Tax doesn’t have to be taxing

So the Guardian’s current campaign is to expose the tax-avoidance schemes that 20 of the UK’s biggest companies are using to cut costs. We’re on day two, and already we’ve found out that... (drum roll and violins playing threateningly in a minor key...)

  • GlaxoSmithKline offshore its trademarks to Puerto Rico (share price up £1.50 this year

     

  • AstraZeneca offshore trademarks to Puerto Rico (share price up from £21.50 to £28.60 this year)

     

  • Shell has moved trademark rights to Switzerland and main tax residence to the Netherlands

‘Off-shoring’ trademarks, by the way, significantly reduces tax bills. You can find out more about just how much by going here, where the Guardian Online has created a rather jazzy multi-coloured circles diagram to demonstrate all the stats. (Although, be warned – the lovely colours and pleasing patterns may distract you from your original intentions of outrage and investigation.)

According to Richard Brooks in the Tax Gap blog, “Official estimates put corporate tax avoidance at up to £10bn annually. A TUC study plumped for nearer £12bn: that's the equivalent of one of Alistair Darling’s fiscal stimuluses every other year.”

Pretty serious stuff.

But what are the ethics of big companies doing this? Whose responsibility is it to moderate them? Yes, in idealistic and moral terms, they have a responsibility to contribute in full to the UK economy and pay as much tax as they rightly owe to prop up the economy they are using to their advantage. But from a business point of view – well, why wouldn’t you save yourself millions, even billions of pounds?

And who doesn’t know someone who doesn’t do something similar, albeit on a (most probably) smaller scale? I know people who drive cars with foreign number plates to avoid paying road tax, who buy property overseas to cut their UK tax bill, who make sure their European business dealings go across the French border to reduce VAT bills.

Then again - £10bn is a lot of money to be missing from the economy. It is, as the Guardian points out, the equivalent of the entire government annual transport budget. It is money that could go a long way towards helping this country, and which should really be going towards helping this country, rather than paying for overpaid execs fourth houses.

And the real pickle of the thing is, that it’s really only the companies who are richest to begin with who can afford accountants good enough to manipulate the tax system this well. Sure, if this was really small businesses who saved themselves £100 here and there, maybe we would turn a blind eye. But it’s not. It’s the ones who can pay for the very best accountancy firms to save them that extra mil here or there.

And that’s really rather sad. The businesses who are richest get the accountants that only they can afford to manipulate the system and keep them more money, thus detracting from the pot that should be going towards helping the rest of the country – small businesses very much included.

It might be about the right time, now, when everybody needs it most, for the government to invest a bit more of what they do have to regulate the tax system and prevent this from happening more.

Hell, worst comes to worst, I’m sure I know someone who knows someone who can bribe a Lord or two to do it.

(As a side note, we particularly liked Naynaynay’s comment at the bottom of the Guardian’s Tax Gap blog:

“There is a company called ‘Guardian Media Group’ which last year paid tax at an effective rate of 4.99%. It has also set up an offshore company in the Cayman Islands to avoid the payment of stamp duty.”)

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