The UK Politics and EU Referendum thread - merged

[EvilPie]

If it's private eye then it's taking the mickey out of the often poor understanding of corporation tax by the genral media and various politicians (see the nonsense about the £93 billion of corporate welfare that Corbyn talks about)

Is it though?

Just while we're (still) here, are you saying it's fine that a company paying dividends and high six-figure salaries to its directors doesn't pay corporation tax for seven years?

What a ridiculous question. Of course it's fine as long as they haven't broken any rules.

Why on earth should any Company have to pay more tax than HMRC rules state it should?

[DungBeetle]

If it's private eye then it's taking the mickey out of the often poor understanding of corporation tax by the genral media and various politicians (see the nonsense about the £93 billion of corporate welfare that Corbyn talks about)

Is it though?

Just while we're (still) here, are you saying it's fine that a company paying dividends and high six-figure salaries to its directors doesn't pay corporation tax for seven years?

What a ridiculous question. Of course it's fine as long as they haven't broken any rules.

Why on earth should any Company have to pay more tax than HMRC rules state it should?

It's fair enough to ask the question I think - it's the age of media spin.

If you look at 2 facts in a vacuum:

£200 million in sales over 7 years
Corporation tax paid zero

The problem is the press are deliberately mischievous, as on face value those 2 facts don't seem to tally but the press don't bother to comment that

A) The important number is profit, not sales.
B) Even if they have made millions of profit, if the fruits of those sales are all being drawn down in salary then it all gets charged to income tax, not corporation tax.

Effectively it's the press making easy headlines for themselves.

[arbboy]

If it's private eye then it's taking the mickey out of the often poor understanding of corporation tax by the genral media and various politicians (see the nonsense about the £93 billion of corporate welfare that Corbyn talks about)

Is it though?

Just while we're (still) here, are you saying it's fine that a company paying dividends and high six-figure salaries to its directors doesn't pay corporation tax for seven years?

What a ridiculous question. Of course it's fine as long as they haven't broken any rules.

Why on earth should any Company have to pay more tax than HMRC rules state it should?

It's fair enough to ask the question I think - it's the age of media spin.

If you look at 2 facts in a vacuum:

£200 million in sales over 7 years
Corporation tax paid zero

The problem is the press are deliberately mischievous, as on face value those 2 facts don't seem to tally but the press don't bother to comment that

A) The important number is profit, not sales.
B) Even if they have made millions of profit, if the fruits of those sales are all being drawn down in salary then it all gets charged to income tax, not corporation tax.

Effectively it's the press making easy headlines for themselves.

Nothing more tilting than the gutter press quoting stuff like this.  Or people trying to big themselves up saying 'I have got a £4m turnover business' blah blah which sounds really impressive to original Joe but in reality shows nothing.  Who cares?  How much profit do you make?  I could turn over £50m a day on betfair if i kept offering 11/10 each on two on tennis matches and lose £2.5m.  Or i could turn over £20k a day and bet to 10/11 and make £1k a day.

[AlunB]

If it's private eye then it's taking the mickey out of the often poor understanding of corporation tax by the genral media and various politicians (see the nonsense about the £93 billion of corporate welfare that Corbyn talks about)

Is it though?

Just while we're (still) here, are you saying it's fine that a company paying dividends and high six-figure salaries to its directors doesn't pay corporation tax for seven years?

What a ridiculous question. Of course it's fine as long as they haven't broken any rules.

Why on earth should any Company have to pay more tax than HMRC rules state it should?

What a lovely black and white world you live in.

[AlunB]

I think you missed the point of my question.

I didn't ask if it was legal or even ethical. I said do you think it's OK. You could have saved a bit of time by just saying yes.

It was a political question in a political thread. I wasn't asking for finance 101, as well intentioned as it was

[DungBeetle]

But the point is that paying a salary to someone directly impacts whether a corporate will pay less corporation tax?  There is an inverse relationship, so since the Revenue gets it's big chunk either through income tax or corporation tax I think it's definitely okay for a company that has paid it's directors a fortune in salary to pay zero corporation tax. 

Pay salary.  Pay dividends.  Either way the Taxman gets his fill.

[Doobs]

If it's private eye then it's taking the mickey out of the often poor understanding of corporation tax by the genral media and various politicians (see the nonsense about the £93 billion of corporate welfare that Corbyn talks about)

Is it though?

Just while we're (still) here, are you saying it's fine that a company paying dividends and high six-figure salaries to its directors doesn't pay corporation tax for seven years?

What a ridiculous question. Of course it's fine as long as they haven't broken any rules.

Why on earth should any Company have to pay more tax than HMRC rules state it should?

What a lovely black and white world you live in.

What exactly is your problem with what has happened at this company?  

If the company has made no profit then it should pay no tax.  If the directors/employees have taken salaries there should pay tax on them.  There is no evidence in this article that this hasnt happened.  

[EvilPie]

If it's private eye then it's taking the mickey out of the often poor understanding of corporation tax by the genral media and various politicians (see the nonsense about the £93 billion of corporate welfare that Corbyn talks about)

Is it though?

Just while we're (still) here, are you saying it's fine that a company paying dividends and high six-figure salaries to its directors doesn't pay corporation tax for seven years?

What a ridiculous question. Of course it's fine as long as they haven't broken any rules.

Why on earth should any Company have to pay more tax than HMRC rules state it should?

What a lovely black and white world you live in.

Well when the question asks for a yes or no answer you can't really expect any answer that isn't black or white can you? You're lucky I padded it out as much as I did....

Smiley face added to show I'm not looking for an argument......

[AlunB]

No that's a fair point. I accept that.

It was a more a theoretical question that should a company seemingly making decent "EBITDA" seek to avoid paying corporation tax wherever possible. But I admit I phrased it pretty badly.

[AlunB]

If it's private eye then it's taking the mickey out of the often poor understanding of corporation tax by the genral media and various politicians (see the nonsense about the £93 billion of corporate welfare that Corbyn talks about)

Is it though?

Just while we're (still) here, are you saying it's fine that a company paying dividends and high six-figure salaries to its directors doesn't pay corporation tax for seven years?

What a ridiculous question. Of course it's fine as long as they haven't broken any rules.

Why on earth should any Company have to pay more tax than HMRC rules state it should?

What a lovely black and white world you live in.

Well when the question asks for a yes or no answer you can't really expect any answer that isn't black or white can you? You're lucky I padded it out as much as I did....

Smiley face added to show I'm not looking for an argument......

Haha! Your phrasing did rather suggest there was no other option besides your point of view, which I don't think is entirely the case.

But it wasn't a ridiculous answer

Smiley face as I'm really really not looking for an argument either. Am just massaging my bruised ego.

[DungBeetle]

No that's a fair point. I accept that.

It was a more a theoretical question that should a company seemingly making decent "EBITDA" seek to avoid paying corporation tax wherever possible. But I admit I phrased it pretty badly.

The article seems to indicate that they have significant brought forward losses, so in my opinion it is justified that we don't tax companies until they have managed to break even.  They have indulged in nothing more than standard corporation tax compliance in rolling those losses forwards.

As I said there are corporates out there creating intricate offshore networks to get one over the taxman.  These guys aren't doing that (which is why I still think Private Eye are writing it to poke fun at some of the guff that has been in the press the last few years).

[EvilPie]

I think you missed the point of my question.

I didn't ask if it was legal or even ethical. I said do you think it's OK. You could have saved a bit of time by just saying yes.

It was a political question in a political thread. I wasn't asking for finance 101, as well intentioned as it was

Unfortunately to someone who knows nothing about Company tax rules it's the only way to provide an answer.

I know a tiny bit about the rules so I know that it's possible to manipulate how much tax you pay year on year but ultimately you end up paying it one way or another at some point. The better your accountant is the better your chances of minimising the total amount of tax you pay when it finally leaves your pocket.

As long as you don't break the rules then it's absolutely fine whichever way you choose to pay it. It's not your fault that you pay less tax if you pay it one way rather than the other.

For what it's worth it looks like the Company in question is paying quite a lot of tax compared to many others who make similar profits. At the level of income they're talking about Mr Osborne will be paying over 50% in total taxation but the Company pays none because of his huge salary. If he just received dividends you'd see that his salary was nothing, the Company paid £200k+ in corporation tax but overall the Treasury would receive about 7% less.

Plug some figures in here to see the difference if you're interested: http://www.uktaxcalculators.co.uk/dividend-vs-salary.php

[AlunB]

No that's a fair point. I accept that.

It was a more a theoretical question that should a company seemingly making decent "EBITDA" seek to avoid paying corporation tax wherever possible. But I admit I phrased it pretty badly.

The article seems to indicate that they have significant brought forward losses, so in my opinion it is justified that we don't tax companies until they have managed to break even.  They have indulged in nothing more than standard corporation tax compliance in rolling those losses forwards.

As I said there are corporates out there creating intricate offshore networks to get one over the taxman.  These guys aren't doing that (which is why I still think Private Eye are writing it to poke fun at some of the guff that has been in the press the last few years).

Yeah I think it's safe to say I used a bad example there. Looking at previous years they made a loss for most of them so not paying tax for seven years is not all that surprising. Safe to say I should have phrased my question a little differently.

[EvilPie]

No that's a fair point. I accept that.

It was a more a theoretical question that should a company seemingly making decent "EBITDA" seek to avoid paying corporation tax wherever possible. But I admit I phrased it pretty badly.

The article seems to indicate that they have significant brought forward losses, so in my opinion it is justified that we don't tax companies until they have managed to break even.  They have indulged in nothing more than standard corporation tax compliance in rolling those losses forwards.

As I said there are corporates out there creating intricate offshore networks to get one over the taxman.  These guys aren't doing that (which is why I still think Private Eye are writing it to poke fun at some of the guff that has been in the press the last few years).

Yeah I think it's safe to say I used a bad example there. Looking at previous years they made a loss for most of them so not paying tax for seven years is not all that surprising. Safe to say I should have phrased my question a little differently.

Tikay will be happy. You've helped to generate a few posts.

[AlunB]

I think you missed the point of my question.

I didn't ask if it was legal or even ethical. I said do you think it's OK. You could have saved a bit of time by just saying yes.

It was a political question in a political thread. I wasn't asking for finance 101, as well intentioned as it was

Unfortunately to someone who knows nothing about Company tax rules it's the only way to provide an answer.

I know a tiny bit about the rules so I know that it's possible to manipulate how much tax you pay year on year but ultimately you end up paying it one way or another at some point. The better your accountant is the better your chances of minimising the total amount of tax you pay when it finally leaves your pocket.

As long as you don't break the rules then it's absolutely fine whichever way you choose to pay it. It's not your fault that you pay less tax if you pay it one way rather than the other.

For what it's worth it looks like the Company in question is paying quite a lot of tax compared to many others who make similar profits. At the level of income they're talking about Mr Osborne will be paying over 50% in total taxation but the Company pays none because of his huge salary. If he just received dividends you'd see that his salary was nothing, the Company paid £200k+ in corporation tax but overall the Treasury would receive about 7% less.

Plug some figures in here to see the difference if you're interested: http://www.uktaxcalculators.co.uk/dividend-vs-salary.php

I ran my own (very small) business for a couple of years so I know the whole dividend/salary thing very well. I also know that, for example, small businesses can often vary wildly in how much they attempt to play the system. It's normally down to the accountant, but it can also be a matter of personal ethics/politics/whatever.

I've also spent a decent chunk of my professional life reading various big and small company's financial reports as a journalist covering the online gambling industry, not that I would claim to understand half of what's in them. But it has shown me how much variation there can be in approach.