The UK Politics and EU Referendum thread - merged

[DungBeetle]

I think the task is tricky.  Globalisation has given companies a huge advantage when it comes to the tax man in that they have an endless number of options in how to structure their business. 

It is a problem that can be solved but the Government needs

A) the will
B) the tax expertise
C) co-operation from other Governments as to how to get companies paying tax where they should.

The third one isn't that easy as effectively different countries are competing with one another to get as much of the Google tax slice in their country.

[Jon MW]

So it's not just Corbyn who can come out with the wrong wording. Cameron is getting it in the neck, not just from Corbyn's gang, but also the likes of Yvette Cooper and Chuka Umunna, for calling refugees a 'bunch of migrants'. Surely it was a slip, not a planned expression?

FWIW I think Cameron did this deliberately. Use a phrase the vast majority of the electorate aren't offended by but get Labour politicians wailing about it all over TV so reinforcing that Labour is fiercely pro-imigration.  Played a blinder imo.

On reflection, I'm inclined to agree with you. I worked in two government departments and every Parliamentary Question, just for ordinary Ministers, was treated like something sacred. Everything else would be dropped if there was a PQ about your area and an extraordinary amount of attention was given to the detail and wording of the answer. Hours of work would go into what might end up being a very short answer. In particular, every possible Supplementry Question was pre-emptied and answered, as they were the real killers, to avoid the Minister getting into difficulty in the House.

PMQs is different, but that was a prepared piece, though politically-written rather than by the Civil Service.

And an added bonus for Cameron was that it has distracted from the Google tax settlement which should be examined in detail by parliament in my opinion.

Yes this.

Someone explain this whole Google thing for me. I understand entirely why we give tax breaks to big companies that employ lots of Brits and I am for that generally (for a couple of % not the huge amounts here). Why the hell would any Government not want to force Google to pay more?

I don't get the 'it's just an old boys club' argument in this case, I refuse to believe any political party would not pursue a big cash cow like this. I suspect they in some other way benefit from Google paying fuck all on their tax of course, but how?

It doesn't really relate to tax breaks, you pay tax on the profit you make (more or less... I think). The problem is you can get different accountants to come up with completely different figures for how much your profit was.

Google brings in a team of accountants and they say we made x profit and owe y pounds
HMRC brings in their accountants and they say you made 10000x profit and owe 10000y pounds

So they argue about it for a while and come up with a figure somewhere in the middle - as far as I knew this has always been the case with large multinationals it's just had a lot more publicity recently and the discrepancy between turnover and alleged profit has got a lot higher.

And none of the political parties pursue the cash - pretty sure it's all done by HMRC civil servants (?)

[Doobs]

So it's not just Corbyn who can come out with the wrong wording. Cameron is getting it in the neck, not just from Corbyn's gang, but also the likes of Yvette Cooper and Chuka Umunna, for calling refugees a 'bunch of migrants'. Surely it was a slip, not a planned expression?

FWIW I think Cameron did this deliberately. Use a phrase the vast majority of the electorate aren't offended by but get Labour politicians wailing about it all over TV so reinforcing that Labour is fiercely pro-imigration.  Played a blinder imo.

On reflection, I'm inclined to agree with you. I worked in two government departments and every Parliamentary Question, just for ordinary Ministers, was treated like something sacred. Everything else would be dropped if there was a PQ about your area and an extraordinary amount of attention was given to the detail and wording of the answer. Hours of work would go into what might end up being a very short answer. In particular, every possible Supplementry Question was pre-emptied and answered, as they were the real killers, to avoid the Minister getting into difficulty in the House.

PMQs is different, but that was a prepared piece, though politically-written rather than by the Civil Service.

And an added bonus for Cameron was that it has distracted from the Google tax settlement which should be examined in detail by parliament in my opinion.

Yes this.

Someone explain this whole Google thing for me. I understand entirely why we give tax breaks to big companies that employ lots of Brits and I am for that generally (for a couple of % not the huge amounts here). Why the hell would any Government not want to force Google to pay more?

I don't get the 'it's just an old boys club' argument in this case, I refuse to believe any political party would not pursue a big cash cow like this. I suspect they in some other way benefit from Google paying fuck all on their tax of course, but how?

It doesn't really relate to tax breaks, you pay tax on the profit you make (more or less... I think). The problem is you can get different accountants to come up with completely different figures for how much your profit was.

Google brings in a team of accountants and they say we made x profit and owe y pounds
HMRC brings in their accountants and they say you made 10000x profit and owe 10000y pounds

So they argue about it for a while and come up with a figure somewhere in the middle - as far as I knew this has always been the case with large multinationals it's just had a lot more publicity recently and the discrepancy between turnover and alleged profit has got a lot higher.

And none of the political parties pursue the cash - pretty sure it's all done by HMRC civil servants (?)

Playing devil's advocate, even if we accept it as correct, where are the late payment penalties and interest charges?  How do they escape that given this supposedly relates to tax from 2005?  Which individuals are held to account for non payment of taxes for 10 years?  

[AndrewT]

I think the task is tricky.  Globalisation has given companies a huge advantage when it comes to the tax man in that they have an endless number of options in how to structure their business. 

It is a problem that can be solved but the Government needs

A) the will
B) the tax expertise
C) co-operation from other Governments as to how to get companies paying tax where they should.

The third one isn't that easy as effectively different countries are competing with one another to get as much of the Google tax slice in their country.

It's the third one that's the stumbling block.

The EU could, if it wanted to, try and standardise corporation tax rates across different countries but why on earth would countries like Ireland, Luxembourg and Netherlands do that - voluntarily giving up competitive advantage? So it's a non-starter.

Tax laws generally have still not caught up with companies making money by not actually selling a tangible thing that has a definite location.

[TightEnd]

HMRC "deals" are approved or not by the National Audit office, not sanctioned or otherwise by parliament

as is said, the tax laws deal with bricks and mortar and not the virtual world so well.

3% is obv a problem, but it took 6 years to get that. they pay 20% in the US where they have more physical activities i think i heard?

[PokerBroker]

Why have consecutive Govts. not made arrangements to change the tax laws.  I fail to understand how HMRC put their might behind going after small business owners and people out there who are genuinely trying to earn a decent income but let multinationals and large corporations away with murder.  

Tax matters are not my area of expertise but when something is so complicated the easiest thing to do is simplify it.   I was enraged last night at Question Time when that oath representing the Tory party tried, somewhat to justify this deal with google.  

I was also angry, at the debate around Syria, the Tory justification of we give more aid than other countries therefore we're doing our bit.  Utter garbage, keep giving money as we drop bombs, that seems like a recipe for success.  

[TightEnd]

Why have consecutive Govts. not made arrangements to change the tax laws.  I fail to understand how HMRC put their might behind going after small business owners and people out there who are genuinely trying to earn a decent income but let multinationals and large corporations away with murder. 

its not as simple as that

global tax experts can structure the company affairs so that they pay tax in whatever domicile suits them, and incorporate in tax havens too. its not as straightforward as a google having x factories here, y factories in France and z distribution centres in germany. they have none of those...

so if the UK reforms in isolation its of no use at all unless the R O W comes along too. Some places will never do that as offshore revenue is what their economies are built on

[MintTrav]

Transfer pricing used to be a big part of it, but I believe it has been addressed to some extent now. I worked for a big US pharma company years ago and some of the drugs sold in the UK were manufactured by their German company. The German company used to invoice their Swiss company at a low price and they would then invoice the UK company st a high price, so the profit was mainly recorded in the lowest Corp tax country and both the German and UK tax authorities dipped out. Initially the goods were shipped to Switzerland and then straight on but that soon changed to them being sent straight from Germany to the UK without even passing through Switzerland. I don't think you can do something as blatant as that now.

[RickBFA]

Interesting that Lord Lawson has said corporation tax has had its day.

His suggestion for a tax on sales makes perfect sense.

Would be much easier to enforce than the current tax regime which leaves HMRC in an almost impossible position if a multi national wants to work the international tax system.

[Jon MW]

Interesting that Lord Lawson has said corporation tax has had its day.

His suggestion for a tax on sales makes perfect sense.

Would be much easier to enforce than the current tax regime which leaves HMRC in an almost impossible position if a multi national wants to work the international tax system.

Some companies might make a 5% profit on each sale while others might make 1000% profit on each sale - how does it make sense for them to be taxed the same?

[RickBFA]

Interesting that Lord Lawson has said corporation tax has had its day.

His suggestion for a tax on sales makes perfect sense.

Would be much easier to enforce than the current tax regime which leaves HMRC in an almost impossible position if a multi national wants to work the international tax system.

Some companies might make a 5% profit on each sale while others might make 1000% profit on each sale - how does it make sense for them to be taxed the same?

No system is perfect but at least taxing sales gives us an element of control.

At the moment the current system seems so weighed in the favour of large organisations (and it will never change as it requires all countries to cooperate with change which will never happen) that we are getting screwed over.

Got to be a better way forward than the status quo.

[DungBeetle]

I think a sales tax would just be passed onto the customer so will just end up being the same as increasing VAT.

[RickBFA]

I think a sales tax would just be passed onto the customer so will just end up being the same as increasing VAT.

There must be a way of collecting a fair amount of tax from large corporations.

Feels currently like we are getting screwed over big time.

The current system ends up with the Government collecting tax from the easiest targets, which are individual tax payers earning reasonable money collecting through PAYE etc.

[DungBeetle]

I think a sales tax would just be passed onto the customer so will just end up being the same as increasing VAT.

There must be a way of collecting a fair amount of tax from large corporations.

Feels currently like we are getting screwed over big time.

The current system ends up with the Government collecting tax from the easiest targets, which are individual tax payers earning reasonable money collecting through PAYE etc.

We are being shafted from a corporation tax perspective. But the flip side is the fact that Starbucks (for example) generates a huge amount of national insurance, business rates and PAYE from it's activities.  I agree we need to take steps on the corporation tax front but we need to be careful that we still make the UK attractive for business.  It's a 2 way street.

[Doobs]

I think a sales tax would just be passed onto the customer so will just end up being the same as increasing VAT.

There must be a way of collecting a fair amount of tax from large corporations.

Feels currently like we are getting screwed over big time.

The current system ends up with the Government collecting tax from the easiest targets, which are individual tax payers earning reasonable money collecting through PAYE etc.

We are being shafted from a corporation tax perspective. But the flip side is the fact that Starbucks (for example) generates a huge amount of national insurance, business rates and PAYE from it's activities.  I agree we need to take steps on the corporation tax front but we need to be careful that we still make the UK attractive for business.  It's a 2 way street.

I think Starbucks is a bad example, as any alternative coffee shop will generate similar amounts of PAYE/NI etc, but will likely pay more corporation tax and will almost certainly serve better coffee!