HMRC can only collect tax due under the law

HMRC vs Amazon Google StarbucksMP Chris White today led the debate on multinational companies and UK corporation tax in the House of Commons. MPs from all parties called for reform to ensure that companies who operate within the UK pay the tax due.

For once there was some sensible conclusions, rather than calling for companies to simply pay more tax, or haranguing HMRC for not collecting it, Treasury minister David Gauke backed HMRC saying “They can only collect the tax due under the law”.

That doesn’t mean that David Gauke intends to do nothing, he conceded that international tax guidelines don’t really meet today’s Internet business world and specifically in what constitutes a business taxable in the UK under “permanent establishment” rules.

Google and Amazon are high on the radar, although the third company called before the Commons Select Committee, Starbucks, appears to have slipped below the horizon with their charitable offer of £20 million in tax. Starbucks say that they decided to forgo certain deductions which would make them liable to pay £10m in corporation tax this year and a further £10m in 2014. Currently they’ve paid £5 million and will pay another £5 million later in the year.

Companies shouldn’t be allowed to pay voluntary tax though, and it’s reassuring to hear the Treasury Minister say so. Many will find it even more reassuring if the law is changed and it’s likely an action plan may be presented at the G20 Finance Ministers meeting in Moscow on the 19th-20th of July.