So there's this idea floating around out there to give companies that pay their fair share of tax in the UK a FairTax emblem:

Company FairTax emblem

Similar to the 'FairTrade' emblem, companies that pay their fair due in tax for doing business in the UK would be awarded the emblem. Many smaller UK companies would get this by default when they don't do any (or a very small percentage) of overseas business.

The goal is to stop global multi national corporations doing business in the UK and then funnelling their business through foreign subsidary companies therefore paying minimal tax in the UK. Examples include Apple, Amazon etc. The Amazon example is of only paying £124 million in tax on £7 billion of revenue from the UK.

If you want to do business in the UK you must support the UK too.

Now there's a rather big problem with this. And that's that they don't define who is going to be responsible for issuing the FairTax emblem. If it's going to be the usual bunch of rabid crusties and Ritchies, then it's fair to say that everyone will soundly ignore it. Just as I suspect Amazon can barely feel the impact of recent criticism of its tax structure. Lots of people might mutter about it, but they'll all happily shop there. You can judge how strongly Ritchie feels about Amazon by the fact that his book is still available for sale there.

A crusty-led scheme would have to be mandatory. But they have grander plans for FairTax. They would like all multinational companies to be required to have it (eg see Mike Saunt's comment timestamped Apr 23, 2012 5:32 pm). Now, in order for this mandatory version to work, it would need to have a government department or quango behind it to distinguish between those who pay the fair amount of tax and those that do not.

And there's the problem. We already have a government department for distinguishing between those who pay the fair amount of tax and those that do not. It's called HMRC. And HMRC has a very detailed and complex set of rules that it must follow for determining whether a company's tax payment is fair. Those rules are laid down by Parliament and frequently need considerable professional judgement on how they should be applied, both by the taxpayer and by HMRC. Some of the more difficult disputes end up in court to be resolved.

You just can't wave away all this complexity by renaming it as "FairTax". No matter how many signatures your petition gets (32 at the time of writing).

Filed under: Taxation with tags 38 degrees, amazon, complexity, fairtax, hmrc, idiots, mike saunt, parliament, richard murphy
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Ritchie defends his decision to besmirch the reputation of a dead man, David Cameron's late father:

[David Cameron is] prime minister precisely because of inherited wealth and position and precisely because his father’s tax haven activities paid for Cameron to go to Eton, to be in the Bullingdon and to have the connections that sent him on the way to Number 10.

If Cameron did not seek to perpetuate inherited privilege and wealth we could ignore his father’s way of earning a living, but he does argue that the son is the heir of his father – in which case his father’s means of buying him his privilege are entirely fair game for political debate and those who say otherwise ignore the reality of the Tory position.

Ritchie has been more than ordinarily erratic recently. You'll remember last year, he fell out with the lovely Frances Coppola, accusing her of being an apologist for the banks, even though most of her blog material is in fact highly critical of banks. And yesterday he launched an extraordinary attack on Mark Lee. I've met Mark and, frankly, Ritchie's attacks on him are completely unfair. His attack on Cameron's father is just another example of a rather depressing trend - to criticise other people when he finds himself unable to respond to their arguments.

Now, when it comes to personal attacks, Ritchie has such a thin skin you can practically see all his internal organs. Yet he's apparently quite happy to dish it out, while continuing to bleat that people are using ad hominem arguments against him! 

In the case of Cameron's father, he's failing to look at the facts of the case. As is apparent from the original article, and would be also apparent to anyone with even the tiniest knowledge of the UK tax system, you can't just shovel money offshore into a tax haven and profit from it. You need to get that money back out again. The Guardian was at pains to say that when the money is repatriated tax is due, and they have no evidence that tax wasn't paid in the proper way. It's totally irresponsible - and more than just a bit naive - to insinuate that Cameron's father was somehow able to pay little David's Eton bills and for his Bullingdon club damage by writing a cheque from his tax haven account with no further tax consequences. Unless, of course, he has evidence that this was going on.

It is possible that, by exploiting the secrecy of a tax haven to mask a complex series of transactions, tax could be illegally evaded. But Ritchie has no evidence that that is what has happened. So his innunendo is a thoroughly despicable and undeserved attack on a dead man. He should be ashamed of himself. But, on past form, he won't be.

Filed under: Other blogs, Taxation with tags bullingdon club, david cameron, eton, frances coppola, idiots, mark lee, richard murphy, tax avoidance, tax havens, uk
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Ooh, have we caught the Cameron family doing something naughty?

David Cameron's father ran a network of offshore investment funds to help build the family fortune that paid for the prime minister's inheritance, the Guardian can reveal.

Though entirely legal, the funds were set up in tax havens such as Panama City and Geneva, and explicitly boasted of their ability to remain outside UK tax jurisdiction.

Er, no (emphasis added):

The structure employed by Cameron senior is now commonplace among modern hedge funds, which argue that offshore status can help attract international investors. UK residents would ordinarily have to pay tax on any profits they repatriated, and there is nothing to suggest the Camerons did not.

So they've put a bunch of money into a place where it's not subject to UK tax. They'll be subject to UK tax whenever they bring any money back to the UK and there's no evidence or allegation that they haven't complied with their tax obligations at all.

This isn't tax avoidance, because not even the mighty brains at The Guardian seem to be able to articulate precisely what taxes have been avoided. So there's simply no story here at all (of course that doesn't stop Ritchie having a strop about it).

Filed under: Taxation with tags david cameron, guardian, idiots, income tax, panama, richard murphy, switzerland, uk
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Ritchie's on a (sausage) roll today:

“Many multi-national companies are paying a lower rate of tax on their profits than most people pay on their income or when buying items subject to VAT, the TUC says today (Thursday) as it urges the government to launch a comprehensive review of the tax system to ensure that everyone pays their fair share.

A TUC report in 2008 – The Missing Billions – found that the 700 largest corporations in the UK had an effective tax rate 7.5 percentage points below the corporation tax rate set by Parliament (30 per cent at the time).

With corporation tax now at 24 per cent, the effective rate for many big companies is well below 20 per cent – the rate that small businesses pay on their profits, basic rate income tax and VAT – says the TUC.

Media investigations about the tax arrangements of companies like Amazon, Google and Barclays show that some companies are paying virtually no corporation tax despite enjoying huge profits, says the TUC.

Well, I presume this is Ritchie sock puppeting his own work.

The very idea behind comparing the proportion of corporation tax to reported profits on selected companies to the rate of Value Added Tax on a particular item of food is totally idiotic. Confused? The TUC and Ritchie want you to be.

The actual rate of corporation tax will be, for 2013, 24%. That's 4 percentage points higher than the rate of VAT on pasties. But corporation tax isn't levied on reported profits. It's levied on adjusted reported profits. Those adjustments, which were created by Parliament, exist solely to make the tax system fairer. They do such things as remove depreciation on fixed assets and replace it with the tax system's own version, and allow past losses to be offset against this year's profits. It's the law, and the TUC/Ritchie seem to have a real problem with companies following it.

Another key aspect of corporation tax is that we in the UK only get to tax what's ours. We don't get to tax profits earned in other countries. That's not to say we don't try (eg our CFC rules) but European law is very clear: you get to tax your own economic activity but no more. In whining about Amazon, Barclays and Google, the TUC/Ritchie are comparing reported profits, including profits outside the UK to corporation tax on those (adjusted) profits in the UK. It's hardly surprising they get stupid results, because it's a hopelessly stupid thing to try and do.

Then they might want to ponder what a company is. It's ultimately a front for its investors. In order for those investors to benefit from any gains on their investment, they must either sell some shares or receive a dividend. And both of those activities will trigger further tax payments, although not necessarily to HMRC. It depends on where the investor lives. But a UK resident would pay either capital gains tax or income tax.

So, really, there's virtually nothing about this that either the TUC or Ritchie have got right.

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Filed under: Taxation with tags amazon, barclays, capital gains tax, corporation tax, dividends, google, hmrc, idiots, income tax, pasties, richard murphy, tuc
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A special low rate of UK corporation tax on finance profits from overseas financing within multinational groups will offer a ‘very significant’ benefit to groups setting up a structure that represents, according to a leading tax expert, ‘almost government-approved tax avoidance’.

Although, as you might expect, Ritchie approves heartily, this is just silly.

While, technically, you could have government approved tax avoidance, this ain't it. An example of government approved tax avoidance would be where government instructed HMRC to turn a blind eye to cases of tax avoidance. Imagine the shitstorm that would create in Parliament when it came to light.

What's happening in reality is that the government has proposed changes to the way in which controlled subsidiaries are to be taxed, with a special rate for controlled finance companies. These will be voted on in Parliament. Once passed by Parliament, it's completely idiotic to argue that a company using the structure expressly approved by Parliament is somehow acting against the will of Parliament. So it cannot be tax avoidance, by definition.

Incidentally, George is doing something quite clever. He's trying to hoover up all the finance companies in Europe by taxing them at the cutdown rate. That should see the UK get 5.5% of a much larger pie instead of the standard corporation tax rate on a smaller one. The other European countries should be whining, but no one in the UK should complain. We're bringing economic activity to the UK and taxing it. That's a good news story, no?

Posted from WordPress for Android. Post may be amended or reformatted later.

Filed under: Taxation with tags banks, government, idiots, parliament, richard murphy, tax avoidance, tax journal
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Now this is very, very extrapolated data and far from complete for the income ranges in question. Clearly HMRC will have much better data than this. But doing reasonable calculations based on just this data and by comparing these tax rates with those anticipatable for the income brackets in question (49% overall in the top two and 42% in the £200,000 to £500,000 bracket) my estimate is that this data show approximately £1.6 billion of tax avoidance to be taking place by just these groups.

Erm, no way matey. The reason they're paying less than HMRC's headline rates is because they're taking advantage of the reliefs afforded to taxpayers by Parliament, in precisely the way Parliament intended. That's Ritchie's very own definition of tax compliance:

A tax avoider seeks to pay less than the tax due as required by the spirit of the law. A tax compliant tax payer seeks to pay the tax due (but no more).

Incidentally, as CityAM reminds us, the vast majority of rich taxpayers aren't taking advantage of these reliefs at all. What are their accountants doing?!

Filed under: Taxation with tags city am, hmrc, idiots, richard murphy, statistics, tax avoidance, tax compliance
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After all, charities are meant to correct problems in society, but far too many of those who donate use their wealth and their position of influence to ensure that questions about why charity is needed are not asked  by the very people who should be posing the question.  That is why, for example, we see some aid agencies not talking about tax justice even though it is very obvious that tax injustice  and tax  haven activity is a primary cause of poverty in developing countries.  As a result of the malign influence of some donors  this issue is not addressed and the consequence is that poverty persists.

Well, maybe. Or is it, more simply, that some charities think Ritchie's views on tax justice are a load of old cock? Answers on a postcard...

Filed under: Taxation with tags charity, idiots, occam's razor, richard murphy, tax avoidance
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Yes, I know I'm not meant to be here. But I can't let this go. Nick Dearden of the Jubilee Debt Campaign and John Christensen of the Tax Justice Network, writing in the Guardian and quoted by Ritchie:

Far from building accountability and democracy, philanthropy will only ever allow the funding of “pet projects”.

OK, so we should get back in touch with the family of Andrew Carnegie and tell them that we don't really want their pet libraries or other gifts? Tell Bill Gates his efforts to reduce poverty in Africa are merely his pet project and not in the public interest?   We should deny the great achievements of the Wellcome Trust, the J Paul Getty Trust and the Howard Hughes Medical Institute?

There are two words to describe spiteful people like Dearden, Christensen and Ritchie. That's "ungrateful" and "cunts". The lot of them. Because only an ungrateful cunt could ever claim that the world-changing generosity of the big philanthropists is anything other than totally remarkable, and that we would be better off if only all that money had been spent by government instead.

Now back to my break.

Filed under: Other blogs with tags andrew carnegie, bill gates, charity, fucknut, idiots, j paul getty trust, john christensen, nick dearden, richard murphy, wellcome trust
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His latest failure to get it:

My answer to the current tax dispute is very simple.

I am happy for anyone to give an unlimited sum to charity.

Let’s be clear though – I see no reason why they should have higher rate tax relief on those gifts which gives nothing at all to the charity as a result. Remember – all the higher rate relief goes to the donor.

Nonsense. The current Gift Aid system is complicated, but reflects a broad objective: to allow individuals to give out of their pre-tax income. Because most people pay tax at the basic rate, charities are allowed to reclaim tax at the basic rate for individuals that have signed to say they have paid enough tax to cover it.

For those people that pay tax at higher rates, it would be an administrative nightmare to allow charities to claim that back. Because they might get it wrong or - perish the thought - might claim amounts to which they're not entitled. So for that much smaller group of people, HMRC allows the individual to reclaim the tax over and above the basic rate through the tax system. Either through their tax code or via their tax return.

It's a total lie to say that this "gives nothing at all to the charity". Because the individual gets some of their tax back, they can afford to be more generous. The very fact that the proposal to restrict this relief is now being opposed by charities, fearful that their big funders may be less generous, rather proves this point.

And at the same time I argue that all charities should have the right to reclaim basic rate tax on all donations arising in the UK without the rigmarole of gift aid tax relief – resulting in a massive simplification in their tax and admin affairs.

Now why can’t we do that?

Why? Because it's a recipe for fraud, as charities claim tax refunds on donations from people who have never paid UK tax. And, in the absence of a statement from a UK taxpayer saying that they've paid the tax, how does Ritchie's idea protect HMRC from complex series of circular transactions, whereby Charity A receives £100, on which it claims tax relief, which it then donates to Charity B, which claims tax relief on the higher amount, and so on, ad infinitum?

We can't do that because it's a terrible idea.

Filed under: Taxation with tags basic rate, charity, fraud, gift aid, higher rate, income tax, richard murphy
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He's still at it. And still getting it wrong.

I have read the reports today on donor and charity back lashes on the cap on giving to charities to be applied to the most wealthy giving more than £200,000 a year.

Er, no. The proposed changes are to restrict all tax reliefs that are currently unrestricted. People who seek to claim more than £50,000 of reliefs will be tested and restricted to 25% of their gross income. That means someone who had claimed £49,999 of other reliefs would find themselves caught by this measure if they donated £10 to charity and sought to claim higher rate tax relief on the donation. That's clearly not the same as an individual giving £200,000 to charity. The proposals will hit more than just the charity high-rollers.

And this is totally extraordinary:

I am not surprised to hear that UNICEF is amongst the charities complaining. I am sure there will be some other aid agencies in the same camp. And there’s good reason for that.

You see, they’re in the aid business. It’s been going on for over sixty years now. There are a fair number of people who have made whole careers out of it. And one thing they’re definitely not inclined to do is ask why they’re still in business. There are two reasons. First it would put them out of a job if they succeeded in relieving poverty. There’s self interest at work here. Second, ending poverty would require change in the world order that would definitely upset their donors. And that would never do.

Yep. Ritchie is arguing that UNICEF's business model relies upon trousering vast amounts of pre-tax money from rich people, which it then spends in a totally ineffectual way in order that it can come back for more next year. What a despicably mean spirited and nasty man Ritchie can be at times.

Of course, if you were feeling particularly unkind, you could ponder whether Ritchie is also in this business. Perhaps he doesn't really want government to solve the problem of tax avoidance because that would cause his major sources of funding to dry up?

It's certainly a more likely explanation of the world than the truly appalling notion that UNICEF is only in it for the money.

Filed under: Other blogs, Taxation with tags charity, fucknut, gift aid, higher rate, idiots, richard murphy, unicef
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