The small business owner who appeared on the BBC show ‘The town that took on the taxman’ has told AccountingWEB that accountants of multinationals “should look at themselves in the mirror and ask, ‘Am I adding value to society or am I simply acquiescing to these big corporations?’”
BBC2 viewers saw Steve Lewis and the other small business owners from the Welsh town of Crickhowell replicating tax strategies used by multinational corporations as part of the campaign’s fair tax protest.
Seeing the tax techniques adopted by large corporations caused Lewis to question the philosophical role of the big corporation accountant, adding: “It’s not the function of the accountants to try and get the tax liability down to zero by looking at the 11,250 lines of tax code.”
The Crickhowell café owner has now set his sights on succeeding Lin Homer as the next HMRC chief executive as he attempts to crack down on multinational tax abuse. Lewis has started a change.org petition to garner support for his campaign to become “the people’s tax man”.
In under a week since the programme aired Lewis has gathered over 125,000 signatures. His plan is clear: “My focus is absolutely now on naming and shaming the biggest abusers and the accountancy tricks they are using to get the consumer to decide what is fair.”
One of Lewis’ suggestions is along similar lines to the catering trade’s five star hygiene rating. He said: “What if you had a tax one that showed five stars and this guy pays reasonable stars. This guy is a tax abuser, zero stars. Let the customer know how much you’ve paid, and then they’ll decide whether they want to come into your shop or not.”
Jolyon Maugham, the tax QC who advised the small business owners, said that the reaction to the programme has been “enormously positive”. He said: “Most people out there won’t have any idea what putting these arrangements in place looks like. What this story does is enable viewers to see that very often these arrangements don’t actually involve any profound change to the nature of the business being done.”
However, not everyone has been supportive of the fair tax campaign. Lewis has come against resistance from Lord Crickhowell. Lewis told AccountingWEB how the Tory peer came into Lewis’ restaurant and told him: “Whatever I did, I shouldn’t go after Osborne because he is a wonderful chap, who’s doing all he could about the tax regime.”
Paula Tallon, Gabelle’s managing partner, criticised the BBC2 programme’s “over simplified” representation of tax. “They look at a company turnover, and say ‘their tax is x% of their turnover’. This is misleading because tax is on profit,” she explained.
Tallon also said the tax avoidance strategy presented in the programme was “quite misleading as to what organisations are doing.
“The rules in the UK allow the large corporates to put these structures in place”, she said. “A lot of the differences are that the individuals would take the money out as loans and dividends – so they were bringing the money back into the UK.
“My concern is that to someone who knows very little about tax, it made it look like there were all these things people could do and they weren’t talking advantage of them, and they ought to. But what they proposed could fall foul with anti-avoidance”.
Lewis also initially shared this concern. “I believe in tax, I believe in paying my way.” he said. He pushed the BBC producers to change the name of the programme, which was originally called ‘The Town that went offshore’. “I am getting really uncomfortable with the notion that we are stating as a fact that the town can go offshore,”
Lewis recounted his conversation with the BBC. “I knew from the offset, you can’t take a town offshore. It is nonsense.”
But the main message Tallon got from the programme was to “support your local businesses”.
Commenting on the programme, an HMRC spokesperson said: "HMRC enforces the tax rules fairly across the board, irrespective of the size or structure of the business. The government is clear that big business must pay its fair share of tax, so new legislation has been introduced to prevent multinationals from diverting their UK profits from the UK tax system, and additional funding has been invested in HMRC to tackle abuse by multinationals.
“The UK has also played a leading role in a recent review by the OECD of how the international framework for taxing multinationals needs to be improved.
"We fairly and dispassionately enforce the law and as Jim Harra makes clear in the programme, if we receive a plan we will look at it in that light".
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.