Opinion: Calling All Bloggers – Don’t make me a tax avoidance accomplice

According to Vince Cable “No one keeps their cash in tax havens for the quality of investment advice; these are sunny places for shady people.” True to form, Vince hit the nail squarely on its head with a whammy of a quote, and how we all clapped enthusiastically. But who actually piles the cash into these rogues’ coffers in the first place? It could be you.

Many of our enthusiastic clappers routinely rock up outside Boots, on a sunny Saturday, aggressively jabbing angry posters-on-sticks skywards, in tandem with chants ofBoycott Boots! Boycott Boots!

Ultra-cool agitprop will require you to join a flash mob in Top Shop, parking your butt adjacent to a rack of animal-print leggings and remaining in lock-down until a bunch of determined rozzers help you outside again.

Then it’s off down the street to the Vodafone shop to hoist aloft a suitably hostile banner, all the while tweeting every twist and turn of your progress on your not-Vodafone-phone.

And oh yes, I’ve got all those T-shirts.

As you’re on this site, you shouldn’t need reminding why lots of angry citizens routinely give Boots, Top Shop and Vodafone the shakeout. This trio is in the champions league when it comes to tax avoidance, and being spotted in any of their outlets could seriously damage your social liberal credentials.

Sadly, it has so far seemed beyond the wit of HMRC to come to grips with these guys, as Willard Foxton points out over at the New Statesman:

Over the last few years HMRC spent £633,000 on publicity around tackling high-end tax evasion, compared with £17.5m on publicity around tackling benefit fraud. By that crude measure, HMRC considers tackling benefit fraud about 27 times more important than tackling high-end evasion.

OK, so Willard’s talking about evasion rather than avoidance, but isn’t the difference just a question of us showing sufficient political will to reframe a tax law or two?

It would probably be unwise to hold our collective breath for that to happen so, in the meantime, it’s up to you and me to vote with our wallets. We’re actually quite good at that, except when it comes to t’Internet. For the high street giants are by no means alone. Tax avoidance in the virtual world is stratospheric.

The latest shady customer to hit their poolside deck chair in a sunny place is everyone’s FB security blanket. Yes, Facebook is facing allegations of tax avoidance after it paid just £238,000 in UK corporation tax on earnings of £175m. Apparently, FB’s profits took the scenic route through Ireland, thus avoiding paying millions in UK tax. But will you be quitting Facebook? Fat chance. Research out this week shows that a third of us would rather give up sex for a week than live without our mobiles.

You will, by now, probably be wondering how the title of this piece can be justified. So let’s move on to examine the daddy of them all, the Don Corleone of Vince’s sunny places: Amazon.co.uk. Britain’s biggest online retailer generated sales of more than £3.3bn in the country last year but paid no corporation tax on any of the profits from that income.

That’s scandalous. Work out for yourself how many libraries, hospital beds, hungry kids or shivering pensioners – whatever your pet cause – that those missing tax revenues would sort out.

And can you honestly say that you’re happy for your dollar to be sucked out of the country in this way?

Put that way, it’s difficult to argue with. So let’s use our considerable combined muscle to bring these internet vampires to book. Use Facebook to start a campaign against Facebook and their tax dodging. Be bold, show your mettle, be a trailblazer and join another social network while you’re at it.

Lobby for all Liberal Democrat Facebook pages to be taken down and make a big media splash about the reason why.

Lobby for a fit-for-purpose internet-based sales tax to be levied in the country of purchase, rather than the country of business residence. That is controversial, and throws up all manner of conundrums, I know, but it’ll kick-start the debate that must be had if we’re to stem this haemorrhage.

And bloggers, next time you encourage me to join you on FB or click through to Amazon to buy a book, you’ll be clicked straight through to my junk folder.

* Kirsten de Keyser sits on the Camden Liberal Democrat Executive and is a member of Social Liberal Forum and Liberal Democrat Friends of Palestine. She blogs here.

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17 Comments

  • While you’re in Govt, can you close these tax loopholes, please?
    Ta very much.
    KISS is the principle to follow.

  • Robert Wright 15th Oct '12 - 5:53pm

    You are actually campaigning to leave the EEC – or to very substantially change the whole ethos of the single market (specifically Article 49 concerning Freedom of Establishment). Will you be supporting UKIP at the next election?

  • Hmmm, clicking through to that story about Amazon includes the info that Amazon has had an average 3.5% profit margin in the US over the last three years and:
    “UK sales over the past three years, according to the SEC filings, were between £7.6bn and £10.3bn. If the same profit margin was applied, this would have generated taxable profits of £266m-£360m and yielded notional UK corporation tax of up to £100m.”

    First, this seems an awful lot of effort to go to to avoid £100m of corporation tax (which will be a lot less after the usual fairly legitimate accountancy work has been done on those figures.

    Even at £100m, with an NHS Budget of £104bn your talking about taxes that fund 0.1% of the NHS budget – or about 8 hours.

    [And secondly that same article reports that Amazon's tax affairs are under investigation by HMRC.]

  • This article is so totally wrong-headed it’s hard to know where to start. But perhaps the biggest one to begin with it the suggestion that because FB or Amazon pay little or no tax in the UK, they must be up to some kind of tax avoidance. That merely demonstrates that the author doesn’t understand how tax works.

    Fortunately HMRC (yes, the Revenue, not some ‘dodgy’ corporate) have just issued this handy 2-pager which, in admirably simple terms, goes some way to explaining what is and what isn’t tax avoidance:
    http://f.datasrvr.com/fr1/412/60665/HMRC_Issue_Briefing_-_Taxing_the_profits_of_multinational_businesses.pdf

    I recommend you read this first before believing wild accusations of ‘tax avoidance’ …

  • Dominic – and tax avoidance is the legal structuring of affairs to minimise tax payments within the current tax framework. Indeed UK company law you could argue requires it given the statutory duty to maximize shareholder returns.

  • Liberal Eye 16th Oct '12 - 6:41pm

    I don’t think the “sunny places” quote is original to Vince but it’s still apposite.

    You can now add Starbucks to the list of tax avoiders. Apparently they have paid no UK Corporation Tax in the last three years although their executives tell analysts how well they are doing.

    http://www.bbc.com/news/business-19967397

    While tax avoidance per se is perfectly legal, I can’t help wondering if some firms aren’t over-egging the costs they claim in places that just happen to have little or no tax; perhaps it’s merely coincidental that offshore costs eat up all their UK profits and is nothing to do with dodgy transfer pricing schemes too opaque for HMRC to penetrate. But if so, why do these firms stay in Britain?

    Osborne is clearly proud of having reduced corporation taxes. Has he perhaps much further than declared and made them purely optional for large companies by creating or winking at obvious loopholes? Then again there is the reduced staffing of HMRC. Cutting budgets has become a standard operating procedure for gutting regulators and the like while keeping this under the radar as far as the public are concerned – a useful device for policy that dare not speak it’s name.

    LDs bang on a lot about fairness but are we to understand that this is limited to the spending of welfare budgets (a typical context) and that it has nothing to do with pocketbook issues? Does it matter that complexity creates one rule for the powerful and another for the rest of us? I think not but you would be hard-pressed to conclude that from some of the above comments.

  • The author has a point. To my mind the answer is that we need to both reform the tax system and go for some further degree of harmonisation. While we are in coalition with Tory overlords, these changes are impossible. You shouldnt be able to lend yourself money at an artificially high rate of interest to make sure you never make a profit in the UK.

  • Kirsten de Keyser 17th Oct '12 - 3:08pm

    Many thanks for all your comments. Let’s hope the debate continues and provides the oxygen we need to bring about some serious action in respect of corporate tax declaring and collecting.

    I’m surprised and frankly dismayed at the lack of fight in many of the correspondents. Apart from Peter Law, who feels inspired, and Alistair, who at least sticks to the central subject, most of the rest get lost in all manner of minutiae, which is where debates generally evaporate into meaningless mist.

    Of course, I completely agree with Mark V about the opportunistic nature of Willard Foxton’s figures, but he’s trying, and managing, to provoke debate – as am I. I just want to light the touch paper, it’s up to far more expert heads to tackle the ensuing blaze.

    The facts, as I see them, are that giant corporations make mega bucks off the back of an ordered societal infrastructure which costs a lot to maintain. They don’t pay their proper dues towards this trading environment. The rest of us do. That’s wrong.

    I’m an activist. I don’t wear fur as I disagree with the fur trade. I don’t give Starbucks, Boots, Vodafone, Amazon…ya-de-ya-de-ya my business, for the same reason. I want to make enough noise until it becomes uncomfortable enough for someone in control to right the wrongs that I’m banging on about.

    Courtesy of Starbucks, as mentioned by Liberal Eye, the media at least seems to be smelling blood. I hope they see this through to some sort of conclusion.

    In the meantime, I’ll continue to make lots of noise in the most simplistic way available.

  • “Lack of fight” isn’t the issue; the issue is that you are trying to fight the wrong battle. Just because there’s a bunch of people sounding off about something in the media doesn’t mean they’re right.

    You refer to “The facts, as I see them …” but then don’t actually have any facts to substantiate your comment. Unsurprising really, because you’re wrong.

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