.png)
.png)
Our weekly look at the tax stories in the national press
Avoidance & evasion
Google and HMRC should face a comprehensive inquiry into their “deeply unconvincing” tax arrangement, according to the Public Accounts Committee (PAC) of MPs.
Guardian; Financial Times; Telegraph
It is hard to understand why the matter is within the PAC’s remit; the committee gives no details of the evidence it has received from whistleblowers, making it impossible for the companies concerned to counter the accusations. HMRC need to explain – without infringing taxpayer confidentiality – why the tax structures used by multinationals work, so that the government can change the law if necessary.
Some of the UK’s companies are overhauling their tax policies in response to the public backlash against avoidance. Meanwhile, 42% of consumers may boycott big corporations as a result of their perceived failure to pay enough tax, according to a Guardian/ICM poll.
Financial Times; Guardian
Companies may feel they need to show greater transparency in how the final figure of tax is reached, by explaining, for example, the use of legitimate tax breaks. Now that some offshore tax havens are signing up to greater transparency, businesses might want to make the case for their use in captive insurance, for example.
All employees should have their tax returns published to stamp out the “morally bankrupt” use of legal loopholes, according to John Sentamu, the archbishop of York. His counterpart in Canterbury, Justin Wells, has led calls for a crackdown on tax havens.
Telegraph; Times
Sentamu’s suggestion would be tough to introduce in a country in which people are generally reluctant to divulge their earnings to each other. As to a crackdown on tax havens, it is already underway, with exchange and transparency agreements made between the UK and many jurisdictions.
Prime Minister David Cameron’s hopes of securing a sweeping crackdown on tax evasion at next week’s G8 summit are in jeopardy following the refusal by the British crown dependency Bermuda to commit to a pact on the issue.
Times; Independent; Financial Times
Words may not be enough to persuade some tax havens that greater transparency is desirable. Not doing so, however, is likely to see them shunned by reputable companies not wanting to be tainted by association.
Business
The chair of the Public Accounts Committee, Margaret Hodge, has welcomed a campaign to rank the UK's retailers by the tax they pay and their use of tax havens.
Guardian
Greater transparency is to be welcomed, although consumers may be more interested in the quality of retailers’ products and service. It should be noted that the Fair Tax Campaign is the brainchild of Richard Murphy, self-appointed scourge of those who he believes avoid tax. It has awarded top marks to Greggs, a company that fought with some success against the government’s attempt to stop companies ‘avoiding’ the VAT charge imposed on hot takeaway food in the 1980s.
Sainsbury’s chief executive, Justin King, has criticised the government for creating an unfair burden on high street retailers by not doing more to tax online-only rivals.
Guardian; Telegraph
Another week, another high street retailer complaining about its online rivals… Sainsbury’s et al can either restructure – something HM Treasury won’t be keen on – or legislative change is needed to recover a greater share of profits generated by sales in the UK from Amazon and the like – but such change would need to be agreed internationally if it were to work.
HMRC’s new real-time information (RTI) system is struggling, according to businesses, which claim key information is being omitted or lost.
Financial Times
The RTI system has struggled with aspects such as firms operating multiple payrolls and annual schemes, but also seems to have some real initial teething problems.
Income tax
The government should hold a debate on giving tax breaks to married couples before legalising same-sex marriages, according to public health minister Anna Soubry.
Telegraph
More to the point, the government ought to decide what its attitude is to unmarried couples. New legislation tends to refer to those who are married, in civil partnerships, or living together “as if” wed or in a civil partnership. The old legislation doesn’t. Surely, if this is to become the new norm, we need the old rules rewritten.
Income tax breaks will put an extra £300 in the pocket of basic rate taxpayers this year, according to economic forecaster the Ernst & Young ITEM Club.
Times
The personal allowance grew from £8,105 in 2012/13 to £9,440 for 2013/14, signalling the largest ever cash increase. Around 2.2m people have been taken out of the income tax net by the coalition government’s changes.
Inheritance tax
HMRC have lost a landmark case concerning inheritance tax relief available on farmhouses.
Financial Times
The authorities’ view in the case of Hanson v HMRC was that farmhouse and farm land had to be in common ownership. The department was overruled by the Upper Tribunal, which held that common occupation was the critical factor.
