[Thing is, EBITDA, isn't a way of assessing how much tax a company should pay in a given year.]

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.

Thing is, EBITDA, isn't a way of assessing how much tax a company should pay in a given year. It is a methodology for comparing the performance of companies after stripping out the costs which can vary according to location (tax and interest costs) and history (depreciation and amortisation).

Lowering CT by investing in assets and thus being able to claim Capital Allowances is surely fine by all?
Lowering CT by reducing taxable profits through higher wages equally so?

Evading CT by dubious use of transfer pricing and shifting profits within a group is a very different thing.

I didn't say it was.

As to your three points.

Broadly, but it depends
Broadly, but it depends
Agreed.

You asked if a company seemingly making decent EBITDA should seek to avoid paying CT. Seems implicit that you were using the measure for that purpose.


btw, depends on what?

On if it's legitimate/fair usage of the system (the vast majority of cases) of if it's being abused.

And I've no idea how you got that from what I said, but let's not disappear down that semantic rabbit hole.

"Lowering CT by investing in assets and thus being able to claim Capital Allowances is surely fine by all?"

Not according to the japester who wrote that £93 billion corporate welfare report! 

Or that japester in number 11 downing street

http://www.theguardian.com/business/2013/may/29/energy-crackdown-government-end-tax-scheme

[Thing is, EBITDA, isn't a way of assessing how much tax a company should pay in a given year.]

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.

Thing is, EBITDA, isn't a way of assessing how much tax a company should pay in a given year. It is a methodology for comparing the performance of companies after stripping out the costs which can vary according to location (tax and interest costs) and history (depreciation and amortisation).

Lowering CT by investing in assets and thus being able to claim Capital Allowances is surely fine by all?
Lowering CT by reducing taxable profits through higher wages equally so?

Evading CT by dubious use of transfer pricing and shifting profits within a group is a very different thing.

I didn't say it was.

As to your three points.

Broadly, but it depends
Broadly, but it depends
Agreed.

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.

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.

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.

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.

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

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.

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?

I assume that's from Private Eye and is a tongue-in-cheek swipe at Gideon. I wouldn't get too upset. It's satire innit. Mind I had a quick look at the accounts and for a pretty straightforward business it does seem to be run in a very tax efficient way

As for the use of quote marks they are just used to differentiate terms directly quoting from the accounts from normal prose . Which is correct usage. I also expect they had an intended comic effect of making them look a bit dodgy.

Which of course is worth about $5m in today's terms as best I can work out.

Think the $1m is a bit of a red flag. As I've read elsewhere he was already president of his dad's real estate empire at that point, so it was more like his dad funded a subsidiary. Either way he inherited his dad's massive portfolio when he died.

"Bloomberg puts Trump's current net worth at $2.9 billion.

"The NJ has worked out that if Trump had just put his father's money in a mutual fund which tracked the S&P 500 and spent his 'career' finger painting, he'd have $8 billion"


#masterbusinessman

Surely not possible?  Not that I like the bloke, but wasn't his seed capital $1million in 1970, which would be about $7 million today.  Pretty sure the S&P hasn't outperformed by a factor of 1000!

The simplest version of the comparison seems to be that if Trump had taken his $40 million inheritance from his father in 1974, converted it into cash, and invested it in the S&P 500, reinvesting all dividends and spending no money along the way, he'd have about $2.3 billion or so today, depending on how you do the math. Bloomberg computes his actual net worth as $2.9 billion, so he's modestly outperformed the S&P over his career, again depending on how you do the math

http://www.bloombergview.com/articles/2015-09-03/should-donald-trump-have-indexed-

I am not a denier, but it has only broken the graph because the scale for the y axis has been set by somebody with a clear agenda. 

If you are told there was a 90% chance that there was a nasty murderer who likes to mutilate children waiting on the path to school; you wouldn't pack your daughter's bag and send her out on that same path because there was that small element of doubt about the whole thing.

I'm not sure I get what you mean by this. I get the first point, but not the second about the murderer.