Are tax activists misguided ?

Rather interesting interview on today's BBC You and Yours. One of the experts pointed out that aside from coporation tax companies operating in UK pay VAT and employ people which involves payroll tax and creates jobs that spend and generate more VAT.

Much as I am often incensed by callers to this programme I don't bother ringing in as it is lunch time and my butties take precedence - much more important than counter arguing to "disgusted of Tunbridge Wells" . However, it is the case that these companies operate legally and to aks them to pay more tax is like asking anybody if they fancy paying above the rate that is legally set, in a purely voluntary capacity. Bonkers isn't it ?

You can bet your bottom dollar that every man, woman and child in green and pleasant land would take advantage of a favourable aspect of the tax code if they had the chance. How many of those self righteous activists bought CDs cheaply from a CI based company avoiding VAT ?  

It is the politicians who need lobbying not the companies. The law may possibly be broken and that is an entirely different matter.

The BBC only slips it in a side comment that the schemes are legal - much like the rest of their biased left wing reporting.

And let me finish with asking how many schemes are the Beeb and their presenters who front these investigative programmes using to mitigate their tax bill ?

Comments
Old Greying Accountant's picture

No ...    1 thanks

Old Greying Acc... | | Permalink

... on many points -

Companies do not "pay" VAT, they collect it from the consumer on behalf of the government!

Increasingly such companies either employ migrant workers so the money gets spent at their "home" not the UK, or outsource abroad and have a very minimal amount of staff in the UK, many on NMW and paying very little tax or NI.

Meanwhile the dwindling minority of Uk resident tax payers then have to pay an increasing amount of tax to pay the benfits of the indiginous benefit claimmants, much of which is paid to non-resident Landlords so again is lost to the economy!

Yours faithfullly

Disgusted of Bigotly

:o)

I do agree wholeheartedly that the tax system is bust and not fit for purpose in a modern global economy!

ShirleyM's picture

Legal?    1 thanks

ShirleyM | | Permalink

Many of the artificial schemes to shift profits to a more favourable domain may be 'legal', but only because tax law favours the multi-nationals.

Unless this is stopped, it will spell the demise of companies based solely in the UK, as it is no longer a level playing field, and the citizens of the UK will lose out because the profits are not used to benefit the citizens of the UK, except for those on the payroll.

I know the old argument that they provide employment, but remember that small businesses in the UK employ far more people than all the multi-nationals put together, but the small business is suffering the greater tax burden.

Tax law needs a radical change.

Flying Scotsman's picture

Tax

Flying Scotsman | | Permalink

Well,of course they only collect it but if they weren't flogging anything there would be nowt to collect and remit to the Treasury

I agree that foreign benefit claimants taking the mick needs serious looking at or is that part of their "right" . If they want to run away from a nasty 'orrible regime hosue them somewhere cheap like up North or preferably the North East 

Flying Scotsman's picture

Tax rate

Flying Scotsman | | Permalink

Would a simple 15% across the board work ? No deductions for "royalties" to connected companies etc etc . As far as deductions are concerned how about a white lsit - either you match it or it is not claimable.

I think that HMRC should run a shadow test for such radical changes against a number of large and small taxpaying businesses and compare results. then we would know , wouldn't we ? 

An end to the nonsense of when is cake a biscuit and all that . It makes for entertaining tax classes but....

How about  abolishing personal income tax (and allowances )except for consumption taxes such as VAT. In order to make it fair each person over 18 gets a refund each year equal to the current personal allowance.

If you could declare independence how would you build your tax code ?

ShirleyM's picture

Why?

ShirleyM | | Permalink

Flying Scotsman wrote:

I agree that foreign benefit claimants taking the mick needs serious looking at or is that part of their "right" . If they want to run away from a nasty 'orrible regime hosue them somewhere cheap like up North or preferably the North East 

Thanks a bunch :(

 

Chris Smail's picture

Yes

Chris Smail | | Permalink

Those free to offer quotes on mid day tax programmes often seem to me to be rather loosely connected to reality.

But then, so do many commentators on accounting web!

ShirleyM's picture

VAT

ShirleyM | | Permalink

Flying Scotsman wrote:

Well,of course they only collect it but if they weren't flogging anything there would be nowt to collect and remit to the Treasury

Flogging to who? The UK citizens who buy their goods/services and so pay the VAT that these multi-national companies claim to 'pay'?? The only 'tax' these companies are paying is employers NI and some will wriggle out of that by employing freelancers.

They treat the UK like a cash-cow. They make profits from the citizens of our country but they destroy wholly UK companies in the process, as they cannot compete with the multi-nationals. More & more large companies will jump on the bandwagon in order to be competitive, and the small businesses (that can't afford these sidesteps) will pick up the tab.

Flying Scotsman's picture

Commentators and reality

Flying Scotsman | | Permalink

I would like to think that present company is excluded !

One person's reality is another person's fantasy . The reality of the rich man is the pipe dream of the poor man.

I think that the bloke on the radio presented a perspective that the populist press fail to grasp or are unwilling to present on a practical level.

 

ShirleyM's picture

Politics of envy ... again??????

ShirleyM | | Permalink

Flying Scotsman wrote:

One person's reality is another person's fantasy . The reality of the rich man is the pipe dream of the poor man.

It really bugs me when people trot out the old 'politics of envy' reasoning.

Would I like to be rich, selfish, greedy, put myself and my riches first, and to hell with the rest of the country .... no way!

Would I like to be rich and powerful ... maybe ... it would depend on the sacrifices I would have to make. But not because I am envious, (Ferraris, flash parties, and mansions, hold no appeal to me), but because of all the good I could do, and the help I could give, with that wealth & power.

Flying Scotsman's picture

Envy

Flying Scotsman | | Permalink

I was not intending to refer to envy politics, rather to request that the situation is adequately explained in a way that everybody understands the issues. Perhaps we should term it "politics of reality"

Most people struggle to understand financial concepts beyond their everyday experience and even then many struggle to get a solid grasp. When they are fed good headline copy that panderx to the visceral instinct of the reader who can only dream of the riches dangled in front of them by the media , the debate loses serious content and veer towards that of the mob, who hitherto were more or less satisfied with their financial position or aspirations

Envy...or just reality...

justsotax | | Permalink

I am not sure people are envious of the starbuck riches....more envious that there effective tax rate is less than that of their employees earning 10k a year.

 

You don't have to be financially astute to find it bizarre that an operation that has continued to open stores across the UK, has made a loss 14 out of the last 15 years...but somehow continues to open stores....rocket it science it ain't!  Of course it is more complicated than that....but bottom line is the SB brand is making money....and indeed based upon turnover in the UK....it just chooses not to pay tax on this.  Nowt wrong with that....but tell it as it is...

Old Greying Accountant's picture

Legal - probably    1 thanks

Old Greying Acc... | | Permalink

Short termist and short sighted - certainly.

The phrase killing the goose that lays the golden eggs comes to mind.

The ultimate end is UK becomes third world poverty sticken country with no market for Starbucks and the like.

Be sensible, pay a reasonable amount of tax here for a long term customer base!

Flying Scotsman's picture

UK becoming 3rd world

Flying Scotsman | | Permalink

It's not such a flight of fancy to imagine UK being 3rd world. Empires come and empires go and ours is long gone. Give it enough time and many parts f the 3rd world will catch up and overtake us. Probably another 2 or 3 generations at the most.

The current cheap labour nations will become expensive and the current 3rd world will catch up to do China's work now once they have moved on. So where would that leave GB ? Certainly without the "G"

Old Greying Accountant's picture

I think ...

Old Greying Acc... | | Permalink

... unless big business skews things, eventually everything will level out globally, may take a bounce or two, may be then humankind can move out of puberty into adolescence!

Flying Scotsman's picture

Levelling out

Flying Scotsman | | Permalink

I suspect that it isn't adolescence that beckons, rather retirement....at least for the developed economies.

We will probably see the equivalent of BRICS that denotes the up and coming , to describe those in decline

Perhaps  WHERE - Western Hemisphere Economies Receding to Extinction 

Old Greying Accountant's picture

I was meaning ...

Old Greying Acc... | | Permalink

... civilization generally, rather than economies - if/when economies even out, we can may be start moving forward as a race, rather than the constant bickering over resources which are actually abundant enough for all, but are selfishly distributed.

In an ideal world business will become extinct full stop and we can all go and do something useful! 

Flying Scotsman's picture

Something useful

Flying Scotsman | | Permalink

I think you refer to  a place called Utopia

 

Old Greying Accountant's picture

Indeed ...

Old Greying Acc... | | Permalink

... I keep looking for tickets but can't find them at any travel agent!

Flying Scotsman's picture

Utopia

Flying Scotsman | | Permalink

They are not approved by ABTA. But I do believe that it is offered by left leaning political parties , misguided tax activists  and trades unionists.

My preferred method to get to Utopia is to make your own itinerary.

Old Greying Accountant's picture

OK ...

Old Greying Acc... | | Permalink

... what about Ray Davies fans?

http://www.youtube.com/watch?v=6fW0gWSchFY 

 

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I've been blogging on my website www.formationsdirect.com for some time with my non-PC view of the world of economics,business and other stuff. If you like to read the views of somebody who doesn't "toe the party line" you've come to the right place. Government cock-ups, financial turmoil , business scandals and people's behaviour - I've got something to say about it , whether you like it or not.