back to article Brit retailers tell Amazon and Google to pay their taxes

British retailers have been calling on overseas firms that make a profit in Blighty to pay their tax in the country as well. Dixons boss Sebastian James tweeted that he agreed with John Lewis chief Andy Street, who said on Wednesday that Amazon can use its tax position to get one up on UK companies. "There is less money to …

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  1. Flocke Kroes Silver badge

    If the public were angry, they would not buy from internet multinationals

    This 'public anger' sounds like astro-turf to me. If the government wanted fairer taxes, they would not be giving tax relief to patent trolls:

    http://www.hmrc.gov.uk/ct/forms-rates/claims/patent-box.htm

    1. Anonymous Coward
      Anonymous Coward

      Re: If the public were angry, they would not buy from internet multinationals

      Patents have nothing to do with it.

      The public look for the best deal.

      Buying a new TV, Amazon may be 20% cheaper so why go to a retail store?

      If these big businesses are able to circumvent the tax system then they will be able to offer items for much less than high street stores.

      Now I know that's not a fair and level playing field, however when I buy something I look to save money.

      The public are not going to get angry and boycott a firm if it means they will have to pay more!

      1. Robert E A Harvey

        Dunno

        I have been buying things from Gaugemaster both direct and via Amazon, thought laziness when they pop up in a search. I have stopped using the Amazon route.

        I am more concerned about the AA, (http://www.guardian.co.uk/business/2012/nov/18/aa-owner-acromas-corporation-tax) - do the vans all go back to Luxembourg every night? I think I shall be cancelling my membership, and going with Green Flag.

        1. SimonG

          Re: Dunno

          There are many names on the high street that play a similar game. Boots I believe is headquartered in Zug, Switzerland.

          1. Silverburn
            Black Helicopters

            Re: Boots

            I live (near) there, and have never seen their HQ. I thought it was in Nottingham.

            Like most corps, I suspect it's simply a tax-friendly, monitored mailbox in an anonymous corporate office block. This is a surprisingly common occurance.

            1. Anonymous Coward
              Meh

              Re: Boots

              Boots is definitely HQ'd in Nottingham.

              Massive place - seriously I've been in significantly smaller international airports.

              1. EddieD

                Re: Boots

                That might be their primary office, but whether it's the registered business address is debateable.

                Boots is now an entirely owned subsidiary of Alliance Healthcare - lord alone knows where they pay tax.

                1. Anonymous Coward
                  Anonymous Coward

                  @ EddieD

                  "whether it's the registered business address is debateable [sic]"

                  Actually no, that particular piece of information is certainly not *DEBATABLE. It is a matter of public record:

                  http://wck2.companieshouse.gov.uk/d29ede152a9d7280f375f616e8c6004c/compdetails

                  It's in Nottingham.

                  The location of their registered office, of course has no bearing on whether they are employing any given tax avoidance techniques or not.

                2. Anonymous Coward
                  Anonymous Coward

                  Re: Boots

                  Group HQ is currently in Zug - presumably for tax purposes, however they have recently sold 45% to Walgreens in the US with the option of selling the rest in 3 years time.

      2. Psyx
        Stop

        Re: If the public were angry, they would not buy from internet multinationals

        "The public are not going to get angry and boycott a firm if it means they will have to pay more!"

        Bets?

        I know of people who have moved away from Amazon, Google and Starbucks in the last month, due to tax avoidance.

        Ultimately, I'd prefer to spend with a company knowing the cash isn't disappearing from the country, too.

        1. cs94njw

          Re: If the public were angry, they would not buy from internet multinationals

          Do I like to get the cheapest price I can? - Yes

          Do I want a high street? Yes

          Would you prefer to shop in a high street over online? - Well... sometimes.

          Would you stop using a company if they continued to avoid taxes? - Sure!... unless it's the company which gives me a wonderful mobile experience, or gives me a huge range of cheap products which are free to deliver. Everyone else - no problem.

          *Boycotting Starbucks purely because of the asking your name thing. Didn't they study the British people!?

        2. Anonymous Coward
          Anonymous Coward

          Re: If the public were angry, they would not buy from internet multinationals

          Vistaprint are also at it. These companies are draining cash from the economy. No matter how many times The Sun and their ilk scream about benefits cheats costing us millions it pales into insignificance when you look at the big tax fiddlers.

      3. JohnMurray

        Re: If the public were angry, they would not buy from internet multinationals

        They pay more either way.

        Either more money to buy products from non-tax-avoiders, more tax themselves, or lower benefits.

        Either way, the public pays.

        A look at that Great British [Virgin Islands] Company, Virgin, is educational.

      4. Anonymous Coward
        Anonymous Coward

        Re: If the public were angry, they would not buy from internet multinationals

        I've stopped buying stuff from Amazon, purely because of this issue. Yes price is important, but not over all other factors.

    2. Shagbag
      Thumb Up

      Surely QOTW

      "None of the three companies were able to change the Public Accounts Committee's mind that they may be avoiding tax legally..."

      There you have it. They're not doing anything illegal. So who should the public be venting their anger at? THE LAWMAKERS, ie. Parliament. Why haven't Parliament done anything about it over all of these years?

      If the public keep shouting about it, they could even close one of the biggest IT "loopholes" there is: alienation of personal services income.

      A "contractor" (through a company) - eg. Jeremy Paxman, Fiona Bruce, Jimmy Carr - legitimately enjoys lower tax rates and deductions for expenses that a non-corporate contractor can't make, etc. while at the same time providing the recipient (eg. employer) with exactly the same personal service. Insurance is available for the individual, so why "contract" through a company? Answer: the tax breaks available to a corporate are greater than those available to the individual, eg. lower tax rates, capital allowances, income splitting, non-residency - to name but a few.

      So while on the subject of the 'immorality' or otherwise of tax avoidance, just give a thought closer to home. The only difference between Starbucks, et. al. and contracting for personal services is scale.

      1. Geoff Campbell
        Boffin

        Re: @shagbag

        No, there is a single, significant, and to my mind major difference between contractors running their own services company and multi-nationals using tax havens.

        The contractor is minimising their tax payments within the systems of the country in which they do business. The multinational is using quite artificial measures to move their turnover outside of that country, pure for the avoidance of taxation.

        I was for many years a contractor, and as such I had the opportunity to use the same K2-style international tax avoidance that recently caused Jimmy Carr such discomfort. I declined, because I thought it was wrong to do so. This cost me several tens of thousands a year in additional tax, however I still feel it was the right decision to make.

        GJC

        1. Shagbag

          Re: @Geoff Campbell

          Geoff, the very point is that to interpose a tax efficient vehicle (in this case, a company) between two parties to a contract for services that can only be provided by personal exertion is perfectly legitimate in the UK but in other jurisdictions it is considered artificial/a sham eg. Australia where it is called a 'Tupicoff Scheme' (after the 1984 tax law case involving Mr Tupicoff - yes, that's right, 1984 when this sort of thing was outlawed 'Down Under').

          So, one jurisdiction (UK) says it's a legitimate exercise while another (Oz) says it's completely bogus. Such is international tax law.

          As to any claims about the 'quite artificial' nature of these types of transactions, there are provisions within UK tax law (eg. Ramsay) where the Courts can set aside transactions which are considered 'artificial'. So either the Inland Revenue is not doing its job or the transactions have passed muster and are not, as you put it, 'quite artificial'. Or perhaps you know something the Inland Revenue doesn't? In which case you should contact the Inland Revenue as soon as possible and point out to them where they're going wrong.

          It's very easy to join the bandwagon and cry 'aritifical', 'sham', 'immoral', etc. but to do so misses the point: it is the Government which sets the law and it will be a much more profitable exercise to vent frustration at them than to swallow their misdirection and blame the multinationals for following the law.

      2. Anonymous Coward
        Anonymous Coward

        Re: Surely QOTW @ Shagbag, you clearly have never worked as a contractor..

        Why contract through a company? its easier!

        Contracting as a sole trader is hard, not many will deal with you, and, in the case of people like you mentioned, they usually have agents and other people working for them, in which case they need a company.

        Another point is the 'normal' contractor will not get work unless they work through their own Ltd or an umbrella, clearly you have zero knowledge of the real world to point this out..

        .

        the real scandal was the offshore tricks they use to cut their tax down to near nothing, something most contractors do not do.

      3. Yet Another Anonymous coward Silver badge

        Re: Surely QOTW

        The difference is that when it was just some ordinary bloke contracting the government could bring in IR35 and make you pay employee and employer NI contributions, could hand down decisions that you WERE really an employee when it came to tx but WEREN'T when it came to redundancy.

        When it's big companies with lots of lawyers they suddenly can't do anything,their hands are tied etc

    3. Davie Dee

      Re: If the public were angry, they would not buy from internet multinationals

      nonsense.

      as AC said, people will always go for the best option for them, if people were as to do as you suggest then no one would buy anything made in China, we all agree China has a terrible human rights track record in parts of its country but we all overlook it because it saves us a few quid

      no, MPs say its legal but morally wrong, ok, well they now need to do what is over all best for the public and that is make it legally wrong it is completely within our power, you want to trade in this country, fine, then you pay up. the amount of profit they make would far outweigh the losses incurred if they decided to leave altogether.

      Most people here work their arses off, get taxed to buggery and we have to live with it, Most people are not in the position to join some tax avoidance scheme but even if we were, what good would it do us? not paying taxes cuts off the hand that is trying to feed us, so to speak

      If you want to sell stuff here you pay tax, if you want to work here, you pay tax, if you don't want to do either, then F$%k the hell off as you/they shouldn't benefit from us that do support the country.

    4. Anonymous Coward
      Anonymous Coward

      Re: If the public were angry, they would not buy from internet multinationals

      I do buy from UK retailers when possible, I prefer the service I get from them, and John Lewis vans are a common sight outside my house.

      I would rather Amazon pay more tax here, but they DO collect the 20% VAT, so the gov does get a cut of every VATable sale....

      I still think we need a more competitive tax rate for businesses, and other incentives to get businesses to move here...

      The primary thing should be to get more people employed than tax companies into the ground..

      More employment means more tax income and a lower social bill

      i.e. 1 employed single person on 24k/year pays £5100 plus 2200 is paid in employers NI, i.e. a total income of £7300 (roughly), or about 27% of the cost of employment.

      The same single person would be entitled to about 4.5k in housing benefit, plus around £3.6k in Job Seekers Allowance.. That is before any other benefits & healthcare etc are considered.

      So a cost of at least 8.1k

      The government needs to realise that making it cost effective to employ here rather than offshore, will improve tax returns even if the company itself is not paying hefty taxes..

      1. Drem
        Stop

        Re: If the public were angry, they would not buy from internet multinationals

        Your benefits costings are interesting, and valid, but...

        I've been digging about around this a little recently. If your one person is changed to a 3 person household, two adults and one child say, (based in Northampton, in a 2 bed house, with band D council tax) the benefits they can claim if they are out of work is £17,910.54 per year.

        If one of the adults is on Minimum Wage, working 42.6 hours per week, they (and their employer) will pay £2,719.08 in NI/Tax, but they will recieve £9,287.39 in benefits, meaning that the government is subsidising their employment to the tune of £6,568.31 per year.

        With one adult on Living wage (outside London) that improves to being £3,997.24 in NI/Tax, and only £7,497.99 in benefits, meaning the subsidy is cut to £3,500.75 per year.

        It's only where both adults are working 42.6 hours per week on either level of pay that they are paying more tax/NI than they get in benefits.

        I've not yet calculated where the break even point is in terms of hours worked yet, it gets a bit tricky to do so.

        That is just on Tax/NI/Benefits, I've not looked at including travel and childcare costs to find the break even point in terms of working vs benefits yet. I intend to do this shortly though, as well as trying to model different transpodt choices into that mix.

  2. Aldous

    Welcome to Capitalism

    Boo Hooo i only like the system when it benefits me they arn't playing fair waaaaahhhhh

    its not right but they would be doing the exact same thing if they could get away with it.

  3. mad_dr
    Unhappy

    Perhaps I'll be the first to admit...

    ... I want the best of both worlds: It angers me to think that the likes of google is not paying a fair rate of tax on its profits but at the same time, I'd be lying if I said that I wouldn't buy a TV from Amazon if it was the cheapest place to shop.

    However companies like Starbucks are on a different scale as far as I'm concerned: Not only are they not paying a fair rate of tax on their profits but they're raking it in AND gouging their customers at the same time.

    So perhaps the main problem for me is that these aren't small, independent underdog companies working the tax system in order to stay afloat in a tricky market - these are vastly-profitiable multinationals who - in some cases - are screwing us twice: once when they rip off their customers at the till and then again when they don't pay tax.

    I would, however, add that I'm completely absent of financial knowledge so may be oversimplifying things somewhat...

  4. KroSha
    Thumb Up

    If the Govm't are so concerned about this, then they need to fix the tax rules. Taking the time to do it properly will mean more money for them, more competitiveness in the market (good for us) and they get to be seen doing something good. While they are at it, they need to fix personal tax dodgers like Phillip Green as well.

    Multinational profits made in a country should be taxed in that country.

    1. Anonymous Coward
      Anonymous Coward

      Multinational profits made in a country should be taxed in that country.

      The problem is how do you decide how much profit Starbucks make in any country?

      1. Mike Brown

        Re: Multinational profits made in a country should be taxed in that country.

        its really easy. look at how much they sell in the UK, minus what it costs to make that revenue, and bosh you have magically worked out how much profit they have made. And if the try to make it harder than that, then fine them.

        1. mccp

          Re: its really easy

          It is only easy if the law is changed so that the multinationals can't claim that, for example, royalties for the use of intellectual property (a brand - Starbucks) are a legitimate cost of sale.

          That will not be an easy thing to change. My company licenses copyright software to a Canadian company and clearly they need to be able to offset the licensing costs against the tax to their government. If the tables were turned and my company licensed software from Canada, how easy is it going to be for HMRC to distinguish that legitimate cost of sale from the 'immoral' Starbuck's cost of sale?

          Just saying that it ain't easy - I for one don't agree that Amazon should be able to operate within a different tax world to John Lewis.

          1. Gordon 10 Silver badge

            Re: its really easy

            It is easy. If the licensing is coming from any other group member or from a company with significant shared ownership HMRC rule it as a tax dodge and clobber them.

            Part of this problemn is the HMRC giving the big boys a cosy ride....

        2. Sean O'Connor 1
          Thumb Down

          Re: Multinational profits made in a country should be taxed in that country.

          > its really easy. look at how much they sell in the UK, minus what it costs to make

          > that revenue, and bosh you have magically worked out how much profit they have

          > made. And if the try to make it harder than that, then fine them.

          So, if you sell apps on the App Store you'd be expected to figure out how much profit you'd made in each country in the world and pay corporation tax to that country at its individual corporation tax rate?

          1. Mike Brown

            Re: Multinational profits made in a country should be taxed in that country.

            I know where your going with this, but yes. Its the only way to make it fair.

            1. Anonymous Coward
              Anonymous Coward

              @Mike Brown

              Won't work, companies would pull out totally in that situation, I know I would loose money if I had to do that, I am based in the UK but sell around the world, so what am I do to? I sell one item in one country suddenly I have to pay tax there? the costs would outweigh the benefits...

              1. Anonymous Coward
                Anonymous Coward

                Is it just me?

                I find it ironic these immoral, expenses cheating politicians, with their gold plated taxpayer funded pensions are crying foul when they set up the rules of the game that the mulinationals play.

                1. P. Lee Silver badge

                  Re: Is it just me?

                  They are aren't worried. Its just posturing and blame shifting for managing the economy into a hole.

              2. Fink-Nottle
                Mushroom

                Let them pull out ...

                > Won't work, companies would pull out totally in that situation

                If Starbucks or Amazon pulled out of the UK then so what; all that means is there's a huge gap in the market that would be filled quickly by an operation whose investors were willing to cut the UK government a fair share of the revenue stream.

                1. jason 7

                  Re: Let them pull out ...

                  Yep, similar thing happened when all the corporations pulled out of South Africa. Local firms just took over and boosted the SA economy even further.

        3. Vic

          Re: Multinational profits made in a country should be taxed in that country.

          > look at how much they sell in the UK, minus what it costs to make that revenue

          And that's exactly where the loophole exists.

          What it "costs" to make that revenue includes things like the price of their *unique* ingredients, plus licencing fees to the global brand owner. The difference between what they take and what they pay is negligible - hence the tiny tax bill.

          What's needed is to find a way to prevent excessive transfer pricing - but that's not a simple thing when you've got multiple legal entities trading across international borders, and it's even harder when some of the countries involved will bring significant political muscle to bear to protect "their" companies...

          Vic.

      2. S4qFBxkFFg
        Mushroom

        Re: Multinational profits made in a country should be taxed in that country.

        The nuclear option would be to completely ignore profit, and tax revenue instead.

        1. P. Lee Silver badge

          Re: Multinational profits made in a country should be taxed in that country.

          No, that doesn't work with low-margin things.

          The nuclear option is to apply IR35-like rules uniformly. Revenue and customs sucks on the their finger, sticks it up in the wind and decides whether or not your revenue is taxable or not. Corporate law and tax law are not the same and may be contradict each other.

          The problem is, that a "tax haven" is just another country. Compared to some countries tax systems, the UK is a tax haven. The difference is that some countries have low running costs (and therefore low taxes) but the UK does not.

          Personally, I'm not sure if driving the high-street out of business is altogether bad. If people are happy to shop online, why are we pushing up prices by having physical shops in cities and towns? What is bad, is that the tax arrangements to accomplish this are complex and not open to the smaller trader.

          Perhaps, rather than hiding the loopholes, the government could make it clear and easy to avoid corporation tax, perhaps under a "small trader" regime. Then smaller traders with lower overheads can join in, take trade from the big-boys and the government picks up extra tax revenue as income-tax, which is more difficult to avoid.

          That just offends the large corporates, so we can't do that, can we minister?

    2. Shagbag

      Agreed...but...

      I agree with what you're saying but what is your definition of 'profits', eg. do you allow deductions for interest on borrowings? if so, what about shareholder loans? how much can a company borrow (and therefore, get tax relief on interest) before you deny them the ability for tax relief? 100% leverage, 80% leverage, 79.9% leverage? what about payments on perference shares - interest or dividends? do you allow deductions for raw materials bought offshore - if so, how much is a reaonsable mark up for the vendor? what if the vendor is related to the purchaser (ie. transfer pricing) - what markup is acceptable then?

  5. Dazed and Confused Silver badge

    When the Euro officials wrote the laws

    They never anticipated the wholesale cross border trade we see today.

    They only thought cars would be a problem.

    So with cars you pay VAT (and other taxes) where you live.

    For booze, fags and other stuff you pay VAT where you shop

    Amazon are based in a lower tax country than the UK, so people get to go shopping more cheaply there.

    This has happened for years. A colleague from Belgium once told me that where he came from on the boarder one side of a road was in Luxenbourg and the other in Belgium. Everything was cheaper to buy on one side of the street, so guess where people go shopping.

    The situation with booze and fag tax in the UK has meant that for years people pile down to Dover and hop the channel to go shopping.

    Its always been the case that you could phone a shop in another country and buy things straight from them.

    It is just that the Internet and online shopping has made this easier.

    1. SuperTim

      Re: When the Euro officials wrote the laws

      That street in belgium/luxembourg is amazing. One side is just petrol stations, but none on the other side (that was 25 years ago mind...

    2. Anonymous Coward
      Anonymous Coward

      Re: When the Euro officials wrote the laws

      I thought that the debate was over 'royalty payments' and internal pricing rather than VAT. Any profits made in the UK are apparently wiped out by 'Royalty payments ' that are demanded by the offshore based parent. Similarly UK profits can be reduced by charging high internal transfer prices for supplies provided by that offshore parent.

    3. Dr_N Silver badge

      Re: When the Euro officials wrote the laws

      Amazon (in the EU) actually charge you VAT based on where you ship the item.

      Put something in you basket, then change the shipping address to France/German and watch the price change to reflect this.

      VAT is the one thing Amazon et al do not **** around with because that part of HMRC actually know how to do their job.

      1. Anonymous Coward
        Anonymous Coward

        Re: When the Euro officials wrote the laws

        exactly

        The politicians winge about corporation tax, employees working for organisations via their own companies, etc, however none of this is illegal, but the politicians are too scared to take charge of the problem and give hmrc a swift kick in the fork.

        The tax code in the UK has the largest number of pages in the EU , more than Germany or France, is excessively complex, and lets the big boys get away with it, why, because the politico's fear the big boys will leave.

        Where are the results of the tax simplification exercise?

        1. Anonymous Coward
          Anonymous Coward

          Re: When the Euro officials wrote the laws

          Of if we are cynical, '... because the politicos fear the big boys will end their party donations and the promises of a non-executive directorship...'

      2. Anonymous Coward
        Anonymous Coward

        Re: When the Euro officials wrote the laws

        Also lets not forget the 'handling charge' for credit/debit cards, which reduces the vat for the seller, but means you get a lower vat amount to claim from hmrc, I personally experienced this with a well known out of town shopping complex shiny box UK retailer, and dobbed them to trading standards as they did not explain this 'feature' in their stores. TS passed it on to hmrc.

        Just ask for a proper vat receipt , or closely scrutinize the receipt. In the end I used cash, just to annoy them.

    4. Shagbag

      Everything was cheaper to buy on one side of the street, so guess where people go shopping

      Tax avoiders!!!!!!

  6. FanMan
    Megaphone

    Switch to PC World? I don't think so!

    Businesses have a right and duty to minimise their tax. Starbucks and Amazon are not breaking the law so fair play to them - we should get the framework changed if we want more of their money.

    I use Amazon all the time and will continue to do so. Much of their sales are from UK based third parties who do pay tax and still offer competitive prices even after Amazon gets their cut.

    Starbucks is great for nice tea, cool sounds, and good wi-fi - but for decent coffee it's Costa all the way, tax or no tax. (Mine's a Cortado thanks.) Plus Costa have real baristas and real espresso machines, not the automated junk Starbucks use.

    1. Anonymous Coward
      Anonymous Coward

      Re: Switch to PC World? I don't think so!

      "Starbucks is great for nice tea, cool sounds"

      I. Don't. Even.

    2. Dr_N Silver badge
      Thumb Down

      Re: Switch to PC World? I don't think so!

      "Starbucks is great for nice tea, cool sounds, and good wi-fi - but for decent coffee it's Costa all the way, tax or no tax. (Mine's a Cortado thanks.) Plus Costa have real baristas and real espresso machines, not the automated junk Starbucks use."

      I think it's quaint when people compare coffee from chains such as Starbucks and Costa.

      Both sell overpriced average coffee with added fluff in markets where Nescafe instant granules are the benchmark for coffee flavour.

      Extra thumbs down for the use of "baristas".

    3. Anonymous Coward
      Anonymous Coward

      Cool sounds?

      They paid £98M for those cool sounds to a 2 person off-shore company in Panama.

  7. Anonymous Coward
    Anonymous Coward

    Fault of the lawmakers, not the retailers

    Blame the EU single market, shirley.

    If corporation tax is bringing little revenue to the UK, why not lower it to a more competitive level against other EU countries?

    Lawmakers should consider why they're employed, and rather than dragging single people across the coals in front of a committee, they should be considering how they can amend current law to better serve the voters.

    1. Anonymous Coward
      Anonymous Coward

      Re: Fault of the lawmakers, not the retailers

      This is what the companies hope for, it would create a tax war in Europe.

  8. JassMan Silver badge

    Tax problem fixed

    If you are a multinational claiming that you don't make a profit in UK and therefore don't need to pay tax, you get to choose:

    * paying a rate based on your UK turnover as a fraction of GDP and average tax paid by the rest of the country.

    If you can't provide UK turnover, HMRC uses European turnover but still a a fraction of UK GDP - you decide pretty quickly to get some figures for UK turnover.

    or

    * paying tax based on your global profits but scaled by UK turnover vs global turnover. If you can't provide figures for UK turnover, European turnover again applies.

    Then you either:

    * go bust because it was true and you could only trade because of the massive subsidy obtained by not paying taxes,

    or

    * you change your business model so that you are no longer paying excessive royalties to yourself, excessive international management fess, excessive profits on external transactions etc.

    This doesn't need international agreement as the politicians keep claiming but I wouldn't mind betting that other countries would follow suit pretty quickly.

    1. Sean O'Connor 1
      Thumb Down

      Re: Tax problem fixed

      > paying a rate based on your UK turnover

      Yeah! Maybe we could call that something catchy, like maybe VAT?

  9. Pete 2 Silver badge

    Someone needs a better accountant

    > if you are giving 27 per cent of your profits to the Exchequer

    Profits (like Humpty Dumpty's words - [they] mean what I choose them to mean), ... are purely voluntary for ALL businesses, more or less. Retailers know that if they have too much money left over at the end of the year, they buy stock, invest in the business, improve efficiency, modernise, pay off their loans, run an advertising campaign (a sure way to use up cash very quickly), increase their dividend or even pay their their staff a little bonus - though there is still tax to pay on those last two.

    None of this is new, or revolutionary and is normal procedure for most competent businesses. If the people who run them are unaware of these, or many more, legitimate or even beneficial ways to reduce their tax bill then they really have no place heading up their operation. If their tax advisors aren't making these options known then someone needs a quiet word and a kick up the metaphorical backside.

    1. Gordon 10 Silver badge

      Re: Someone needs a better accountant

      You are missing the point - the people running the UK businesses are well aware of their ways of minimising their UK tax breaks. However this is not about that - its about maximising the profit for the Group - even if the UK subsidiary takes a loss in doing so.

    2. MrXavia
      Facepalm

      Re: Someone needs a better accountant

      increase their dividend... you do realise dividends are paid out of profits after tax......

      1. P. Lee Silver badge

        Re: Someone needs a better accountant

        That would make sense, except that the issue is that the UK company is not making any profit - it is all sucked out under various guises to the foreign parent corp.

        They need to stop bogus royalty payments and "management" fees.

  10. dave 81
    WTF?

    Morally?

    Sorry, What is so "moral" about paying taxes? As far as I am concerned if a penny of tax money goes to trade unions or to the anti-democratic EU, then paying taxes is the immoral thing.

    1. Martin
      WTF?

      Re: Morally?

      In which universe do Trade Unions get supported by tax?

      1. James 100

        Re: Morally?

        Sadly, this one, in multiple ways: 'facilities time' (government employees getting a government salary yet actually working for the union not the government, part or even all of the time), 'modernisation funds', the government collecting union dues free of charge for the union rather than making them do it themselves...

        It's being scaled back slightly at the moment, but still widespread.

  11. JimmyPage Silver badge
    Boffin

    On radio [4] last week

    Tuesdays PM, some expert made a very shrewd point about Starbucks. He said that they claimed to HMRC they hadn't made a profit, whilst at the same time publishing shareholder accounts (in the US) showing how much profit they were taking (since shareholders like profit).

    He also made the point that HMRC *already* had the powers to use such documentation in calculating tax liability.

    But when Vodafone can write of billions of tax over a cosy afternoon tea with the head of the HMRC (remember the guy who tried to tell the select committee he didn't have to answer them) what's the point ?

    There is absolutely zero incentive for HMRC themselves to simplify the tax system - the more complex it is the more of them you need.

    Just blue-sky thinking, but why not abolish all taxes, and simply take a %age of every single transaction made with currency . Imagine the Pound as the IP of the UK government, and every time it's used they get a licensing fee.

  12. Anonymous Coward
    Anonymous Coward

    Government should drop tax rates and clamp down on evasion - although lower rates would reduce evasion anyway (both for personal and corporate taxes)

    Lower corporate taxes mean more investment, more jobs and any profits are then typically paid out as dividends which are again taxed. Lower personal tax means people would be tempted to work more / evade less and more money in their pockets gets spent which in turn boosts the economy.

    Perhaps worth a try as the current system is not really working.

  13. Chris Miller

    Point of information

    When was the last time that Dixons made a taxable profit? JLP over the last couple of years made a gross margin of 1-3%, so paying 27% Corporation Tax on that adds ~1% to their street prices. Has anyone ever made a decision not to buy from JLP because somewhere else was 1% (as opposed to 25%) cheaper?

    All these businesses pay plenty of VAT, NI etc. in the UK - Corporation Tax is a rounding error. And taxable profit is whatever a cunning accountant says it is, which has always been the case.

  14. Anonymous Coward
    Anonymous Coward

    We need jobs and growth - more / higher taxes and complex taxes do not work - that is why these guys headquarter in Belgium or wherever. Simplify the lot - why not charge everyone a flat rate of 25-30%.

  15. Anonymous Coward
    Anonymous Coward

    The better way to tax is on consumption - i.e. VAT - and it's pretty hard to evade. Reduce income (and corporation) taxes - people have more to spend so you get the money back that way.

    1. Anonymous Coward
      Anonymous Coward

      > The better way to tax is on consumption - i.e. VAT

      Yes, but people don't like indirect taxation.

      It generally is passed on directly with no accounting for local costs (everything comes from china anyway) - companies don't pay it and they don't reduce their retail prices to account for it because people would then export the goods to other parts of the world, undercutting the channel partners elsewhere.

      I do this already, buying from the UK and shipping to Oz (destroying their high-street!) because its often cheaper to airfreight to Oz than buy locally. I've just bought and shipped for $260AUD what would cost around $400 here.

      Could Oz cry foul because the UK has some advantage? Perhaps, but whether its tax or something else, its really up to the local market to work out what its good at and do it.

  16. davemcwish

    Here we go again...

    Its really simple, tav avoidance was shuch a big issue then:-

    1. Government long ago would have introduced flat personal and corporation tax rate and removed all personal allowances; the revision could have been written on single side of A4.

    2. The public would have stopped buying from Boots/Vodafone/Amazon/Google/Starbucks/Thames Water/Anglian Water/Yorkshire Water/Arcadia/Facebook/eBay/Apple....

    Given neither has happened the only assumption is the Parliament and the general public don't care

    1. Anonymous Coward
      Anonymous Coward

      Re: Here we go again...

      Its not that simple. With massive volumes of cash, even a tiny % saving is worthwhile for the corporate.

      The issue is not with companies deciding not to pay tax, the issue is with a corporate structure which means they don't make any money in the UK. No profit -> no tax.

      One world tax and one world government is the solution.

      Like piracy and the music industry, there is no perfect solution, you just balance practicalities.

      Of course, it would help if government didn't get so cosy with big business.

  17. supreme-overlord

    Hypocracy

    None of you have ISAs then? Claim legitimate child tax benefits? All of you IT types pay yourselves as PAYE at 50%+ and don't use Ltd companies or umbrella companies? Thought not...

    1. Anonymous Coward
      Anonymous Coward

      * HYPOCRISY

      Spelling check functionality is available in popular browsers.

      1. Anonymous Coward
        Anonymous Coward

        Re: * HYPOCRISY wrong

        Im typing on my phone and it doesnt have either a good keyboard or editor. Wtf does it matter? Its not like we are writing laws or reports to the boss.

  18. The Godfather
    Coat

    Pots calling kettle black...

    Odd isn't it that we drag a few major US company executives to be questioned by ministers over corporation tax issues when we so easily ignore home-grown instances in their hundreds if not thousands.

    Simple way in which UK Plc can increase its share of tax paid, match that paid in places such as Luxembourg or force repatriation of at least a measure of that tax back into the UK. Furthermore, apply this principal to any business, including our own, banks and indeed some of our own utility companies.

    Ministerial questioning is nothing more than an 'appeasement' of media outrage and public annoyance, a facade in effect. Ordinary people recognize this as nothing more than posturing, knowing full well little change will occur.

    Nothing like a bit of 'foreigner' bashing to soothe the brow these days....

    1. Anonymous Coward
      Anonymous Coward

      Re: Pots calling kettle black...

      spot on mr(?) Godfather...

      http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html

  19. Anonymous Coward
    Anonymous Coward

    No personal allowance, 25% flat rate tax on all income (and capital gains) - simplify it all and have stiffer penalties for people who still seek to evade. I know people who are at income boundaries and it's a choice of working more / harder / going for a promotion but for a decreasing benefit.

    We reward people for not working in this country - work more and pay more is fine - work more and pay EVEN more seems rough. Also lower taxes would encourage people into work / off benefits = win win.

  20. Anonymous Coward
    Anonymous Coward

    lol, but they're NOT making any profit, they said so! :D

    as demonstrated by the Amazon (soon to be exed... axed..) director of this or that for Europe, who was turned into a mild celeb by the beeb, for his non-answers to the parliament.

    In fact, all those multinationals do it for the love of Britain and Britons only, they run their enterprise on loss in order to give us thousands upon thousands of highly paid jobs and fulfilling jobs, honest!

  21. gskr

    As I see it one of the common tax avoidance techniques works like:

    Company A is based in the UK - and has a parent (company B) in Luxembourg or something.

    Money that would normally remain in company' A's accounts as profits is transferred to company B as a "brand licensing fee" or something - so appears as a cost on company A's accounts.

    Because its that money that's transferred from A to B that you are missing the tax on that's where you need to focus the reforms.

    Introduce a new tax that applies whenever a company pays a parent company (or another company owned by the parent) that is outside the country of company A, and not covered by another form of tax (eg import duty on physical goods bought from a parent company would make it ineligible for this). Tax is 27% (ie same as corporation tax). Add some checks so that company B isn't doing something like charging £1M per cardboard box that company A buys. Problem solved.

  22. stanmarsh14

    RE: Boots

    Yep, Boots main world HQ is off Lenton Lane (Next door to Imperial Tobacco), Lenton, Nottingham, and not too long back, has jumped in to be with the American chemist chain, Walgreens, but the whole boots operation for tax reasons, is based in Switzerland.

    I've worked in many departments on the site (D105 and D82 - Logistics, D42 - Recycling, D6 and D10 - BCM), with D6 building appearing in an episode of Poirot S05E02 - The Underdog

    As for the tax thing, Boots is very well known in it's avoidance of Tax, and there has been many campaigns in Nottingham about this, along with picketing Starbucks and the such like.

  23. Dave Bell

    First they taxed the businesses in the Channel Islands...

    It used to be that, for the smaller items, you could buy from businesses in the Chennel Islands, and legally not pay any US taxes at all. Not even VAT. I know of one of those businesses that has moved its warehouse/dispatch to the UK, and it still undercutting the High Street and the supermarkets. Is it all tax avoidance?

    These moves are part of the same pattern of potential competition-killing. These are not the only companies which avoid tax. I wonder just who is running the Conservative Party glove puppet on this.

    There's also that story of how the EU Commission does not approve of the ultre-low rates in Luxembourg, which Amazon takes advantage of.

    Is this a case of companies being too greedy, and drawing attention to themselves?

  24. EvilGav 1
    Happy

    Lots of tax lawyers . . .

    . . . on the Reg forums today!!

    It's interesting to note that, of those companies sponsoring the Olympics in London this year, they all claimed special tax breaks on the sponsorship deals. All barring one of those companies also have their HQ in an off-shore friendly tax haven.

    Strange we didn't look into this before then, isn't it?

    1. davemcwish

      Re: Lots of tax lawyers . . .

      From what I read I'm not sure I agree *all* took their tax breaks.

  25. Mike Taylor

    Amazon and book VAT

    The Guardian reported last month that Amazon do play with VAT. Rather impressively from both ends.

    http://www.guardian.co.uk/technology/2012/oct/21/amazon-forces-publishers-pay-vat-ebook

    Anwayy, upshot of all this is that !'m not buying Kindles for my kids this year, but will go to a retailer that does pay tax. And have spent all the money i usually spend at Waterstones instead. I feel a bit conned.

    Re computer kit, dabs has always done me proud. I hope they pay tax :-(

    Re coffee, Starbucks? Really? Coffee?

    1. daveeff

      Re: Amazon and book VAT

      Only recently - anything from indigostarfish amazon shipped out of (via?) Jersey which was VAT free (arranged so they could ship flowers a long time ago). Gvmnt did tighten that one up

      Dave

  26. Anonymous Coward
    WTF?

    I don't understand

    The words morality and taxes are not relevant to each other.

    You pay taxes because the government says that you have to.

    Nobody wants to pay taxes. You fill in your tax return to get the best tax advantages that the law has to offer.

    When large companies do it better than you, that's unfair? WTF?

    Another commentard here stated sometime ago: "Government is a necessary evil. That's my starting position". For me, that's says it properly. We pay taxes because in general, we need government. But to state that paying tax is a moral position is a nonsense. If it were true, then moral people would be falling over themselves to contribute extra and I don't see that happening in large droves.

  27. Anonymous Coward
    Stop

    I think

    When the governments start spending tax wisely and not seemingly squandering it away then I will get concerned over tax avoidance schemes.

    If the government wants more tax coming here, then lower the bloody tax rates. The equally applies to VAT etc, lower the rates and the economy will grow. (just like Hong Kong did).

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