MPs want HMRC to be ‘aggressive’ in tackling tax avoidance
UK committee says corporate tax avoidance should be confronted head-on
By Gaurav Sharma | CFO UK | Published 18:19, 03 December 12
A committee of MPs has called on HMRC to be more "aggressive" and assertive in confronting tax avoidance by multinational corporations operating in the UK.
In a report published on Monday, the Public Accounts Committee (PAC) said the HMRC needed to act as the low level of tax taken from multinational firms with large UK operations was "outrageous."
The report comes in wake of several media revelations about the likes of Starbucks, Google, Amazon, eBay and other well-known global companies using tax avoidance measures and legal loopholes to lower their UK tax bill.
PAC chairwoman Margaret Hodge said their moves tantamount to an "insult to British businesses and individuals who pay their fair share."
The report directly criticised Starbucks, Amazon and Google, none of whom have paid much UK corporation tax.
Appearing before the committee earlier this month, Starbucks revealed that it sold nearly £400 million worth of goods in the UK last year, but paid no corporation tax at all, because it transferred some of the money to a sister company in the Netherlands in the form of royalty payments.
It also said that all Starbucks' businesses worldwide, including in the UK, actually buy their coffee from its Switzerland office.
Amazon said its UK sales via the Amazon.co.uk website - and in all other European countries - were actually made by its Luxembourg-based business. As such, the profits on the mark-up on the sales price are booked by the Luxembourg company.
Google revealed that it had chosen Ireland due to the country's favourable 12.5 percent corporation tax rate. It also confirmed that the holding rights to the company's non-US intellectual property rights were owned in Bermuda, also because of the tax benefits.
In response to the PAC report, HMRC said it already ensures that international companies complied with "existing" UK tax laws. However, the UK Treasury has announced it will provide the HMRC with £77 million of new funding in an attempt to track down individual and corporate tax avoidance schemes.
In a statement, Chancellor of the Exchequer George Osborne said, "The government is clear that while most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law."
"The action will help HMRC close in not only on those who seek to avoid or evade tax, but on the dubious 'cowboy' advisers who sell them the schemes and dodges they use to cheat the law-abiding majority," he added
However, the Treasury said it would not heed calls to name and shame companies found falling foul of the system.
eBay, Amazon and Google declined comment in response to PAC findings when contacted by CFOWorld. But Starbucks said it will revisit its UK tax arrangements, details of which the company would reveal over the coming days.
Share:Facebook Twitter Google Plus Stumble Upon Reddit Share This Email this article
Examining how CFOs can improve the way they report back to the boardmore ..
Mobile giant acquires the remaining 11% it did not already ownmore ..
FCA’s review found 73% of firms failed to provide adequate informationmore ..
Rules requiring telcos to retain communications metadata are disproportionate, the court saidmore ..
Litigation funding is a very useful tool for CFOs but not a panacea for all legal mattersmore ..
Corporate governance is a powerful tool in a C-suite executive’s arsenalmore ..