38 degrees, capital controls, Coalition, Conservative, Customs, David Cameron, Deloitte, Ernst & Young, Exchequer, George Osborne, Gideon, government, hm, hmrc, KPMG, Margaret Thatcher, Mike Sivier, mikesivier, Parliament, politics, PricewaterhouseCoopers PwC, public accounts committee, Revenue, tax avoidance, Tories, Tory, Treasury, Vox Political
Why are the ‘Big 4’ accountancy firms – the companies at the heart of every major scheme for tax avoidance – being allowed to make the law on – guess what – tax avoidance?
Could it be because our comedy Prime Minister, David Cameron, and his part-time Chancellor,
Gideon George Osborne, are both either tax avoiders themselves, or have strong connections with tax avoidance? I think it could.
Cameron’s family made their fortune by establishing a tax dodging empire after Margaret Thatcher abolished capital controls in 1979.
And there was a major campaign by 38 Degrees to get
Gideon to pay his taxes after Channel 4 revealed he was paying accountants to help him dodge £1.6 million in tax payments every year.
The firms implicated – PricewaterhouseCoopers PwC, Ernst & Young, KPMG and Deloitte – received a damning verdict from Parliament’s Public Accounts Committee today. An internal HMRC study estimated that these four firms “were behind almost half of all known avoidance schemes”. But that doesn’t mean their government contracts will be terminated.
Look at Robert Edwards, senior manager in international corporate tax from KPMG, who was seconded to the Treasury for 20 months to help develop policy on Controlled Foreign Companies (CFC). His speciality was advising multinationals on tax-efficient cross-border financing and restructuring.
What is the UK’s new policy on CFCs? If a British company has subsidiaries overseas, and it transfers ownership of its brands to a tax haven country like Switzerland, its profits on those brands will no longer be subject to UK tax – meaning the new system encourages firms to switch their money into tax havens. Previously, their profits would have been taxed on the difference between what they pay in the tax haven and the UK rate – a disincentive to moving the money as the amount paid in tax would be much the same.
Only UK-generated income will be taxed in the UK, while the costs of funding overseas operations remain allowable against UK profits for UK tax – in other words, the costs of overseas operations will be subtracted from company profits by HM Revenue and Customs, when it considers how much tax to charge.
This is Osborne’s economics in action – big bonuses for big businesses, and all tax-free. Alongside the huge cuts in Corporation Tax (down by a quarter since the Coalition came into office) the loss to the Treasury is expected to be around £20 billion over the lifetime of this parliament, according to its own estimates.
There is no benefit to small- and medium-sized British companies.
Look at the predatory schemes set up by these companies. The Guardian has reported that in November 2012, a tax tribunal threw out an Ernst & Young inspired scheme that enabled Iliffe News and Media to create a new asset – newspaper mastheads. This asset was created for a nominal sum of £1. It was leased back to its subsidiaries who paid the parent company over £51 million in royalties and thus reported lower profits.
PricewaterhouseCoopers devised a scheme to avoid capital gains tax on profits involving a series of circular and self-cancelling transactions resulting in the creation of assets and disposals which somehow managed to cancel out the profit. This scheme was sold to 200 entrepreneurs and, if successful, would have enabled them to avoid capital gains tax on profits of around £1 billion.
KPMG cold-called an amusement arcade company with a scheme to avoid paying VAT on its operations, using Channel Islands entities.
And Deloitte devised a scheme to enable bankers – bankers! – to avoid income tax and national insurance contributions on £91 million of bonuses.
These are just schemes that have become public knowledge. Many more are sure to exist. The predatory practices of major accountancy firms include creating sham transactions, phoney losses and phantom assets to enable their clients to dodge taxes.
But no accountancy firm has ever been disciplined, the UK Treasury has never sought to recover legal costs from the promoters of the schemes and, instead, the big accountancy firms continue to receive taxpayer-funded contracts.
Bankers, accountants, politicians – right up to the Prime Minister. If the proposal in my e-petition – to prevent MPs speaking or voting on legislation likely to make money for them – became law, either Osborne would not be Chancellor of the Exchequer or UK tax receipts would be much healthier than they are today.
Feel free to think about that while you’re signing the petition.
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David Elms said:
BROKEN BRITAIN UNDER TORIES –BORN PRIVILEGED
We as a Human Race are all born and die the same there is a beginning and an end .Those born of Privilege and being educated at Eton or another of the University’s should know better than anyone of their past .Privilege was granted through rape ,pillage ,murder and unfavourable alliances .
We the General Public accepted privileged people and allowed them to continue to lead their lives as such .
Born with more money than the average person and better educated ,we would expect you to behave in a rational and moral way when in positions of power ,instead we are treated with contempt .It is we the working public that have helped line your pockets even more .We are deemed scroungers by people whom feel they are our betters .But the truth of the matter is that Parasites like Smith and Grayling and other cohorts have attached themselves to the Privileged circle and do your dirty work .The position of an MP is to represent the Public and its concerns – to aim for a more cohesive society .The vast majority of us have respected your positions but your ever increasing LIES ,PUBLIC PURSE THEFTS and ARROGANCE has now gone beyond the pale .
It is you that have decimated our society and you have the audacity to look down upon us – you a bunch of thieves liars and cheats .Your greed is beyond comprehension .Sleep well PARASITES .