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Google, Facebook, Starbucks etc

Google, Facebook, Starbucks etc

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Beware Awful/Jokey Clients 

When I give a few clients their year end accounts showing how much Corporation tax is due, I normally get the following reply 

"Can't we do something about this amount? I'm sure Google, Facebook etc don't pay that much"

I normally jokingly reply (depending on client) "Why don't you hire Google, Facebook etc accountant then?"

Nothing annoys me more than what is going on with Google at the moment because it makes the small accountancy practice appear bad to their small limited company clients as to why we can't lower their corporation tax bill for them. 

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Portia profile image
By Portia Nina Levin
27th Jan 2016 13:18

What you mean because your clients are based in the UK?

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By Pelican
27th Jan 2016 13:20

 Most Clients don't see it

 Most Clients don't see it like that. 

 

They just Hear/Read the headlines that these big corporation companies are not paying the amount of tax they should be. 

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By carlh
27th Jan 2016 13:36

required

Pelican wrote:

 Most Clients don't see it like that. 

 

They just Hear/Read the headlines that these big corporation companies are paying the amount of tax they ARE REQUIRED BY LAW TO PAY.

fixed it for you.

quit whining those companies employ 100,000s of people who otherwise would be sucking on the govenments teets[***].

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RLI
By lionofludesch
28th Jan 2016 17:06

Accountants Fees

Pelican wrote:

 Most Clients don't see it like that. 

 

They just Hear/Read the headlines that these big corporation companies are not paying the amount of tax they should be. 

Ask them if they want Facebook/Starbucks/Google's accountancy fees as well.

That'll eliminate their tax bill without any jiggery-pokery.

Maybe that's how Facebook/Starbucks/Google do it ..........................

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Portia profile image
By Portia Nina Levin
27th Jan 2016 13:24

Yes. But you encouraged their ignorance with your choke

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By cheekychappy
27th Jan 2016 14:03

CarlH, Google generates revenues attributable to the UK of $5.6bn whilst employing approx. 5000 employees in the UK. They have a worldwide head count of approx. 55,000.

 

As I mentioned on the 9am lowdown, if I was a Google shareholder I would be miffed that they have volunteered to pay "tax" in the UK that isn't legally due.

I think political pressure to collect tax revenues should not overrule the law. A very dangerous road to go down.

 

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By carlh
27th Jan 2016 15:06

I may have

over egged the employee numbers but those 3 companies it would be a lot,

and for once I am in complete agreement with you cheeky.

"I think political pressure to collect tax revenues should not overrule the law. A very dangerous road to go down".   and yet it has started to happen. 

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Stepurhan
By stepurhan
27th Jan 2016 15:38

Rephrasing

I would phrase it differently. The way you've said it almost makes it sound like it could be done for them, but you aren't capable of doing it. Even if you are saying it jokingly, you risk giving the wrong impression.

Whilst not saying Facebook et al are doing anything illegal I think the number of people they employ is irrelevant to the argument. Effectively you are saying that such companies should be able to blackmail the government (if you change the rules to make us pay more tax, we'll take our jobs elsewhere). That would be as wrong as companies being forced to pay amounts that aren't legally due.

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Portia profile image
By Portia Nina Levin
27th Jan 2016 15:55

So, how many people on AWeb have clients that:

sell goods and services to persons situated outside the UK, andonly pay UK tax on their profits?

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By Martin B
28th Jan 2016 08:52

George and his low quality team

George Osborn and his team have managed to collect £120m - which they say is 3%. The french team has collected three times as much around 15%. Even the Italians are going for a big share.

Just goes to show how substandard the UK tax negeotatiors are, when the lion share of Google activities are in UK.  Arthur Daley and Del boy would have done a bettre deal for the UK!

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My photo
By Matrix
27th Jan 2016 19:30

Your reply should be that you are using applicable UK tax law to minimise their UK tax liabilities and, if their fact pattern was the same as those big companies, then the UK tax implications would be the same.

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Stepurhan
By stepurhan
28th Jan 2016 08:01

New initiative

It's alright. HMRC have come up with a new initiative to deal with these companies.

http://www.thepoke.co.uk/2016/01/27/hmrc-launch-honesty-box-let-multinat...

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By AndyC555
28th Jan 2016 08:45

Worth remembering....

As the howls of anger grow ever louder in the media and among MPs that Facebook, Google and Amazon (among others) are definitely getting away with something and definitely guilty of something and need to be punished, it's worth remembering that back in 17th century Salem there were howls of anger as it was PROVED in court that certain people were witches and they were put the death.

Most of the media and most MPs seem to have as firm a grasp of tax law as the prosecutors in Salem did of witchcraft.

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Stepurhan
By stepurhan
28th Jan 2016 09:32

Not really comparable

The UK turnover of these companies is a matter of public record. The overall profits they have announced are a matter of public record. The apparent disparity between the profits declared in the UK as a percentage of turnover and their overall profits as a percentage of turnover are a matter of fact. It is not unreasonable for people to get upset about that sort of thing, even if the arrangements are perfectly legal.

More to the point, unless they can actually be proven to have broken the law in an actual court (where actual evidence will need to be presented), nothing is going to happen to those companies. The worse thing that is going to happen to them is that their PR is going to suffer, and that's hardly going to make a big impact. How many people have actually stopped using these companies because of their tax planning? To compare a minor PR issue to women being burned alive because of fabricated evidence is in very poor taste.

You might as well say "You know who else thought companies should pay more tax? Hitler!" for all the analogy brings to the debate.

 

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By cheekychappy
28th Jan 2016 10:02

I was outraged

stepurhan wrote:

How many people have actually stopped using these companies because of their tax planning?

 

 

So I Googled "alternative search engine". But Google was the top result.

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Hallerud at Easter
By DJKL
28th Jan 2016 11:21

Disproportionate

[quote=stepurhan]

 

 To compare a minor PR issue to women being burned alive because of fabricated evidence is in very poor taste.

[/quote

 

But surely to rail against its use as a metaphor is itself overreaction?

I am not aware of such anger when Arthur Miller used the Salem trials in The Crucible to highlight McCarthyism, the fact is that in Western popular culture using Salem as a metaphor for over exuberant vilification is common, hence surely the commonly used "witch hunt" to denote a pursuit of a person/idea etc ,out of proportion to the facts.

Whatever the rights and wrongs of the tax paid by Google and others the media assault has been ill informed in part and therefore a parallel with the accusations in Salem is, in my opinion,  apt; hyperbole is a valid tool of criticism; or are we now in the realms of censoring literary expression and metaphors must be far tighter and  more apt  to that which they depict before being deployed? If thought and expression are to be fettered by such considerations one might refer to such a society as Orwellian, but perhaps drawing such a parallel might in itself be disproportionate.  

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By Tom Herbert
28th Jan 2016 10:13

At the risk of bringing down the wrath of the Google gods on our heads, duckduckgo is an alternative search engine that doesn't track your every move (although it is a bit patchy)

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By Tim Vane
28th Jan 2016 11:50

Patchy

TomHerbert wrote:

At the risk of bringing down the wrath of the Google gods on our heads, duckduckgo is an alternative search engine that doesn't track your every move (although it is a bit patchy)

I actually like the fact that when I search on google it finds stuff that's relevant to me rather than just any old guff. I've also got nothing to hide. So the more it can use what it knows about me to make my life easier, the happier I am. I think it's rather clever.

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By kingje
30th Jan 2016 18:48

qwant

www.qwant.com doesn't track users either and I've found it less patchy than duckduckgo. I prefer they qwant search result layout too

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By Duggimon
28th Jan 2016 10:32

The media are quite focused on how bad a job HMRC and Mr Osborne have done in securing such a paltry payout but unless my understanding of the situation is at fault they don't actually owe as much as they've paid.

If public outcry against these companies is at such a fever pitch then why aren't the media focusing on the need to change tax laws rather than browbeating the authorities on how small an amount of tax they've collected that was never even owed.

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By paulwakefield1
28th Jan 2016 10:38

Rare for Godwin's law to

strike on the first page of a thread! :-)

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Stepurhan
By stepurhan
28th Jan 2016 11:09

Good old Godwin

paulwakefield1 wrote:

strike on the first page of a thread! :-)

I'm not sure deliberately invoking it counts.

But do you know who else deliberately invoked Godwin's Law? .....

As an aside, the new initiative I posted earlier rather proved my point about it only being a minor PR issue. Somebody had posted it on Facebook.

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By bendybod
28th Jan 2016 10:41

Yes, I frequently get these comments.  My response is that what they are doing is perfectly legal under UK tax law.  If they were to operate in another country then they would pay less tax in that country than they do in the UK.

The big corporations 'volunteering' to pay 'tax' is not helpful at all because it ingrains the perception that they were doing something wrong and that they have still only paid back a fraction of what they 'owe' in coming to an arrangement.

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Stepurhan
By stepurhan
28th Jan 2016 11:40

Personal opinion

I thought it was an inappropriate metaphor. Others may differ in that view. But I haven't called for the comment to be removed, so I am hardly fettering anyone's freedom of expression. The fact that you can view both the original comment and my response and judge accordingly is evidence enough of that surely.

But, to follow up on your Arthur Miller reference, the victims of McCarthyism also suffered extreme consequences. Granted they weren't put to death, but many lives were effectively destroyed (largely through ending their careers) in the process.

It is that suggestion that these big companies are suffering dire consequences that I think makes the analogy inappropriate. Are any of these big companies actually going to suffer noticeably from the bluster in the press? As I said already, I very much doubt it. You may disagree with that assessment and both sides are available for you to make that call. Or are you saying that my opinion that the parallel is inappropriate should be suppressed?

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Portia profile image
By Portia Nina Levin
28th Jan 2016 11:43

NO!!!!

stepurhan wrote:

I thought it was an inappropriate metaphor...

It was not a frigging metaphor!

You were right the first time around, when you called it an analogy.

And it is an appropriate analogy, because what we have going on in the press and Parliament is nothing short of an ill-informed witch hunt.

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Hallerud at Easter
By DJKL
28th Jan 2016 12:12

Definitions are so restrictive

Portia Nina Levin wrote:

stepurhan wrote:

I thought it was an inappropriate metaphor...

It was not a frigging metaphor!

You were right the first time around, when you called it an analogy.

And it is an appropriate analogy, because what we have going on in the press and Parliament is nothing short of an ill-informed witch hunt.

A metaphor is surely merely a type of analogy, distinguishing the two often makes little sense. Happy to accept imagery as a catch all if you feel it is more apt (I tended to blag my way through my essays being vague), or maybe perhaps extended metaphor- nice loose thing a metaphor, shame similes were never as obliging.

The catch with being too definite as to which label bites is one ends up "dancing on the head of a pin" discussing the point (wish to label that) , one of the less appealing aspects of literary criticism and one of the reasons why I turned from the path of light to that of darkness, accountancy- but money might have been a bigger motivator than my distaste for reading Northrup Frye et al.

However disappointed that the original attempt at irony was ignored.

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Stepurhan
By stepurhan
28th Jan 2016 13:02

Overreaction

DJKL wrote:
But surely to rail against its use as a metaphor is itself overreaction?

Portia Nina Levin wrote:
It was not a frigging metaphor!

You were right the first time around, when you called it an analogy.

Whilst my objection to the comparison may or may not have been an overreaction, I'm pretty sure this response to the use of the word "metaphor" is. 

Quote:
And it is an appropriate analogy, because what we have going on in the press and Parliament is nothing short of an ill-informed witch hunt.

I agree that, in its general colloquial usage, the coverage is a witch hunt. It is the further step of directly equating the companies in question to the actual victims at Salem that I think is going too far. Reasons already cited.

Like the difference between analogy and metaphor, there is a clear distinction between a colloquial witch hunt and people being tortured and killed for alleged possession of supernatural powers.

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By Ian McTernan CTA
28th Jan 2016 12:32

Amuses me

It amuses me that the rabid reporters always seem to grab figures out of the air and then apply a %age to them.

Last time I checked, UK CT was still based on PROFIT, not turnover.

Maybe someone could dumb that down enough for the journalists writing for the Mirror to understand...

And the Mirror seems to have found an 'industry expert' that is saying these firms failed to report 80% of their UK turnover in their UK accounts.

The blame lies firmly in Ireland's tax rules which allow companies based there an unfair tax advantage- hence why so many are now based there.

Instead of attacking HMRC, the public anger should be directed at the country that supports these structures- Ireland.

The companies themselves are doing nothing wrong, choosing best practice and minimising their taxes through the use of Ireland's tax laws.  They are acting in the best interests of their shareholders.  It's probably worth mentioning that every private employee in a funded pension scheme (sorry civil servants, your gold plated pensions win anyway) is indirectly benefitting from the company acting in the shareholders interest, as their share price is higher as a result of the tax savings they have made. Nothing is straightforward in taxation!

If you want things changed, international agreements will need to be drawn up and Ireland forced to change their rules (along with all other countries at the same time).  Which will take 10-15 years, minimum, if you could ever get everyone to agree to stop competing to attract these companies to their shores...

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Hallerud at Easter
By DJKL
28th Jan 2016 12:53

@Ian McTernan

The media reportage and approach is merely in line with the public's need to have everything presented to them is as simple a way as possible, I would not really blame the media, the public has the attention span of a gnat and needs a baddy, they have got bored with banks.

And I am afraid your 10-15 year approach will just not cut it with the must have it now society.

On the plus side it is not just our public, across the pond in the good old USA politics has been driven to the point where policy is now a real handicap and all you need to do is shout about building a wall or similar; always someone else to blame, Monday will be very interesting as a reflection of how the world is turning.

The Roman maxim of bread and circuses re the masses merely updated, feed them pap through the ether and ensure at all times there is someone else to blame, for the entertainment.

 

 

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Portia profile image
By Portia Nina Levin
28th Jan 2016 13:26

Now... I wonder where the colloquial term witch hunt was derived?

Remember, nobody expects the Spanish inquisition.

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Hallerud at Easter
By DJKL
28th Jan 2016 14:41

Comfy chairs- what all accountants need.

Portia Nina Levin wrote:

Now... I wonder where the colloquial term witch hunt was derived?

Remember, nobody expects the Spanish inquisition.

Now Torquemada would be a great user name on here and nobody would know his/her chief weapons.

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Stepurhan
By stepurhan
29th Jan 2016 11:55

Which one?

DJKL wrote:
Now Torquemada would be a great user name on here and nobody would know his/her chief weapons.
There appear to be quite a few. :-)

https://en.wikipedia.org/wiki/Torquemada

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Stepurhan
By stepurhan
29th Jan 2016 14:06

Literal and figurative

Portia Nina Levin wrote:
Now... I wonder where the colloquial term witch hunt was derived?
Now you're confusing literal and figurative. My objection is to the literal comparison presented, not the figurative one that the colloquial term implies.

If you say someone has bought a pig in a poke, you likely don't mean they have received a bag of cat meat when they were expecting pork. If you say someone is a fish out of water, you likely don't mean they are an aquatic life-form on land.

On a similar basis, Google et al may be subject to a colloquial witch-hunt, they are not facing consequences anything like the unfortunate women of Salem. Accordingly I think directly comparing them to those women is over-stating the case by quite some way.

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By petersaxton
28th Jan 2016 17:20

Footballers

HMRC have limited the amount of image rights that footballers include in their contracts so why can't they put some sensible limit on royalties, etc. which are paid to related parties?

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By The Grammar Police
28th Jan 2016 17:44

You're stepping on my toes..........

It's not often I agree with PNL, but.....

You were right the first time around, when you called it an analogy.

And it is an appropriate analogy, because what we have going on in the press and Parliament is nothing short of an ill-informed witch hunt.

And...

What really annoys me is the way newspapers equate turnover with profit, as if there's some sort of relationship between the two.

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By tax novice
28th Jan 2016 19:30

Your are right

Clients cant judge a frigging thing

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By machon
29th Jan 2016 11:30

Shareholder's interests

My pension funds probably invest in at least some of these companies, so I declare a vested interest in Google et al maximising their profits. But it occurs to me that dealing with negative PR by paying more tax could actually increase future profits through better PR. The £120million covers a number of years; the recurring cost will be much lower.

Bob.

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By The Minion
29th Jan 2016 13:06

have i missed something here?

I haven't really been keeping up to speed this last few months for various reasons, but...

 

If i set up a company which made shed loads of money so to avoid paying tax i previously created a new company that holds the trade mark etc and then charge original co a royalty of 90% of originalco turnover, why isn't that an artificial step a la Ramsey?

 

Do you think i should have a word with George and tell him about this? My commission rate would be 55% of the tax collected - payable to my cayman company, see you on the beach guys...:)

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7om
By Tom 7000
30th Jan 2016 12:26

One idea
Google is so good it should be exempt from tax like the queen. It is then encouraged to expand workforce so 90% of its employees are uk based.

Now add up the paye...

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By petersaxton
30th Jan 2016 12:56

Queen exempt from tax?

Tom 7000 wrote:
Google is so good it should be exempt from tax like the queen. It is then encouraged to expand workforce so 90% of its employees are uk based. Now add up the paye...

The Queen has paid tax (income tax and capital gains tax) since 1992!

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By Sherman Holter
30th Jan 2016 14:23

NEGOTIATE ! ! !

 

I love the word "negotiate" which has been used to describe the Google/HMRC deal.

 

My suggestion : Do away with all tax laws and have accountants negotiate with HMRC for clients.  Think how much more work for all of us that would be.

 

 

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By The Minion
30th Jan 2016 14:57

@sherman and @Tom

We used to have an ex inspector of taxes work for us who had worked at (the then) Inland Revenue. He always used to reminisce about having chats with the various taxpayers about how much tax they would agree between them should be paid for that year...

 

If Google has lots of UK based employees, doesn't that mean that those employees with no employer with a fixed UK establishment have to do their own payroll?

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