That Reuters report on tax paid by big companies
Posted by Christie Malry on December 27, 2012 at 1:10 pm
Reuters have this exclusive today:
Big companies in Britain now pay less tax than they did 12 years ago despite a big jump in profitability, a Reuters analysis of official data shows. Tax campaigners say the trend is the clearest signal yet that tax avoidance has blossomed under a more business-friendly strategy at the UK tax authority Her Majesty's Revenue and Customs
It's a story in which they analyse HMRC data but don't provide their workings, and their only "experts" are John Christensen and Prem Sikka.
I think we can safely file this under "bollocks".
@fcablog how surprising! After a recession, recovering companies have trading losses brought forward to utilise against profits... Shocking.
I spoke to the journo who did that report. And I pointed out that they're comparing profits as a share of GDP (which includes foreign profits made by UK domiciled corporations) with corporation tax paid to UK HMRC. Which doesn't include the deduction for foreign corporation tax paid on foreign profits made by UK domiciled corporations.
Given increased globalisation this is something of a problem.
They blathered about how they'd checked FTSE. At which point I pointed out that of the top 10 of FTSE, only one actually had any significant business in the UK at all. Very much my point. RTZ for example makes vast overseas profits and damn near nothing in the UK. UK corporation tax will therefore be minimal after deductions for foreign tax paid.
In return I got "crickets" from Reuters.
Let me consult Messrs Whillan & Hardman to bolster my ailing memory... oh, yes, I thought so: 12 years ago the headline CT rate was 30%, and now it's 24%. Might that have had any impact?
So: big companies pay less tax when the government lowers the tax rate. I'm shocked!