Former Google Exec Turns Whistleblower On Company’s Tax Avoidance In The UK

No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue

There is only the law , the rest is b.s.

That was my point. Whether or not you can morally justify it, corporate income tax is easy for multinationals to avoid, putting smaller corporations at a disadvantage and forcing companies to operate more inefficiently.

Always blaming the system is not productive. If the system has to be air-tight to get a usable result, you've already lost the battle.

You shouldn't be, because tax avoidance/evasion measures like the Double Irish With A Dutch Sandwich are not caused by the flaws in one country's laws, but by multi-national corporations exploiting differences between tax laws in different jurisdictions to avoid paying tax where they generate revenue and instead pay tax in the jurisdiction with the lowest tax rates. This is not something HMRC alone can easily fix, nor is it a flaw in just one set of laws, but a lack of international control governing corporate behaviour, which is unlikely to be resolved soon unless you want to see a world state. The reason for the special deals is that corporations have many ways of pressuring governments (jobs, investment, etc) and the big ones wield more power and influence than the state itself.

Instead perhaps you could try being angry at large corporations for evading their responsibilities as corporate citizens to pay tax, for dissembling about where revenue is generated and how in an attempt to avoid tax, for creating subsidiaries and licensing agreements solely to declare a nominal loss, and for creating complex chains of companies in many different countries in an attempt to evade tax. Despite the apparent clarity of terms like avoidance and evasion, or legal and illegal, which people use to describe these activities and make them appear simple, there is no clear line between avoidance and evasion, only a set of interpretations, and in this case Google have strayed too close to evasion in the opinion of this whistleblower and of HMRC. Given the evidence presented and the lack of convincing answers from Google, I'm inclined to agree.

I can imagine this could be quite a difficult problem to fix.

These big companies bending the law get away with it only because they a multi-nationals, which means they are governed by more than one set of tax laws.

Each country in which they operate has different tax rules and they use these differences to avoid and minimise their tax.

They are also help out by the fact that countries are notoriously bad at cooperation, so the problem always takes a longer to fix than it should.

And it's Starbucks corporate that relentlessly games the system, adjusts the licencing fees and defines the licensor (all owned by the very same company) in order to minimize tax.

That makes the 3 quid licece fee not really a legitimate business expense, but a sham. Set up in order not to pay taxes.

Legal? Sure. Honest, fair and decent? Most certainly not.

With all the anger, the austerity and the countries waking up to such shenigans I wonder how much longer such dodgy schemes will work anyway and I have a hunch the clampdown will be very, very hard.

At least I hope so.

(http://www.reuters.com/article/2012/10/15/us-britain-starbuc...)

Over 14 years they've made £3bn in revenue, but paid £8.6m corporation tax. (And none for the last 3 years that records are available).

The combination of telling investors that the UK operation is the best performing of the European operations while telling the tax office that there is no profit made in the UK is a distortion of truth that's hard to reconcile.

Starbucks buys beans. They roast those beans. They then sell those beans back to themselves for much more than the market value of roasted beans. That's not because they use good beans, that's a tax dodge. Starbucks thinks it's legal. But investigative authorities don't have the time nor money to go through the accounts to check.

(http://www.reuters.com/article/2012/10/15/us-britain-starbuc...)

(http://www.huffingtonpost.com/2012/12/02/starbucks-tax-uk_n_...)

This argument only works so well when hundreds of millions of dollars a year are paid by these companies to the people who make these laws...Seems a bit naive to overlook that and simply say "well as long as its legal I have no issues with it!"

The Fair Tax attempts to address this via 2 mechanisms- first, it does not tax used goods. Poorer people are more likely to buy used goods than new ones.

Second, the Prebate. Under the Fair Tax, the a prebate is given, based on the Federal Poverty Line, and the amount of tax that would be paid if a family spent up to the federal poverty line. Families that are spending less than the Federal Poverty line actually would pay negative taxes, and those spending more, would progressively be taxed more.

As written, some analysts of the Fair Tax have criticized it for putting the squeeze on the middle class- because many spend everything/most of what they earn, but earn well over the poverty line. Whereas the wealthy still consume very little of their overall income, and the poorest of the poor pay negative taxes.

I would tweak the prebate a little from this model, requiring the legislature to specify the prebate level each year as a part of their budget. This means they can't hide behind tweaking the way the poverty line is calculated- they have to make the decision directly, and be held accountable for it. I would also require the legislature to set the actual tax rate annually or at some other regular interval.