Public Values

Blowing the whistle on corporate tax avoidance

Investigative series looks at the problem in the UK.

Polly Toynbeeby Polly Toynbee, The Guardian

January 31, 2009 — Paying taxes makes us citizens. Living and voting together, citizenship means belonging to the community that decides how much tax to levy and how to spend it. Most people can't avoid PAYE and they are rightly outraged by those who go to great lengths to avoid paying their fair share. There's likely to be greater indignation about avoiders in times when public spending will be pinched tight and taxes rise to pay for this great calamity. Her Majesty's Revenue & Customs can't know how much tax companies avoid, but the department's estimates rise as high as £13.7bn.

On Monday the Guardian reports on its investigation which reveals corporate tax avoidance on a gargantuan scale. Respectable FTSE 100 companies, household brands that are cornerstones of Britishness, have for years deprived British citizens of potentially billions — all done legally by battalions of super-accountants and lawyers.

As company wealth ballooned during the boom, the money going into Treasury coffers should have grown proportionately. But between 2000 and 2007 the proportion of tax paid by top companies fell. Where did it go? The very clever people who devised fiendish debt devices that blew up the banks also applied their brains to byzantine new tax avoidance strategies.

Delving into the truth of company taxes has taken the Guardian team months of digging, talking to whistle-blowers, and following the knotted strings that lead through a labyrinth of subsidiaries in secretive tax havens. As the story of each famous company unfolds, keep your eye fixed on every twist and turn. You will go on a journey through the minds of people who have wasted their talents on making others pay for everything that makes Britain the safe, civilised, beautiful, enjoyable place where these company directors wish to live and bring up their families.

Public companies are anything but public about tax. Annual accounts are opaque, not obliged to spell out how much tax was paid where, or the tax-advantageous deals between their subsidiaries. But this we know: a third of FTSE 100 companies paid no tax in 2005-2006, and another third paid a minute proportion of their operating profits. Thanks to avoidance, HMRC says 12 of the UK's largest firms "extinguished all liabilities in 2005-2006". Scores more claimed tax losses. The area between tax dodging and reasonable offsetting — of pension contributions, research and development, preventing double taxation, new investment and legitimate reliefs — is the thick fog where lawyers and accountants make their millions. Between the spirit of tax law and its practice, fortunes are made. . .

To read further. . .

Privatization vs. Public Values Frame
  Paying taxes means you have bad accountants / Paying taxes makes us citizens

Links and sources
  It's time to rattle and bang in protest at this outrage, by Polly Toynbee, The Guardian, January 31 2009
  The Guardian Series: The Tax Gap Home Page

Posted: February 09, 2009

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