Wouldn’t you LOVE ACTUALLY to choose how much tax you want to pay?

Wouldn’t you LOVE ACTUALLY to choose how much tax you want to pay?

Wouldn’t it be nice if every company paid the UK tax that ‘the hard-working man/women’ would expect them to pay?

In 2019 Google avoided paying its estimated £1,500m tax bill, and instead paid just £67m.  Amazon did the same paying just £220m against its’ estimated £2,000m tax bill.  Likewise, Facebook.

How did they do achieve this?  Well they did nothing illegal, but who might you guess has been resisting tightening the tax rules.  Well, it is the old-style ruling elite bunch of politicians.  Yes, the same ones that brag about looking after the ‘hard working’ people of the UK, despite putting them through Austerity for 12 years.

Two tricks are commonly employed.  Firstly, these companies book sales in the UK through a lower tax regime country.  For example, Amazon book all sales via their Luxembourg subsidiary.  Secondly, they transfer ‘in’ costs not incurred in the UK or for their benefit of the UK operations.  This reduces their UK profits, and funnily enough boosts their income in lower tax offshore centres.

The other trick is that they can claim tax offset against capital investments, known as ‘writing down allowances’.  So, if they were due to pay tax of £100m in the UK, then they buy assets worth the same, they can fully offset this ‘investment’.

The Europeans tried to introduce the concept of a turnover based tax for these tax-avoiding companies in 2019.  However, Donny Trump was not having any of it, threatening sanctions and refusing to consider a UK Trade deal.

I love that scene in Love Actually where the UK PM played by Hugh Grant, tells that USA President in a Press Conference, that it is not a great relationship where one party bullies the other, and if that is the way that they want to play their part in the special relationship, then perhaps it would better not to have a relationship at all.    Ballsy, but we all loved it.

I think that Donny Trump does have a point.  Differentiating companies between those that we tax on a standard basis of ‘profits’ and those that we tax on ‘turnover’ is fraught with difficulties.  We are far better sticking to one taxation treatment of ‘genuine’ profits made.

So, we could and should move to the following: -

     1. All revenues to be accounted for in the country of operation. i.e. all UK sales are treated as UK income.

     2. Only genuine UK costs incurred are to be allowed in the accounting.

     3. WDA (Writing down allowances) only allowed at 100% for UK companies with turnover of £100m or less.   Companies where turnover exceeds £100m to be allowed           WDAs but spread out equally over 10 years.

     4. Significant deterrences for Accounting Firms that promote Tax Evasions schemes e.g. A full penalty fine of a whole year’s profits (before partners drawings/wages), plus       jail sentences and professional bans for Partners that have been found to promote Tax Evasion.

5   5.  A statement in the Accounts that they have been prepared on an ethical basis.  There are to be no transactions that are adjustment transactions, with the sole purpose       of reducing UK taxation.

Would it be great if Companies that traded in the UK played on a level playing field, and if there was a new 'Ballsy' style of leader that had a will for this to happen?  That would be nice.

Love and Peace

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