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Richard Murphy on tax and economics

If in doubt Tim Worstall resorts to misrepresenting the truth

Mon, 07/14/2014 - 20:33

I posted an audio blog this morning explaining why and how Amazon, amongst other companies, avoid tax, making quite clear what the processes involved are and that despite avoiding they might still on occasion pay tax, which is blatantly obviously true.

In response Tim Worstall has published a blog on Forbes under the title

Britain’s Leading Tax Expert Insists That Amazon Is Not Avoiding UK Tax

In it he says:

After many years of insisting exactly the opposite Britain’s leading tax expert, Richard Murphy, today announced that Amazon does not in fact avoid (and most certainly does not evade) UK corporation tax. He now actually agrees with me, that in the most recent year we have the numbers for Amazon overpaid UK corporation tax.

Now I have never said Amazon has evaded tax, so that is not news. As for the rest, it’s just straightforwardly untrue and a total misrepresentation of anything I have said both today and previously, all of which I stand by. Forbes really should take care when publishing blatant misrepresentations of the truth, including (but not limited to) the suggestion that I am the UK’s leading tax expert, which I simply do not and never would remotely agree with.

I can assure you that Tim Worstall will never appear anywhere on this blog again. Not only is he a lousy economist he simply cannot tell the truth. In combination that is enough to resolve the issue for good.

Addition at 7am on 15 July:

The following exchange in the comments section may elaborate this issue:

Andrew Jackson:

In your audio blog, you did indeed say that they are paying the right amount of tax at the moment – indeed, more than one might expect. The issue you mentioned there was that you consider that they have set up structures such that they will pay too little in the future.

I can see how you get to that conclusion, but to say that a company is a tax avoider when it is not actually avoiding tax as yet – in essence, conflating “in my view there will be” with “there is now” – does seem to be a little bit premature.

My response:

Oh come on – that is a comment taken wholly out of context.

I suggested that because of what might be considered the fixed margin tax planning arrangement they are using for the long run they might, because of their current decision to reduce profit in a race for global domination in which tax avoidance plays a key part, have temporarily paid more pro rata tax in the UK than might be expected but that this did not in any way mean that they were not a tax avoider.

They have underpaid in the past.

It is likely they will again.

Saying they’re not now is as absurd as claiming that a person engaged in another form of abuse is not guilty of it because by chance they did not do it today.

For heaven’s sake; if your analytical abilities are as weak as this then you really are in trouble, desperate or just hopelessly inept.

The comment does not just apply to Andrew but all others who have apparently made similar comments elsewhere on the net.

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The hidden economy

Mon, 07/14/2014 - 12:46

From The World Weekly:

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PWC: give us tax haven UK or we’ll throw our toys out of the pram

Mon, 07/14/2014 - 12:38

The Telegraph has reported that:

The chairman of PwC in the UK has said that takeover deals based on tax inversions — which were brought to the fore in Pfizer’s aborted battle for AstraZeneca — should be welcomed.

So that’s a welcome for tax haven UK then, where transactions are artificially relocated purely to save money. The report went on:

Ian Powell said that the UK’s low corporate tax rate is an added advantage for British business, and should not be dismissed.

In other words, it’s good for a few, and the rest of you must not question it, or as he put it in his implied threat to those who might differ:

“London is a global financial centre . . . and I think if we start to damage that by changing the narrative, then things become difficult,” said Mr Powell.

Read that another way and he’s saying to Labour, toe the line or we’ll throw our toys out of the pram, and then you’ll notice. And as if to emphasis the point:

However, he went on to say that key to attracting overseas companies to the UK is certainty, and that the recent furore among politicians and parts of the media was unhelpful.

“Companies are coming here for Patent Box grants and other tax schemes, which are offered by the Government, but then don’t want to be criticised for taking advantage of legitimate benefits,” he concluded.

So, in other words, don’t any of you threaten to take our toys away before we’ve had time to throw them.

And don’t tell us off either, or we’ll cry.

One wonders if he realised how stupid he’d sound when this was reported, or is his bubble so thick he hasn’t realised there is a world outside it?

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The Quick Take: Why do some tax avoiding companies pay tax?

Mon, 07/14/2014 - 08:20

In the last few days the question has been raised as to how a company can be accused of tax avoidance when it appears to be paying tax. This is my quick take on a response.

Listen to ‘The Quick Take: Why do some tax avoiding companies pay tax?’ on Audioboo

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Thanks – and what’s next

Mon, 07/14/2014 - 06:34

I was, I admit, very surprised and a little overwhelmed by the response to my blog entitled ‘What does matter?‘ written and published early on Saturday morning.

If there is one part of blogging that is tedious (indeed, the only part that I find tedious) it is dealing with the comments of the cohort of pretty antagonistic and profoundly right wing commentators who post persistently, and frequently repetitively, in what seems to be a deliberate attempt, on many occasions, to waste my time.

Now agreeing with me is very definitely not a condition for posting here. In fact, I appreciate and benefit from constructive disagreement: all debate does. But it is the repetitive and aggressive nature of the opposition that characterises much if the commentary that is annoying.

I am aware that some so may own style encourages this. I do not accept that. Whilst I have over the years undoubtedly been robust (and still can be) this was pretty much a pre-condition of getting tax justice onto the agenda both in the UK and elsewhere.  As most will attest when they meet me, this is not my personal style. In the face of antagonism I do not, however, accept nonsense, but the evidence of where the aggression comes from can very easily be found both in the body and comments section of things like Tim Worstall’s blog, which I note he has said is no longer catalogued by Google because of its offensive nature.

So, what have I learned? First, that there are people who seem to appreciate this blog. Thank you. I really appreciate that.

Second, there are occasions when favourable commentators can massively outpost the negative ones. It’s been notable that the right wing commentators here are complaining that I must have rigged the comments to achieve this outcome. That is simply not true; the vast majority of comments made to this blog (even the one requesting that I die, on this occasion) get posted.

Third, some comments were also made by email. I won’t name the person who sent this – who I do not know – but I appreciated it:

Your blog is an essential reference point for me I find it concise informative and illuminating and read it as soon as it is delivered. The concern you display for your fellow human beings should be recognised and commended.

Your articulate and intelligent observations are no doubt unpalatable to a minority of individuals who recognise that you hit the nail on the head time after time.

Please keep doing what you do as you do it exceptionally well.

That point about the minority is the most important in this – although I am human, and did appreciate the rest. There are around 5,000 reads of this blog a day during the week with fewer at the weekend (although that tends to be because I blog much less at weekends and about half of all traffic seems to relate to the day’s posts and half to the back catalogue). I suspect now that the vast majority of readers are sympathetic to what I write. However, the comments don’t usually reflect that fact – although I greatly appreciate the few regular sympathetic commentators who do contribute and add a lot to this blog.

And in that case I think that there are lessons to learn from this.

The first is that – as many have told me – that engaging with the time wasters is pretty much that – a waste if time.

But more important, the issue is of engagement. I have often been asked when speaking what people can do to support tax justice. The answer is you don’t have to write a blog or become much of an expert. But engagement helps. Support here is appreciated, but it’s a bit like a letter in the Guardian; useful as an indication of support but unlikely (if I am honest) to reach many but the converted. So the need is to engage more widely and that is possible.

Papers want letters. Please write them. Say you support your local tax office. Say you regret the unfair advantage big business has over local companies. Object to any privatisation contracts. Support the local NHS. Say you don’t mind paying taxes for the services you get (which is such a shocking idea you’re bound to get published). If you get good service from a public authority, say so. These things do help in all sorts of ways, including with the morale of those you thank.

Also try doing the same on local radio stations – and national ones – that have phone in programmes. The BBC, in particular, has to try to get balance on these issues and sometimes struggle to achieve it.  Take part. Just write down three key points at most you want to make before calling e.g.

1. I support today’s strikers

2. That’s because I really value (e.g. the care and support the local authority’s staff have provided to my mother in law)

3. I think it unfair that the people doing the work gave seen their wages fall heavily and can’t make ends meet.

Or:

1. I think large companies should be expected to pay higher rates of tax than smaller ones

2. The government has almost levelled these rates up

3. I think that’s unfair because big companies can always borrow money more cheaply than small ones so the small ones need a lower rate of race to compensate for that.

Such lines are needed, urgently, because the neoliberals keep saying that competition always works, but we know it doesn’t so we need the fight back material.

And if you can’t do the above – well, please do comment here. And support organisations like  38 Degrees and Avaaz. Clicktivism works.

Finally, join a union. If more people did we would have greater equality in this country. And that is one of the goals of tax justice.

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Creating tax transparency: publish what you pay

Mon, 07/14/2014 - 06:30

Tax transparency is, in the case of companies, all about being accountable for the tax due by the company.

The trouble is that the vast majority of UK based companies are not accounting for the tax that they pay for a number of reasons.

In many cases that is because they file abbreviated accounts. These are, of course, legal for small companies but they mean that no profit and loss account information, at all, is published by the companies making use of this form of reporting. Given that detailed disclosure of liabilities is also not required by them the chance that any disclosure of any sort with regard to corporation tax is made by these companies is very limited indeed.

Curiously they are a long way from being alone in this regard. Some branches of foreign companies need file no accounts in the UK, and far too many of such companies that may only trade here e.g. by renting land and buildings but are not required to file accounts with Companies House. They too fail to provide any information on the tax they pay.

But this is not the only tax opacity in company accounts. Look at the accounts of any UK parent company with a parent elsewhere in the EU (and, sometimes, elsewhere) and they do not need to file a cash flow statement, meaning that critical data on tax paid is not provided by these companies.

Multinationals do provide data on tax paid, but in far too many cases it is meaningless. Tax is, inevitably and only paid locally, but in most multinational corporation accounts there is little indication as to where profits are made, let alone where tax is being accrued or paid.

Then result is that in the vast majority of the published accounts of companies working in the UK there is very little, and in far too many cases, no information at all on the tax due and paid in this country. This is an absurd situation. When tax payable on profits is, in my opinion, the necessary price payable for the privilege of limited liability the fact that in most of the accounts we have no clue as to what UK profits are, let alone the resulting tax due, shows a fundamental failing in the accounting requirements demanded of our companies.

The solution, in all cases, is that as a minimum, every single company trading in the UK (defined as having a permanent establishment in the UK for tax, trading through a related permanent establishment trading in the UK (to cover Amazon) and managing land, building or other assets from which income is earned in this country) must file as part of their annual accounts a statement that must be published, irrespective of the size of the company stating what the UK turnover of the company is, what its UK profits are, UK current tax liability provided and UK corporation tax paid in the year.

There is no company that does not know this data.

There is no company whose competitive position in the UK is compromised by this since absolutely every single company trading here must file it.

And there is, therefore no reason at all why this should not be required.

If any government, whether Cameron’s, which committed to trade, tax and transparency in 2013, or an incoming government in 2015, cannot deliver this then they are not serious about tax transparency. And that is why this has to be on the agenda for UK tax transparency.

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Venn diagrams for our times: political narrative

Mon, 07/14/2014 - 05:57

 

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What does matter?

Sat, 07/12/2014 - 06:32

Having written two blogs in a row on quite personal issues – one on being despised by a commentator on Forbes and another on commentators on this blog who seem intent on a destructive relationship – the question of what does matter seems of relevance early on a Saturday morning when I would rather be asleep but have habitually woken, nonetheless.

Let’s make the obvious comments first. My family to whom I have yet to take tea this morning matter.

And so do the enormous number of decent, caring, people I meet directly and indirectly through the work I do, and elsewhere.

But so do those who despise that work matter. That’s not just because they are fellow human travellers – although that’s true and a reason for saying they matter. They are also of concern because they despise and because they want to block and because their aim appears to be to cause harm.

Now I am sure they will say it is me and my colleagues in the tax justice movement doing harm, but I will unsurprisingly beg to differ. I believe that the time when it was possible to argue, as they all seem to do, that a purely utilitarian view that increasing wealth without consideration for its distribution has long gone. We know now, without a doubt, that distribution of wealth matters and that inequality is harmful.

Again, the time when it could be argued from a libertarian perspective that government per se was harmful has again passed. This is simply not true. What we know as a matter of fact is that when policies in pursuit of this goal are put into practice – as this government and others, using the excuse of the recession, have sought to do – then the weakest in society suffer disproportionately. Real suffering, of the sort denied as real by many such libertarians because they cannot quantify its impact, results.

The denial of this reality matters.

The capture of the income streams of government through the privatisation process that will as a consequence enrich a few when those funds should be used to serve the majority matters.

The denial of tax revenues to governments that need funds to equitably relieve inequality in society and to meet real need matters.

The inequality between societies matters. In a small world our neighbour is everywhere even if some are closer than others.

The delivery of social as well as economic justice matters.

The right – and I think it is a right – of each individual to achieve that of which they are able matters, because to me that is the best expression of equality that there really is. Removing the impediments that prevent that achievement happening matters very much indeed, and has to be the focus of any responsible government.

The support for community matters, because we all live in it, even if many would deny it.

And the time to reflect, to relax, to enjoy, to break bread with others, to breathe in the wonder of the world, and our small part in it, those things all matter – and far too many are denied those pleasures by the oppression of an economic system that is indifferent to them and their need for such real pleasures in life.

The counterpart of this indifference to the needs for the pleasure of many, which is the  denial of the purpose of far to many people as evidenced by a willingness to consign them to unemployment, zero hours contracts, and outsourced contracting where their integral membership of the entity they service is denied , matters enormously.

At the end of the day dignity matters. The dignity of each and every person, that is, whatever their situation. Each has a right to that dignity. And that, I think is a key element of what tax justice is about. We have always said each person, their contribution and their rights matter, whoever and wherever they are.

That’s why I will take being despised to do this work. Because it matters.

Now, time for tea, I think.

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The week ahead

Sat, 07/12/2014 - 05:59

As one commentator on this blog has said in the last week of the contributions others have made, there are number of people posting right now whose main aim does, it seems, to be wasting my time to prevent me doing other work.

I have considerable sympathy with that suggestion. So the current rash of commentators who are engaged in posting repetitive, neoliberal commentary of mind-numbingly boring irrelevance on the blog will be finding the delete button in heavy use in the coming week, not least because I will be spending a couple of days of it in and around hospital as part of my on-going dispute with my gall bladder.

Priorities matter. Reading comments from such people comes very low on my list of them, especially when I am sure that the aim is to grind down my willingness to campaign for change. It won't work.

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The ever subtle Tim Worstall

Fri, 07/11/2014 - 19:21

This has been published on Forbes today, written by Tim Worstall:

I really do despise the Tax Justice Network and their ilk. Spreading untruths to make the world a worse place. Well done chaps, oh yes, well done.

Let’s ignore the fact for a moment that governments around the world and the EU have been persuaded by our arguments, which Tim, forlornly, tries to tear apart.

Let’s also ignore the fact that Tim suggests that John Christensen and I may have been teenage Trots, which is rather far from the truth.

Let’s just note his subtlety on this occasion. It’s usually a lot worse on his own blog.

And then you wonder why I might get fed up with his followers who frequent the comments section of this blog.

I guess all one can say is if this is the level of his argument he’s both lost the plot and is one of the very few remaining in the stage of vehement denial on the issue of tax justice. Most of the world is ready to move on now and accept that our case was always glaringly obvious all along. One day even Tim will, if the anger does not get the better of him first, which I’d rather hope it doesn’t.

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HMRC, you and me

Fri, 07/11/2014 - 08:26

Tax barrister Jolyon Maugham is rapidly becoming one of the leading commentators in the tax debate in the UK, with a welcome left of centre stance matched with strong professional knowledge. In a new blog he says (and I have edited, but only very slightly):

The rise of tax to the top of the political agenda; the public demand in times of hardship for everyone to pay their share; and the suspicion of two tax systems – one for the wealthy with access to the best technical minds and one for the rest who must make up for the tax lost to the wealthy: these things demand a closer and more responsive public engagement from HMRC.

His lament is that this response is not forthcoming on issues as important as, for example, the Bernie Ecclestone case, and he provides the evidence that this is not necessary and that HMRC have the power to engage more fully than they do at present.

I think Jolyon’s argument is not just sound, but important. With the exception of big business, where there is a very clear impression of active communication being undertaken, whether it be on governance via the big business dominated HMRC board, or consultation, where big business usually dominates as they are the only people with the resources available to dedicate to the process, or even on tax affairs, where big business gets its own dedicated customer relationship manager where the rest get a telephone call centre if they are lucky enough to get through, the HMRC attitude to communication is lamentable.

From the patronising description of taxpayers as customers to the closure of local tax enquiry centres, to the retreat to call centres, and the new policy of expecting taxpayers to self serve themselves on tax queries, which is to become prevalent over the next two years as more than 5,000 HMRC staff in personal tax lose their jobs, HMRC’s attitude to most people appears to be one of withdrawal from active engagement. Whoever you are, and whatever you want it seems that HMRC wants to hold you at arm’s length, or more. No wonder they have difficulty persuading some people to part with their money. They are very clearly not building their public relationships on the basis of mutual trust, and that, for a tax authority, is disastrous.

This is also true at a policy level. It is very obvious that my work irritates HMRC. They have invested enormous amounts of time, effort and, therefore, money in trying to discredit my work on the tax gap and other issues, to limited avail. The fact is that whether my work is right or not those with open minds can see that it raises serious questions about the approaches and methodologies HMRC use that imply that their own estimates must be, as Margaret Hodge has put it, the ‘tip of the iceberg’. And yet they have never sought to engage on such issues. Not once have they invited me in for a discussion. Nor have they suggested they might wish to explain where I am wrong: they just fire barrages from afar. It’s battleship diplomacy and it does not work.

That’s also true of their consultation processes.  If HMRC was serious about consultation it would realise that drawing responses from a very limited range of large businesses, and their advisers, plus the tax academics who are largely sponsored by those firms,  is an inadequate process.  It is normal for evidence from small business and civil society to be very limited  simply because the resources available to make such submissions are very limited in these sectors.  In that case HMRC  has to go out of its way to secure these opinions, including by making grants, where necessary, to ensure that those with the capability of providing them have the means to deliver.  That would appear essential if they are to secure evidence from a wider variety of opinion on such an important issue as tax policy.  At present they only hear from those with  command of considerable financial resources, and most of society does not enjoy that. No wonder HMRC has  a communications problem if it only has an ear for 1% of the population. 

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The Quick Take: why naming and shaming helps deliver tax justice

Fri, 07/11/2014 - 06:00

I’ve not been a regular user of the spoken word on this blog, but I thought I might give it a try.

Treat this discussion of why naming and shaming individuals who use tax arrangements helps deliver tax justice as an experiment, and let me know if you are interested in more, and what on.

listen to ‘The Quick Take: Why naming and shaming helps tax justice’ on Audioboo

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Venn diagrams for our times: surveillance

Fri, 07/11/2014 - 05:57

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Creating tax transparency in the UK: introduction

Thu, 07/10/2014 - 09:40

For more than a decade I, and many others, have been campaigning for tax transparency around the world, and most especially in tax havens.

We have campaigned for country-by-country reporting and whilst we have not got it yet, it is on its way for tax, and public reporting seems to be an almost inevitable follow on.

We are moving rapidly towards a situation where we will soon have significant extension to automatic information exchange from tax havens and between other countries. What was once just a pipe dream will soon be commonplace.

And we are getting more international tax cooperation from the OECD downwards.

But, surprisingly, there is an aspect of tax transparency which requires a lot more attention, and that is tax transparency in the UK. If I am honest this is an area which has been overlooked during the period when there was almost total opacity offshore and in many multinational companies. But as we begin to make some progress on these international issues the time has come to look at what can be done to improve tax transparency here in this country.

This is no small task; there is a lot to do, all if which can be entirely achieved within the UK. Over the next two or three weeks I will address a whole range of issues to create an agenda for change for tax transparency here in the UK, for which reason it is appropriate to note, first of all, just what I think tax transparency is.

Tax transparency is about at least five issues. The first is the obligation on the taxpayer to supply their tax authority with the information they need to tax them appropriately.

The second is that in some cases (those where artificial structures such as companies, LLPs and trusts are used) the taxpayer should supply sufficient information to all potential stakeholders to show that the use they have made use of the privileges granted to them by society is appropriate.

Thirdly, this is about tax advisers being transparent in their dealings.

Fourthly, this is about the information a taxpayer needs to enable them to estimate the tax that they owe being readily available to them.

And lastly, tax transparency is about a government being accountable for the use it makes of the funds it raises.

Of these five objectives there is usually little chance from public data to assess the first of these issues, since there is an accepted right of privacy in the UK, at least with regard to the tax affairs of most individuals (and there are exceptions: HMRC, for example, publicise the affairs of some taxpayers who have been penalised by them).

The second concern will be the focus of much of what I will write in this series.

The third is an issue of increasing concern as more tax arrangements fail and taxpayers find they have been sold inappropriate advice.

The fourth issue is a matter of real concern; taxpayers must have the information they need to ensure they can pay their tax in the right place, at the right rate and at the right time.

The last issue is far too often ignored when it comes to tax justice and yet has always seemed to me to be of considerable significance. We cannot demand transparency of taxpayers without government reciprocating.

The discussion will be framed by these concerns, unless comments made expand its range.

The issues I will address will not necessarily be in the above order though. I admit I’d find that restrictive. This series is about creating ideas, and I need the freedom to roam.

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Tax abusers want their pound of flesh – in court

Thu, 07/10/2014 - 08:23

As the FT reports this morning:

Lawyers are scrambling to file compensation claims against advisers who sold tax-saving schemes that have backfired to leave an estimated £5bn bill for individuals.

It would seem that some of those who have been sold abusive tax schemes that may not work are not happy. And when the rich aren’t happy it’s the writs that fly.

I have to say that I suspect those issuing these writs may have little more hope of them succeeding than their dodgy tax schemes did, because the lawyers and advisers involved in these arrangements almost certainly covered their backsides rather well, but that’s not the point. There are three points to this.

The first is that there has been mis-selling, even if backed by learned counsel’s opinion.

The second is that there were advisers willing to do that mis-selling.

The third is that at least some of those mis-sold too might have genuinely believed they were not taking any real risk.

So, what to do about it. Mazars would have us believe that a ‘trusted tax adviser‘ scheme should be enough to protect the public from such schemes. I do not agree, not least because compliance with the rules of existing professional bodies is clearly insufficient to prevent tax abuse (as I consider exists) occurring.

In that case any case scheme has to be tougher. Back in 2007 I wrote a Code of Conduct for Taxation. It read as follows:

A Code of Conduct for Taxation

Objective

This Code of Conduct relates to the payment of taxes due to a State or other appropriate authority designated by it.

Scope

This Code applies to:

  1. Governments and their agencies in their role as tax legislators, assessors and collectors;
  2. Taxpayers, whether individuals, corporate bodies or otherwise;
  3. Tax agents, whether they are undertaking tax planning or assisting with tax compliance.

Application

It is intended that this Code be voluntarily adopted by States and should be used to guide the conduct of taxpayers and their agents who choose to comply with it whether or not they reside in a State which has adopted the Code.

The Code

The Code is divided under six sections, each of which includes three statements of principle.

1. Government

a. The intention of legislation is clear and a General Anti-Avoidance Principle (‚ÄòGantip’) is in use;

b. No incentives are offered to encourage the artificial relocation of international or interstate transactions;

c. Full support is given to other countries and taxation authorities to assist the collection of tax due to them.

2. Accounting

a. Transparent recording of the structure of all taxable entities is available on public record;

b. The accounts of all material entities are available on public record;

c. Taxable transactions are recorded where their economic benefit can be best determined to arise.

3. Planning

a. Tax planning seeks to comply with the spirit as well as the letter of the law;

b. Tax planning seeks to reflect the economic substance of the transactions undertaken;

c. No steps are put into a transaction solely or mainly to secure a tax advantage.

4. Reporting

a. Tax planning will be consistently disclosed to all tax authorities affected by it;

b. Data on a transaction will be consistently reported to all tax authorities affected by it;

c. Taxation reporting will reflect the whole economic substance and not just the form of transactions.

5. Management

a. Taxpayers shall not suffer discrimination for reason of their race, ethnicity, nationality, national origin, gender, sexual orientation, disability, legal structure or taxation residence; and nor shall discrimination occur for reason of income, age, marital or family status unless social policy shall suggest it appropriate.

b. All parties shall act in good faith at all times with regard to the management of taxation liabilities;

c. Taxpayers will settle all obligations due by them at the time they are due for payment.

6. Accountability

a. Governments shall publish budgets setting out their expenditure plans in advance of them being incurred, and they shall require parliamentary approval;

b. Governments shall account on a regular and timely basis for the taxation revenues it has raised:

c. Governments shall account for the expenditure of funds under its command on a regular and timely basis.

Enforcement

States seeking to comply with the Code will voluntarily submit themselves to annual appraisal of their Conduct. These appraisals will in turn be reviewed by a committee of independent experts appointed by participating States. Differences of opinion will be resolved by binding arbitration.

Any taxpayer or agent wishing to comply with the Code may do so. A State should presume that a person professing compliance with the Code has done so when dealing with any tax return they submit. In consequence the administrative burdens imposed upon that person should be reduced. In the event of evidence of non-compliance being found any consequential penalty imposed should be doubled.

Note that this Code does not just cover advisers: HMRC has to play its part too as do taxpayers themselves.

The time to revisit such a Code that requires real commitment over and above the norm so that taxpayers know they are dealing with honest firms would seem to have arrived.

The report that accompanied the Code is here.

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Osborne exposed: his £5 billion annual giveaway to big business

Thu, 07/10/2014 - 06:49

Earlier this year I wrote a blog about George Osborne’s tax giveaway to big business suggesting the cost was between £5 and £10 billion a year, depending on the method of calculation used (with all workings provided).

It was good to find the FT has caught up with this today, with Vanessa Houlder reporting:

The UK government’s aggressive cuts to corporation tax are costing more than £5bn a year, requiring funding from elsewhere in the Budget at a time of spending cuts.

Businesses will pay nearly £8bn less corporation tax a year by 2016-17 after UK chancellor George Osborne pushes through what he terms “the largest reduction in the burden of corporation tax in our nation’s history”.

As she then notes:

But at a time when painful spending cuts are being inflicted on Britain’s public sector, some critics are questioning Mr Osborne’s strategy.

Richard Murphy, a director of Tax Research UK who advises the Trades Union Congress on taxation, says he is unconvinced of the benefits of a strategy that made multinationals like Fiat and Pfizer want to move their holding companies – but few jobs or operations – to Britain.

“It is attracting financial relocations but not much underlying investment and employment. The cost of achieving it is very high.”

Not everyone agrees, of course. I was particularly amused to note that:

Chris Sanger, global head of tax policy at EY, the professional services firm, believes it is a mistake to blame the rate cuts for falling revenues.

They are Chris: look at my workings. I suggest it’s not possible to offer another explanation in the light of what is happening on the small business tax take.

And what is more this issue won’t go away. Labour has said it will keep the most competitive tax rate in the G7. That still gives plenty of room to correct Osborne’s hand out to his chums.

 

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Venn diagrams for our times: union rights

Thu, 07/10/2014 - 06:36

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