I just made this suggestion yesterday
In relation to the Google (?) barges parked off the USA.
UK Prime Minister David Cameron will announce today that a register of the real owners of companies will be opened to the public as part of the government's efforts to stop tax evasion. Campaigners pushed the G8 heads of government summit in June to consider a register of beneficial owners so that people could see who actually …
In relation to the Google (?) barges parked off the USA.
I agree with this, it's an important step towards tax fairness IF implemented well. Of course it needs to be combined with other changes to the tax law. For example encourage other countries to do the same by giving beneficial tax terms to companies with ownership that is either UK-based or based in countries with a similar disclosure regime. Otherwise the UBO would just register ownership through an offshore shell company.
Couple of things, not sure about making it totally public vs available only to HMRC. Pros and cons to that I guess. The other thing is, where do you draw the line? A publicly listed company like a big utility can have thousands or hundreds of thousands of shareholders. many of these shareholders will be pension funds, mutual funds etc. Some funds are themselves 'funds of funds'. So where is the line drawn? Because if all ownership has to be traced back to a physical person it will be VERY messy. And if ownership is not traced back to a physical person but stops at particular financial instruments, then these types of financial instruments can themselves be used as shell companies.
Hyperlinks are your friend, I guess.
Company A own 53% of Company B. Follow the link.
Company X owns 22% of Company A. Follow the link.
"I agree with this, it's an important step towards tax fairness IF implemented well"
No it isn't. If I buy from Google (let's say a Nexus, not my "consumption" of adverts) then it's already clear who is the beneficial owner of whichever entity I contract with. It's the shareholder register of Google Inc. Will that stop the executives of Google undertaking apparently legal tax avoidance, as part of their fiduciary responsibilities to shareholders? Even if you traced every Google subidiary round the world on a who owns whom basis, would that alter things? No.
The problem isn't who is the beneficial owner, either in total or at each inter-company trade, it is how they own it, and Shiney Faced Dave isn't even clever enough to realise that he's talking rubbish. More pointless policy making on the hoof.
"Because if all ownership has to be traced back to a physical person it will be VERY messy."
And if any of the intermediate entities in this chain of ownership are subject to different tax laws, who is to say what the final owners' tax liabilities are?
For example, the (in)famous Irish tax loophole used by a number of US corporations is a legal tax avoidance technique. I am the holder of equities in some of the parent corporations taking advantage of this. But my residency has no bearing on whether this loophole is legal or not. It certainly is no indication of whether I personally am in compliance with my countries (US) tax law. The USA has one of the most far reaching unitary tax regimes in the world. Even here, intertwined corporate holdings are a barrier to my tax liabilities. I don't know how tracing the holdings of residents and corporations in other tax jurisdictions would have any meaning.
@Ledswinger - "Will that stop the executives of Google undertaking apparently legal tax avoidance, as part of their fiduciary responsibilities to shareholders? "
No it won't which is why tax reform must go hand in hand with this. What this system will show though, is that there is a formal relationship between Google UK, Google Ireland, Google Bermuda, Google Inc, whatever, and that link is established even if "Google Bermuda" is registered as "Bob's offshore company". This will allow a revised tax law to cut down on internal profit transfers to lower-tax jurisdictions.
You're right that without any change in the tax laws that regulate "internal" transfers then nothing will change. That's why I said "Of course it needs to be combined with other changes to the tax law."
Nobody honestly cares look at Startbucks etc etc people still use them. Politicians are up to their eyeballs in tax dodging firms.
Nothing will change - even look at Branson, moves to a private island to avoid paying tax. Until the tax laws are changed and firms have to no choice but to change then NOTHING WILL CHANGE - EVER.
Evasion is not paying tax that is legally due to be paid, ie. breaking the law. Avoidance is the opposite: no laws are broken because no tax was ever due - the person simply structured their affairs and planned their transactions so that the long arm of HMRC has no right to be in their pocket, taking 40%+ of what they earn.
As to the register. It's admirable but, it will fail unless everyone else does it. Even then, how is it ever going to deal with 'Bearer' securities? What use is an entry in the register that says:
"the beneficial ownership of these securities is with the entity that can produce them on their demand."
I'm all for going after tax evaders, but the question of avoidance should not come into such discussions. Avoidance is legal. If a taxpayer is not allowed to understand the law and work within it, then the UK is no different from a totalitarian regime. If you don't agree with avoidance, then blame the legislature for not making new laws. Don't simply criticise someone for obeying the law.
Crikey, since when did register forums merge with the daily mail?
Branson pays no tax because he gives all his income to charity - whether he lives on his island paradise is up to him. Whether you use your SHOUTY RIGHT WING BOLLOCKS typing or otherwise.
The line isn't as cut and dried - otherwise we wouldn't need courts
If the Inland Revenue decide that you buying your coffee beans from Switzerland at 10x market price is purely to make a tax loss - then it becomes illegal tax evasion.
"If the Inland Revenue decide that you buying your coffee beans from Switzerland at 10x market price is purely to make a tax loss - then it becomes illegal tax evasion."
No, as you said, it becomes illegal tax evasion when the courts decide. When HMRC decide it's tax evasion, they then need to prove that to the satisfaction of the courts, but HMRC have been remiss in building an effective case and taking it before the courts. So HMRC should have been after Starbucks years ago, and have had for three decades or more ample transfer pricing laws and precedents that they could have used, instead of ignoring big corporate tax dodgers and hounding UK tax payers under PAYE, SA or IR35.
That sorts out dodgy transfer pricing but it doesn't affect Google or Amazon saying their revenue arises here, but their profit magically arises elsewhere on electronic transactions. Parliament could do their share if the lazy, incompetent scrotes were to get off their well padded behinds, and draft some internet age laws about transactions placed over the internet. They could stop the likes of Google and Amazon dodging taxes by simply passing laws to define where a transaction takes place, rather than allowing companies to pretend that having a server in Kazakhstan means that the trade was executed and the profit made there, when the trade was placed and logistically executed in the UK, conducted in sterling and under the laws of the UK. You could still have free trade - but make those with Kazakh (or Luxembourg) "subsidiaries" undertake their business under the relevant foreign legislation and currency and fulfil from a foreign logistics centre. Amazon would have two choices - pay taxes where the revenue arises, or try and convince customers to have slower delivery, fewer consumer rights (under the jurisdiction of a foreign court in a language most customers won't speak), and persuade the customers to pay in euros or shekels.
For all the whining of the politicians, the situation is their fault. It can be solved by unilateral action. They simply don't have the spine or the common sense.
And what might be a good way to effect this change? Perhaps making the average person both more aware of the relationships and angry at the convolutions of the companies would help, do you think?
Then again, perhaps not. The average person sure seems pretty complacent about the arse rogering they are getting these days.
Totally depends on international cooperation. Could be extrememly useful if implemented properly with the right agreements in place.
What I would expect is lots of dead ends. Yes you may be able to identify the owner of a british shell but when the owner turns out to be a private trust based out of the Dutch Antilles what chance then.
Could be mistaken but too much money and effort invested in this sort of financial hide and seek for me to think this will work.
This could easily be fixed by legislation that taxes the company as an individual at income tax rates until clear owners can be identified. As a UK LTD company it would be bound by such laws and profits would be taxed before they can leave the country. Simples.
That would be an easy fix and for that reason isn't likely to happen. As far as I know no legislation along those lines is being proposed but could really help bring in some much needed tax revenue. Would imagine heavy lobbying against it if Vince suddenly grew a pair and started pushing for it.
What we would LIKE to hear
"We need to know who really owns and controls our politicians. Not just who owns them casually, but who really benefits financially from their existence," Cameron is expected to say at a conference.
But unfortunately not.
"For too long a small minority have hidden their business dealings behind a complicated web of shell companies and this cloak of secrecy has fuelled all manners of questionable practice - and downright illegality."
And we make the "legality" - in particular in order to spend other people's money on various shit, wars as well as ourselves. As the income is not enough, we introduce VAT, income taxes etc. As this is STILL not enough, we need to upgrade constantly which we then sell to the sheeple by claiming that widows and children are being treated unfairly.
Spot on! That really is the issue.
For a full list - see this article
It proves what we have been suspecting all along - that a group of mainly Banksters own most of what you see around you. That includes supermarkets, pharma, banks, military, political parties, media, education...
More importantly, prices are fixed and there is not much competiton because they are all owned by the same group of companies (who also control the politicians).
Thus if your peeved off with your energy company it doesn't matter who you go to cause one might offer you a fraction less.
If you look hard enough, you will see evidence of this empire coming to an end and more power coming to the people. It is happening in increments.
There seems to be an awful lot of paid shills in this forum - I can't believe you got 8 downvotes. This could only result from trolls or shills.
If Mr Cameron is aware of companies participating in "illegal" activities, why hasn't he reported it to the appropriate authorities?
And by the way, if shell companies and blind trusts and what-not really are the devil's spawn, (a) why doesn't he make them illegal? (b) why doesn't he release a list of the MPs who made/voted-in the laws which allow these accounting 'tricks' to exist in the first place?
why doesn't he release a list of the MPs who made/voted-in the laws which allow these accounting 'tricks' to exist in the first place?
All that information is already in the public domain. All MP.s votes on legislation are publicly recorded.
> why doesn't he release a list of the MPs who made/voted-in the laws which allow these accounting 'tricks' to exist in the first place?
Because he and his Chancellor would be top of it. Lest year they made a big fuss about rewriting the tax laws to "clamp down on tax avoidance" and actually hired the big 4 accountancy firms to rewrite the law so that all their avoidance "instruments" are no longer pursued by HMRC.
The law is now that unless you can afford to hire PwC, Deloitte, Goldman-Sachs or the other one (i forget), you pay all the tax. If you can afford them, you pay no tax at all.
Assuming you're referring to the Big Four accountancy firms, it's PwC, Deloitte, KPMG and Ernst & Young. Goldman Sachs is an investment bank.
Wouldn't it be simpler to replace all these taxes with something like a transaction tax instead?
Unless you want to cripple the economy by taxing the street-level grunt, no.
Frank Chodorov, in Out of Step, Devin-Adair, 1962:
First, as to method of collection, taxation falls into two categories, direct and indirect. Indirect taxes are so called because they reach the state by way of private collectors, while direct taxes arrive without by-pass. The former levies are attached to goods and services before they reach the consumer, while the latter are in the main demands upon accumulations of wealth.
It is not the size of the yield, nor the certainty of collection, which gives indirect taxation preeminence in the state's scheme of appropriation. Its most commendable quality is that of being surreptitious. It is taking, so to speak, while the victim is not looking. Those who strain themselves to give taxation a moral character are under obligation to explain the state's preoccupation with hiding taxes in the price of goods.
Taxes of all kinds discourage production. Man works to satisfy his desires, not to support the State. When the results of his labors are taken from him, whether by brigands or organized society, his inclination is to limit his production to the amount he can keep and enjoy. During the war, when the payroll deduction was introduced, workers got to figuring their "take home" pay, and to laying off when this net, after taxes, showed no increase comparable to the extra work it would cost; leisure is also a satisfaction. A prize fighter refuses another lucrative engagement because the additional revenue would bring his income for the year into a higher tax bracket. In like manner, every business man must take into consideration, when weighing the risk and the possibility of gain in a new enterprise, the certainty of a tax-offset in the event of success, and too often he is discouraged from going ahead. In all the data on national progress the items that can never be reported are: the volume of business choked off by income taxes, and the size of capital accumulations aborted by inheritance taxes.
As a programmer my interest is in building and designing systems not to fail. Ignoring the questions of morality, can we not come up with a tax system which cannot be evaded by off-shoring etc?
@AlgernonFlowers4: Having asked myself the same question, the best I've got is a flat, x% tax on any retail purchase made, or on any money being moved out of the country. No doubt someone more versed in finance would poke holes in my plan but I find virtue in a tax system simple enough that average Joe can understand how much he's being taxed and subsequently make informed financial decisions.
I wonder how many actual owners there will be? I propose starting a pool.
I put 5 quid on 12.
Except those 12 will all be members of a certain group (lets call them the Illuminaughty)
Your post is good, but it was Illuminaughty that brought it to up-vote status!
What we need to do is get rid of all the imcompetent crooked politicians (wait, that's redundant).... Oh well.
Only a few months ago they were going to allow directors of animal testing companies to be anonymous....
... and now they are going to make all the shareholders, shareholders in shareholding companies, and so forth, public.
Part of the problem as has already been highlighted is no politician has the bottle to radically restructure the tax laws along the KISS* principles.
The more complicated and convuluted tax law becomes the easier aviodance is.
That said the Grant Thorntons, KPMGs and PWCs and their paid puppets.... I mean Non-Exec Directors who also happen to be MPs... would lose out financially so I can't see that happening any time soon.
*Keep It Simple Stupid
I wonder if we (the public) will be able to obtain a similar list of Politicians that have vested interests in companies so that we can spot obvious conflicts of interest within the Government.
The fact that this report is apparently written by either a time-traveller, Cameron's speech-writer, or someone from the NSA is either; Awesome, neato, or frightening - respectively!
This cannot be a new idea.... My classmates and I floated this a few years ago as an "app" for your phone when you go shopping. Scan a barcode and it will show you who owns the brand...
In reality, if you earn money from a company the tax is taken before you see it (in the UK anyway...).
If you run a company, you can offset losses against gains, and often show no profit.
What really needs to happen is let citizens offset losses against their income to lessen their tax liability....
I doubt that will ever happen in the UK.
"Scan a barcode and it will show you who owns the brand..."
You'd have to keep up with the constant shuffle.
You can already offset your legitamate costs of earning your salary against your tax liability. For example as a Chartered Engineer, I have to pay certain sums of money every year to various groups. I can declare these payments to avoid paying tax on the money I earned to make those payments. Exactly like a company.
However the physical and mental pain of doing so hurts more than the money I would make through the tax saving, so I don't.
There's already an app for that. It's called "Buycott".
So far everything seems to be 'After 21015'.
So now we know who owns what. I'm sure HMRC knew this already. But what laws are being made/changed to prevent this type of tax avoidance/evasion?
Does that mean they've figured out another way of hiding their stuff?
If it's anything like the US, the big surprise will be that it's a relatively short list.
If you're not aware of it, most boards of directors are also directors of other boards. The
inbreeding crossover is jaw dropping incredible.
“Life is about to get much more difficult for corrupt politicians, arms traders, drug traffickers and tax evaders."
This is one of the finest non-sequiturs I have ever come across. With the exception of arms traders, none of these groups are set up as companies, listed or otherwise, so a register of ownership will disclose . . . nothing. And I have not heard the likes of BAE being discussed in the same fields as Starbucks, Google and Amazon.
Given that the UK (ok, the CoL) is a world leading tax shelter and money launderer that is knee deep in legal and financial rules designed to enable tax avoidance and avoid detailed scrutiny I somehow doubt this will make any real difference whatsoever.
Arrbee's post is spot on: I refer readers to the "In the back" section of Private Eye which has been cataloguing the DoubleThink/DoubleSpeak of successive UK governments (they're all as bad as each other) for as long as I can remember.
The UK's legendary libel laws, coupled with the astonishing ease with which the UK financial sector and assorted consultants and advisors can make any and all profits simply disappear, gives the true measure of this country's "leadership" in the tax avoidance game.
Yup and when they conveniently exclude 'party sponsors' businesses for that convenient 'charitable' donation.