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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 …

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  1. Anonymous Coward
    Anonymous Coward

    I blame obama

    I mean the governemtn >.>

    Part of the problem is we've gone the classic briish route of pricing ourselves out of the market. We want more money so we jack up taxes, company a and b can't afford it and either go out of business, or avoid the taxes. Suddenly less money coming in, or not as much of a gain as they'd hoped, taxes go up again, rinse and repeat.

    The same thing is happening everywhere.

    Heck half the town centre is dead where I live because of a very similar problem with business rates being jacked up. Because of this local businesses are all doing one of the following 3

    Going out of business.

    Moving elsewhere

    Dodging tax as best they can.

    Going out of business and moving elsewhere are most common however. Because of that town is now a barren wasteland of mobile phone stores and charity shops. A lot of stores are actually moving to the next town over, whose business rates are around 5% lower. That town is thriving while ours is dying.

    Surely this is pretty much a small scale version of what's happening with international taxation.

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    1. Mystic Megabyte
      Reply Icon
      Unhappy

      Re: I blame obama

      I think you''l find the real reason is that the small businesses cannot compete with the big supermarkets.

      Tesco announced a billion pound profit, I wonder how much tax they paid on that?

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      1. Anonymous Coward
        Reply Icon
        Anonymous Coward

        Re: I blame obama

        Well, their 2012/13 FY results show them making £1.96bn taxable profit. They paid out £574m in corporation tax to assorted government, so that's about 30% tax rate.

        But that ignores their employers NI and business rates which will more than double that. If you ignore what Tesco are taxed on, and just look at gross governemnt confiscation as a proportion of profits, then you'll find that the thieves and wasters of governments take more of Tesco's profits than Tesco's shareholders.

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  2. Anonymous Coward
    Anonymous Coward

    They all do...

    Used to work for a SME UK company who had an Irish office for tax purposes. They also had a datacentre located in mainland Europe being a fully owned Irish entity. So all customer payment transactions therefore flow though Ireland and are subject to the lower Corp tax.... They also took 95% of their profit from certain software licensing and paid a 'completely separate' company in an offshore location (called the same name funnily enough) this royalty fee. So they only paid 12.5% Corp Tax on 5% of their profits. In fact it was even less than that due to them then moving the money out of this offshore haven to others.

    All totally legal but morally suspect....

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  4. Shasta McNasty
    Stop

    Not quite right

    "Broadcaster BSkyB has ten per cent of its 110 offshoots in tax havens, according to ActionAid's data, including a branch in Ireland and two in Delaware..."

    Sky has a large customer base in Ireland as it sells its TV, Phone and Broadband products there. It also has customer support infrastructure there that supports both the UK and Ireland.

    So its not just an "offshoot in (a) tax haven" as suggested in the article, but a legitimate company.

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    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      Re: Not quite right

      Well not so sure about that.....I think it may be used for some tax haven purposes as ironically we pay the 20% VAT rate to the UK for Sky products (not the 23% VAT to the Irish Gov), except for installs and service call outs (where it does get paid to the Irish Gov @ 23% VAT). You'd wonder....

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  5. JimmyPage Silver badge
    Mushroom

    We need to be careful we don't get what we want ...

    As things are, publicly traded companies are *required* to deliver the maximum possible profit for their shareholders. Which is why they are *obliged* to minimise their tax bill.

    If we start meddling, we will end up where companies are NOT required to deliver maximum profit for their shareholders, but to deliver maximum tax take for the government of the day.

    Which would *you* prefer ?

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    1. I think so I am?
      Reply Icon
      Meh

      Re: We need to be careful we don't get what we want ...

      required* to deliver the maximum possible profit for their shareholders.

      How many companies pay dividend = to the profits or at a reasonable return on investment.

      If I owned 1% of Vodafone shares, would I get 1% of profits?

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      1. Anonymous Coward
        Reply Icon
        Anonymous Coward

        Re: We need to be careful we don't get what we want ...

        "If I owned 1% of Vodafone shares, would I get 1% of profits?"

        In simplistic terms yes. Few companies distribute their entire profit (otherwise they won't be replacing their assets as they depreciate), but even if Vodafone didn't pay out the full amount, you'd still own 1% of their balance sheet where the retained profit shows up, and 1% of their future income streams.

        Taking Vodafone, if they paid out 100% of their profit, then over time they'd have no surplus cash to renew the network infrastructure, to buy 4G licences and the like, and over time that would drag on their business and reduce its scale, so your investment declines in value. Or they'd need to borrow more to renew assets, which would reduce the future profits through interest payments (a self compounding problem in this hypothetical example because as debt ratios climb, so would the interest rate).

        Ultimately the 100% payout company would see equity (shareholders) decline in importance until they disappear. When a company's gearing (ratio of debt to equity) starts to go wrong, it reaches a financial event horizon, beyond which the interets payments become unafforable, or the creditors can trigger breach of covenant clauses, and seize control of the company. Certain big banks have a track record of engineering these situations deliberately.

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        1. Anonymous Coward
          Reply Icon
          Anonymous Coward

          @ledswinger

          another person who doesn't understand accounting.

          Taking Vodafone, if they paid out 100% of their profit, then over time they'd have no surplus cash to renew the network infrastructure, to buy 4G licences and the like, and over time that would drag on their business and reduce its scale, so your investment declines in value.

          Profit is what is left AFTER you have spent money on investing in the business.

          I wish the brain dead "reporters" in the main stream media got the point and tackled the energy companies on this when they try to say "ah but if we didn't make a profit we couldn't invest".

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        2. Anonymous Coward
          Reply Icon
          Anonymous Coward

          Re: We need to be careful we don't get what we want ...

          When I started working for a US publicly traded company (multinational, about 30,000 employees, but about 35% of the stock was still held by the family of the original founders of the company), we were told about the "5 Voices" - The Community, the Customer, the Employees, the Management and the Shareholders.

          By the end of the 1990s, the only "voice" that mattered was the Shareholder, and the main goal of managing the company was to increase the share price.

          A company doesn't benefit from a higher share price (unless it creates new shares, and dilutes the value of existing shares). A higher share price makes it harder for a company to be bought out, which is often bad for middle management, and upper management's remuneration also tended to be closely tied to the share price, so I guess the Management Voice was pretty closely aligned with the Shareholder voice, but the other 3 voices were pretty much sidelined by a focus of people who were only rewarded by selling their stake in the company! Speculators, in other words. The Voices that were best served by permanence and long term thinking (Community, Employees, Customers and those Shareholders who were interested in Dividends, rather than share price) were all sidelined.

          Note that the Share Price of a company tends to take account of all those overseas profits, even if they can't be repatriated, and used to pay dividends. So this focus on off-shore tax "management" is also part of the fallout from shareholders switching from investment to generate income/dividends to speculating in share prices.

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  6. Anonymous Coward
    Anonymous Coward

    Research shows?

    commissioned by whom?

    It would be rather funny if it were to be found out that it was commissioned by one of those tax-dodging googles, starbuckses and other Irish&Dutch loving mega-contributors to the UK economy and the well-being of us all.

    which is NOT to suggest, that the research results are incorrect, nosir. Just a little bit of a diversion perhaps ;)

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  7. Anonymous Coward
    Anonymous Coward

    but let's be honest

    we ALL would love to do that, only that we can't afford it.

    ...

    ok, not you, of course you wouldn't! ;)

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    1. Crisp
      Reply Icon

      Re: but let's be honest

      Not only can I not afford it. But I'll never be able to afford it if my taxes have to keep subsidising big businesses that can more than afford to pay the tax they owe.

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  8. Flakey

    Surprised?

    Businessmen, crooks in suits, being helped by politicians who are crooks in suits. How can anyone be surprised by this?

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  9. Bod

    It's not fair, boohoo, etc

    If you want businesses to have freedom to work without the restrictions of borders, and as a consumer to live and buy without borders, then so be it. Nothing illegal or immoral to move your affairs to where it's cheapest or most profitable.

    Is it much different to moving up north and buying a house much cheaper? Surely these people are avoiding taxes? And not even taxes, but the price of things, surely it's "imorral" to be paying £100k less for a house than the average. That's not fair on the rest of us. They're taking the piss aren't they? ;)

    I could move to a country in the EU where taxes are cheaper. Am I a tax avoider? Flip it round, people who move to the UK to get more money than where they live, is that "fair" too?

    What's the answer? Oh yes, communism. Everyone earns the same, everyone pays the same, everyone's poor (except those in charge).

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  10. g e
    Meh

    ActionAid? Mind you...

    I can't remember ever seeing a skint ceo (or whatever they're called) of a charity

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    1. Androgynous Cupboard Silver badge
      Reply Icon

      Re: ActionAid? Mind you...

      ActionAid have been beating this drum for some time, and not just in the UK. They did a particularly good piece a few years ago on how uk.gov were actively enabling tax avoidance for large UK firms operating in developing countries.

      Wife works in the sector and as a consequence I have a fairly low opinion of some of the larger Charities, but not ActionAid.

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  11. DJO Silver badge

    Avoidance Inertia

    It's not really that difficult to eliminate tax avoidance: make accountants personally responsible.

    So if an accountant dreams up a scheme that avoids £10M tax then when it's discovered not only does the company have to pay the £10M plus interest in back tax plus a fine of some kind, possibly equal to the sum avoided but the accountant personally has to pay the same sum as a penalty.

    Just make tax avoidance too expensive as well as putting a lot of effort into detection. As long as companies, individuals and mostly accountants think they can get away with it and if the penalties if discovered are low then avoidance will continue.

    The net benefit is that if everybody paid the tax they should pay then everybody else could pay tax at a lower rate in order for the government to raise the same sum.

    A part of the problem is that the people who make the legislation are largely the same people who would stand to lose most from such a system so boys and girls, don’t expect any significant changes in the near future and especially not from a Tory government.

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  12. Anonymous Coward
    Anonymous Coward

    Citizens, not Corps

    Who here doesn't thinks that the G20 summit proposals to go after tax dodgers will be aimed exclusively at private citizens and not against large international corporations?

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  13. Dave 15

    Answer is simple

    Tax using a turnover tax. I pay my income tax on the amount of money the company gives me NOT on the profit I make from going to work. Tax companies in the same way - on the turnover.

    All of this tax evasion then goes.

    Simples

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    1. Androgynous Cupboard Silver badge
      Reply Icon

      Re: Answer is simple

      Congratulations! You've just made every low-margin business bankrupt! Thanks for playing "politician", your score is 4 of a maximum 1000 and you have been awarded a level of "naive"

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    2. SkippyBing
      Reply Icon

      Re: Answer is simple

      Actually if you do a tax return you can pay tax on the profit from going to work as you can claim back mileage, uniform maintenance and other expenses of working.

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  14. The Godfather
    Coat

    Nothing new...

    One needs check nearer home...vendors and distributors operate similar systems and set -ups, all designed to minimize or zero tax liability.

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  15. Jean-Paul

    How many of you...

    Have an isa, or child trust fund, or make private pension contributions etc

    Aren't you all avoiding tax as well?

    Change the rules by all means, but until such time they aren't doing anything wrong.

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    1. John Brown (no body) Silver badge
      Reply Icon
      Thumb Down

      Re: How many of you...

      "Have an isa, or child trust fund, or make private pension contributions etc"

      All of those "financial instruments" are capped at a maximum level of tax-free investment on an annual basis. In other words, they are designed to encourage saving by waving a carrot in front of the investor. All that saved money goes into the pots of big business where they can use it to make more money while creaming off the "management fees".

      On a totally unrelated note, Starbucks for example, pay almost their entire income to low tax based "associated" companies in eg Switzerland for the use of the name and to source their coffee. Surely if they were doing their "fiduciary duty" to their shareholders, then Starbucks UK ought to change their name to something they own and source their coffee more cheaply on the open market.

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  16. Tom 13

    A wise man once noted

    "The problem with Socialism is that sooner or later you run out of other people's money."

    I will note that the re-jiggering the definition of "tax havens" will not allow you to avoid the previous note.

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  17. Maharg
    Holmes

    The Irony of it all…

    It’s amazing how little people care about this, or excuse it as just what companies do, we are talking Billions of pounds not being collecting in tax for the UK, yet it’s a none story, however, as soon as its not a huge company dealing with Billions, and becomes of the vastly over reported despite the minuscule amount of people that do it out of the 3% that claim ‘benefit cheats’ dealing in hundreds of pounds, it’s all day everyday disgusted news and people foaming at the mouth, MP’s getting angry and Daily Mail headlines.

    I guess the moral of the story is, if you want to ‘cheat’ the system do it big, and already have a ton of money.

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  18. David Kelly 2

    Government Has No Reason To Complain

    Government writes the rules and should not be at all surprised or have any reason to complain when companies obey the rules. When companies find the rules say something the government didn't intend.

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    1. Anonymous Coward
      Reply Icon
      Facepalm

      Re: Government Has No Reason To Complain

      Absolutely. Tax planning to avoid tax is not illegal (evansion is). Tax avoidance is a perfectly normal thing to do, not just for large multi-nationals, but for individuals too. I'm an IT contractor and I see it my duty to myself to minimize my tax hit. I pay as much tax as the rules require me to pay. If you want more tax, vote into power a party that will raise tax rates. Otherwise people should just live with it.

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  19. cs94njw
    FAIL

    What annoys me is that Jimmy Carr was made an example of for legally avoiding taxes in the UK.

    Whereas Lewis Hamilton actually changed nationality to being Swiss to avoid paying taxes, and nothing was said.

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  20. Green Nigel 42
    Megaphone

    Old boy network alive & well?

    If one refer's to the Smith Ìnstitute Survey on who governs Britan its summary was

    "Parlement today better reflects the gender balance and is more ethnically diverse, but in the terms of educational & vocational background the new political elite look remarkably like the old establishment. It is suprising how many of our MP's were privately educated, went to Oxbridge and worked in the professions, particularly the Conservatives and Lib Dems. It seams that our Parliament is becoming less representative in terms of education and occupation, and continues to attract similar types of people from a narrow professional base".

    http://www.smith-institute.org.uk/file/Who-Governs-Britan.pdf

    With this in mind, what is the likelyhood of persuading your MP & using the established democratic process to change laws & enact tax reform?

    I did find it dissappointing to hear this morning that both BP & Shell's Uk headquarters were raided by the EU looking for evidence of price fixing, why was'nt our UK authorities dealing with it, why the big suprise from the MP's questioned, I wonder?

    I suspect that with this inbreed cronisim, nepotism, lack of real world experience & vested interests the Global Corps will continue to evade there moral dues.

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