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Umunna calls on companies to reveal tax bills

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18th Jun 2012
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Shadow business secretary Chuka Umunna has called for businesses to publish their tax bills under a radical shake up of accounting rules.

Umunna said the measure was needed as the behaviour of a few major corporations was damaging the reputation of businesses and the relationship between corporate Britain and the rest of society.

As reported in The Telegraph, the MP for Streatham said: “The perception of UK companies has become characterised by the more extreme examples which is grossly unfair on the overwhelming majority of businesses in this country who are making a huge contribution to the exchequer.”

“To put it in context...in the tax year 2010/11, business paid £163bn in tax [in Britain]. That is the equivalent to the defence, education and transport budgets for this financial year.”

Umunna encouraged shadow chancellor Ed Balls to declare annually how much the public purse receives from British business as a whole, but stopped short of calling for employers' NICs, business rate and fuel taxes.

His comments follow a number a shareholder revolts over executive pay and just days after UK Uncut was granted permission to challenge HMRC in the High Court over a “sweetheart” deal with Goldman Sachs.

It also emerged last week that Vodafone paid no corporation tax in the UK last year despite its UK operation taking £1.3bn in earnings before tax and interest.

In spite of this, just last week the National Audit Office concluded that five corporate tax dispute settlements with HMRC were “all reasonable” and produced a positive outcome for the Exchequer.

Tim Worstall, a senior fellow at the Adam Smith Institute in London, followed up on Umunna's comments with an article in the same newspaper, saying “He's [Umunna] so far off base in his most recent pronouncement that it's embarrassing,” adding that corporations do not pay tax.

“There are two entirely separate problems here: Umunna being wrong in detail and wrong in theory as well. In detail, he's produced the most appalling mishmash of a number in that £163 billion,” he said.

Other reactions came from Jonathan Russell, partner at ReesRussell, who said: “The problem is how do you define a UK company in this global age? Many of the significant UK companies earn significant amounts of their income overseas and often pay taxes in other jurisdictions.”

“Yes, we have some extreme examples of tax avoidance, but in truth some may congratulate those companies for excellent management while other see it as morally flawed.”

Replies (8)

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By ShirleyM
19th Jun 2012 09:14

Why do we bother?

Honesty and openness seem to be non-existent these days. It pays pretty well to be corrupt and selfish as honesty, integrity and morality costs money!

These large companies are happy for others to pick up the bill to keep their companies profitable, in the form of road infrastructures, good health for their workers, education, defence, etc.

How many companies are now declaring they pay high taxes, but include VAT, PAYE taxes, and NI in those figures, and in reality are paying only 1% (or less) in Corporation tax?

Anyone who thinks lower corporation tax will result in the workers getting higher wages are naive, or they think they are clever and can sell this fairytale to Joe Public. The management and shareholders will always get the lions share, especially where high unemployment exists and people are desperate for jobs.

I see it in my practice all the time, where self employed people are being squeezed but the contractors are laughing all the way to the bank. Why pay a decent wage when they know good workers will work for next to nothing .... they have no other choice these days!

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By johnjenkins
19th Jun 2012 10:12

I'm not so sure that

publishing these sort of figures without some sort of background would be advisable. I have a couple of clients who have paid very little corporation tax over the last 5 years for one reason and one reason only. They have invested (not offshore) in the growing business and are now able to compete with larger companies. They have invested in the workforce by spending on training. I'm sure that many other companies are in the same position. Which makes me think that this article has to be more about electioneering.

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By ShirleyM
19th Jun 2012 11:00

@johnjenkins

I am not arguing that low tax bills, and tax avoidance can be perfectly legal.

I object to the spin where large public companies are trying to deceive the public (and their shareholders) into believing they contribute significant taxes towards the running of the country.

This could easily be avoided by making them openly declare Corporation tax, rather than including 'taxes' collected by them and handed over!

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By david5541
19th Jun 2012 12:30

adding all tax together!

i gues all mps think about is PAYE and VAT and excise duties!

 

the question is

Is paye a company/business tax or an employee tax?

add to that the administrative cost to businesses large and small(far higher proprtionally for small business!) of administering paye and vat and you can see

a)why civil servants are opting to go freelance!

b)why an MP fails to look at the real perspective where any global businesses now are "outsourcing/offshoring" to all those indian call centres!

(never mind the taiwanese/thai/chinese/cambodian producer/manufacturers who take PAYE away from the UK to some forgotten third world country/ which earn a nice healthy trade surplus from UK componies offshoring.) and devalue sterling

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By johnjenkins
19th Jun 2012 12:36

@ShirleyM

If a large company employs loads of people and pays large wages, surely that does contribute to the tax coffers and keeping people off benefits. Really the corporation tax side of it is indirect. There is a lot of deception these days from many sources, to pick out one particular wouldn't really benefit anyone. What's really important and will affect all of us big time is the Eurozone, the deception that is going on there is incredible.

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By pauljohnston
20th Jun 2012 11:24

Corporation Tax

is a cost of doing business and being profitable.  Perhaps the way forward is nil Corp Tax but that all divs salary etc are taxed in the hands of the recipients.

That would mean that taxes would be collected and doing business overseas would have the same level playing field as the uk.  For those who invest in the business there would be no tax drag.

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By lynamn
20th Jun 2012 12:14

Will he do the same?

How about MPs setting an example?  Publish how much in pay and expenses they receive, and the increase in the value of their pension entitlement, at the cost of the tax payer - as a single figure - and the amount of tax that they pay on that. 

I'm sure everyone will understand the perfectly reasonable explanations that could be offered as to why their overall tax rate on that is ostensibly so much lower than that of net contributors to the exchequer.

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By asking
20th Jun 2012 16:16

publish the tax
Print the accounts off............

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