of these firms lie when summoned before MPs to testify as to the nature of their UK activities...

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Not the full story

Vodafone operates a phone service in Ireland and Cable & Wireless operates phone services in many of the offshore Islands. That is a legitimate reason for having companies in theses countries. Of course they have a subsidiary in Switzerland where they don't operate a phone service so they are clearly involved in tax planning as well.

We need to look at why they have those companies, many of may have legitimate reasons for doing so, and if the local government chooses not to charge tax on their genuine activities there, that is their prerogative.

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Facepalm

Laughing at the idea of David Cameron, of all people, lecturing the G8 on tax havens. I'd wager a large majority of parliament and of his own party are doing it, he might want to tread carefully.

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I disagree. He should wade in and reform the system. If his party are doing it then they will be cleansed at the same time.

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Anonymous Coward

Cameron's father made £10M in offshore tax havens

Funny that he never mentions it when he's banging on about Jimmy Carr etc.

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Anonymous Coward

10 thumbs up and 1 thumb down for this comment. Does D-Cam post on El Reg?

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They don't want to be "cleansed" - they want to stay filthy rich.

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Flame

No real surprise

Some of HMRC's offices are run from a tax haven. I shit you not.

Only in the UK would the tax inspector sell their own buildings to a company operating out of a tax haven.

Want to avoid paying taxes? Just buy the head of HRMC a nice dinner. Job done!

Want to change tax law? Just second a few accountants to the right MP. Job done!

Want to de-regulate banking? Just stuff the banking regulator with bankers who don't want regulation. Job done!

Is it any wonder the country the fecked?

Labour and Tories both to blame in equal measure as the are both cut from the same cloth.

Too quick to cosy up to their rich chums and gouge the tax-payer to enrich them further.

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Re: No real surprise

Got a source for this? Sounds like an interesting story.

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Re: No real surprise

Try this as a start (it references the UK Public Accounts Committee) - http://www.accountancyage.com/aa/news/1808456/mps-slam-hmrc-business-acumen-offshore-company-deal

However from what I understand those dozy gits who sit in the House of Commons either kew nowt or were not prepared to do anything until Private Eye (http://www.private-eye.co.uk/) started raking up some of the dirt, as well as subsequent disgraceful behaviour by HMRC. Described as scurrilous by many (typically MPs, Councils and others who get caught out - for example http://www.private-eye.co.uk/sections.php?section_link=in_the_back&issue=1338, it does the most consistent job of reporting the real murk in Britain of all the news publications. Worth a subscription).

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Paris Hilton

Re: No real surprise

UKIP - the solution for the moment?

My take: the other parties are institutionalised

UKIP still has that rawness that challenges the establishment.

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WTF?

Re: No real surprise

Oh and dont forget the fact that even the "doorman" at HMRC towers seems to be empowered to cut Goldman Sachs a massive Tax rightoff without any approval from Govt or higher powers in HMRC.

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Re: No real surprise @ All names Taken

If UKIP would drop the nonsense about coming out of the EU (I know - they'd need to change their name first), then their other policies look quite attractive and socialist. However, I'm rapidly becoming a Scottish Nationalist - socialist and wants to be part of the EU. I'll let the loons in the rest of Britain vote their paranoid way whilst I vote to make my adopted home a country that will be as good as the best in Europe in a few short years.

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JDX
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Well Duh

Amazon and Google don't do it because they're evil, but because it makes financial sense - ergo every company with competent CFO will do the same by default - if they don't they give a huge concession to their competitors who are doing it.

Tough, but true.

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Big Brother

Is it just me...

...or did the person who came up with the name 'Foreign Account Tax Compliance Act' get told to cut it off two words shorter, just in case the plebs noticed they were having the piss taken out of them. Foreign Account Tax Compliance Act Territorial Services maybe...or something.

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Meh

Y'know, is it just me or could the issue be something to do with the complexity of the UK tax code (running at 11500+ pages, most complicated in the world *various sources, citation needed etc)?

I mean, businesses will be businesses however it is in the power of the government to reduce complexity (albeit at the risk of offending friends at accountancy firms & subsequent employment prospects).

Argh, so tired of it all.

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Unhappy

Agreed. You need financial adviser to stay on the right side of the tax law, but since his wages are not small chunk of money, why not put it to good use. You should not need adviser in the first place to pay the right amount of tax, but that would take the job away from ex-government advisers .... guess what they are doing now.

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Anonymous Coward

Complex, but not the worst

The US code is legendarily complex - sure there are plenty of complexities in the UK code, but you can usually knock up a reasonably approximation of expected corporation (for small biz) & income tax in a spreadsheet. In the US, you need specialized software and/or a firm.

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Anonymous Coward

Smoke and mirrors

"Sky directly contributes more than £1 billion a year in tax..."

You know a company has something to hide when they start throwing around big numbers. Unless the tax is given as a percentage of earnings then the figures are meaningless.

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Joke

Re: Smoke and mirrors

You know a company...

Oh they're all at it. How can you tell when a politician is lying? Their mouth is open.

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Re: Smoke and mirrors

Indeed, I'd bet that Sky have included employee PAYE & NI contributions in that. Correct me if I'm wrong once a salary is paid that money belongs to the individual so the individual pays that tax.

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Holmes

Re: Smoke and mirrors

To put that £1 bllion figure from Sky in perspective in 2010/11 the UK government raised £43 billion in Corporation tax, which was 8% of the gov't's income.

By contrast income tax raised £153 billion, National Insurance £93 billion and VAT £84 billion.

So the true figure should be substantially less than that punted to the media.

Sources - http://www.ifs.org.uk/publications/5885 and http://www.hmrc.gov.uk/stats/tax_receipts/tax-receipts-and-taxpayers.pdf

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Re: Smoke and mirrors

As a listed company, they freely provide all of this information.

It should be here:

http://corporate.sky.com/the_bigger_picture/reporting/ourperformance/financial

A cached version is here:

http://webcache.googleusercontent.com/search?q=cache:RSf8rtRWOBwJ:corporate.sky.com/the_bigger_picture/reporting/ourperformance/financial+&cd=4&hl=en&ct=clnk&gl=uk&client=firefox-a

Approx £330m of taxes borne. Profits before tax at £1148m.

Approx. £1086m of taxes collected by Sky. No figures provided for the cost of collecting the tax.

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Re: Smoke and mirrors

If BSkyB is including VAT in those figures then of course it is not paying that at all - its customers are! Corporations pay corporation tax and employers NI, the rest of it is paid by us, not them.

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But HP don't take the piss?

We all know big companies take the piss out of us, the front desk of one big hotel chain has a screen listing all their companies, we are talking hundreds of little companies all with names like X000001 X00002 X00003, all operating at below level required to register for VAT . No doubt they send all their sales through the Caymens and rent the use of the company name from an office in Delaware.

The moment you can afford to have 2 or 3 accountants working full time for you, you can recoup their wages in tax avoidance.

The trouble is that these companies can only make money out of the UK by taking advantage of the infrastructure and protective framework of the UK. (roads, police and general safe environment in which to do business)

As someone mentioned before, remove politicians personal links to big business and refuse entry to company's who wont pay their upkeep towards this safe business environment and all the corruption goes away (or at least finds less lucrative loop holes)

In the mean time, as someone who gets to make a decision on purchasing kit, it looks like HP are the winners here

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Re: But HP don't take the piss?

If the hotel was trying to avoid a VAT registration then that would be unlikely to work, you can't artificially separate a business out to avoid it.

See - http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm#7

I'm not saying there isn't something weird going on there, it's just unlikely to be VAT related.

Most of the tax schemes here require an overseas element, usually a low tax regime, which will have an entity billing the UK bit. That bill reduces the UK profit, which as taxes are based on profit, reduces the tax bill. Tax is then paid in the overseas place, and dependent on the tax treaty is then considered taxed, so no further tax will be payable. It's a bit more complicated than that, but it gives the gist.

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Devil

Re: But HP don't take the piss?

"In the mean time, as someone who gets to make a decision on purchasing kit, it looks like HP are the winners here"

As somebody sitting in a company enduring HP's 5hite service and products, I wish you good luck choosing your vendor on the basis of their unproven claims to be paying their fair share of tax.

Out of interest, why would you want to do business with a company who not only have messed up every major acquisition they've made, but also seem to be claiming that they ignore their fiduciary responsibilities to shareholders? And as a major offshorer of UK and US jobs, why is it that (allegedly) paying their fare share of taxes is a good thing, but you're happily prepared to endorse and reward their export of jobs in the pursuit of profits?

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Anonymous Coward

Delaware

The vast majority of US corporates are registered in Delaware. It's not necessarily for tax reasons: http://en.wikipedia.org/wiki/Delaware_corporation

I work for a UK SME (about 50 employees). We do a lot of remote work for a US customer (based in southern California) from our UK office, but we employ two guys in the US to liaise with the customer and "bring the work home". Those two guys are employed by a small US subsidiary, which just happens to be incorportated in Delaware, mainly I think because it's about the easiest state in which to set up an Inc.

With the possible exception of the two US staff, all our income comes into the UK company and we pay tax in the UK. Without the US Inc. company and it's two employees we probably wouldn't have work for maybe 10 or 20 UK-based staff.

So, a UK company having a Delaware subsidiary isn't necessecarily bad for the UK.

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Meh

Re: Delaware

Except of course, isn't this exactly the same reason Google are being hauled in front of the PAC committee again? If the two guys in the US are setting up the sale, shouldn't the sale be attributed to the US authorities? Or have you set up some elaborate licensing agreement between the UK parent and the US subsidiary?

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Anonymous Coward

Re: Delaware

No elaborate agreement. The work is on a time-and-materials basis. The work of the UK company is sold by the UK company, carried out in the UK, and the customer has a direct contract with the UK company for that work. The guys in the US are just a visible presence at the customer's site which helps the UK company be considered for future contracts with the customer. The only sale they conduct is of their own labour under a separate contract between the customer and the Inc. company.

Google's case is the opposite, trying to persuade the taxman that work/services which "appear to be" carried out in the UK are nevertheless supplied by a company in Ireland.

In our case it couldn't be clearer that the work done in the US is supplied by the US firm and the work in the UK by the UK firm.

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Shouldn't the UK Gov start upping it's game then?

It's not like the government has to ask companies very very nicely for their taxes. Why can they not do what they do with the rest of the populace and just take the money?

The companies that pay too much tax can always claim it back later.

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Re: Shouldn't the UK Gov start upping it's game then?

Well I'm sure they would love to but then all those lucrative corporate non-exec directorships/consultancy roles for when they leave office will just evaporate.

It's not the Govt that's in control here remember.

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Re: Shouldn't the UK Gov start upping it's game then?

> Why can they not do what they do with the rest of the populace and just take the money?

Simple. The companies would bugger off to somewhere more "sympathetic". Governments can tax their citizens into oblivion, safe in the knowledge that few (not even the rich ones - for they have better means of avoiding taxes) , very few, of those people will up-sticks and leave.

Companies however, are not so sticky. That's why they can negotiate beneficial tax terms (what: you thought they just paid up and didn't do deals with HMRC?) and grants in order to do countries the favour of setting up on their patch of land - as opposed to some higher-taxed country.

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@Pete 2

"Simple. The companies would bugger off to somewhere more "sympathetic"."

Good. Let them go.

There are more than enough people/companies who can replace them and pay tax in the appropriate places. All this needs is the balls to actually start laying down the law. 'The law' as-in what 'the man in the street' would understand, not 'the law' as thousands of scumbag accountants/lawyers/politicians can figure out.

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Re: @Pete 2

> Good. Let them go.

Maybe I wasn't explicit enough:

The companies would bugger off to somewhere more "sympathetic" making thousands of people redundant, and terminating the contracts they had with ALL the local service companies and suppliers they use, causing even greater knock-on redundancies.

As for the companies who would replace them, if those companies wanted to be in the UK, they would already be here. It's not a case of the UK can have (say) Google, or Exxon and somehow choose who they'd like to come here. All multinationals make their own, independent, decisions of where they choose to have offices. By making the UK financially unattractive to some, it's not very likely that others would see an opportunity and pile in, instead.

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Unhappy

Re: @Pete 2

@Jason_H

Sorry chap, I see where you are coming from but the politicians don't work for us. None of the western politicians work for the 'normal citizens'.

They all work for the big global corporations. Have done for decades. That's why no matter who you vote for Tory/Labour/Socialist/Right wing etc. the basic corporate agenda carries on unaffected.

It's all been manipulated that way. You don't think those big political donors only donate to one party do you?

All this Europe/immigration stuff only keeps getting dredged up because it works as a good smokescreen to keep covering up that none of the corporates/banks have yet to be taken to task for the crisis they helped make.

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Re: @Pete 2

Sorry but that's bullshit.

If a company can make money somewhere they won't leave just because they may make less money if the tax system changes. If it falls below the level of profit - or *enough* profit then maybe yes. But to state that if things thange they will all leave is patently rubbish.

If a large company is using/abusing the tax system then they have an inherent advantage over smaller companies coming into the market, who may not be able to 'save' their money in the same way.

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WTF?

Re: @Pete 2

@Jason H,

I agree with you..............

We had all the Bankers threatening to leave the UK financial services sector for more sympathetic countries when they got bashed and taxed for "significantly contributing" to the causing the banking crisis.

I ask you how many actually left? Few.........

Has it damaged the performance of the Financial Services sector in the UK? No!!

Are we feeling the pain? No!!

Should we have already prosecuted and jailed some of those Feckers? Absolutely

Such as action would once again re-establish the "moral hazard" or fine tune their "Moral Compass"

Finally corporations did leave the UK when we had through necessity apply higher corporation taxes to allow us to recover from the "banking led economic crisis". This was only right and proper as clearly based on other posts on this forum; Corporations have clearly profited massively in the good times. Now its payback.

That said now that Corporation and other taxes are coming down how many of those corporations are coming back to the UK.

In short the UK Government has to "grow a pair" and get tough rather than lube up and flash the sheriffs badge each time Corporates make threats.

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Meh

Well you know what they say....

...paying tax is for little people.

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"You thought only Google dodges UK taxes?"

Nope. You ?

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