Wednesday, 26 October 2011

Ending corporate tax avoidance

You may remember that, back in March, Green MP Caroline Lucas tabled a Tax and Financial Transparency Bill aimed at tackling corporate tax evasion and avoidance.

She has now launched a related e-petition to galvanise public support for the proposed measures - we are also hoping that this will help to put pressure on the Government to make time available for the second reading of the Bill on 25 November and raise awareness of the issue more generally. Over 1,800 people have already signed since 11 Oct.

The petition is here. Obviously the more signatures the better, so please feel free to circulate far and wide!

UK Uncut are supporting and have posted a nice piece with video footage of Caroline here.


Jonathan said...

This is not going to work.

UK companies are already required to declare and pay tax on all profit they make anywhere in the world.

The problem is with the structure of Private Equity funds. The fund itself is based offshore, and there is a UK based service company that employs the staff and pays the bills for the offices. You will then have a UK based company, and a whole web of different layers of offshore companies all owned by the fund to take profits out of the UK company. For example you will have one offshore company that owns the building they trade from. They receive rent from the UK company, a perfectly allowable expense. Other offshore companies will lend money to the landlord company and the trading company and charge interest on it, another perfectly allowable expense. Another group of companies might own the trademarks, patents etc, and charge royalties for using them. The people working the UK trading company will not be able to trace who ultimately owns any of these offshore companies.

Gordon Brown spent 13 years trying to close these loopholes, all the simple changes have already been made.

Banks are already required to notify HMRC of any accounts that are opened. They, and Companies House don't care about people filing dormant accounts when they are not dormant, so it their attitude that needs to change so they start enforcing existing rules properly.

Rob White said...

I don't think we should give up on tackling a problem just because someone in the past has failed to tackle it.

Jonathan said...

No of course not. My point is that you need to look at why they failed and learn from their mistakes rather than ask the government to do things they are already doing.