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Amazon, Starbucks and Google questioned by MPs over tax

By Chris Dawson November 11, 2012 - 3:19 pm

What do Amazon, Starbucks and Google all have in common? They don’t pay much tax in the UK and all three will be appearing before a Commons Select Committee on Monday 12th November.

At 3.15pm Andrew Cecil, Amazon’s Director of Public Policy; Troy Alstead, Starbucks Global CFO; and Matt Brittin, Google UK CEO, will all appear before the Public Accounts Committee in Westminster to answer questions on their tax status. One has to wonder why other companies such as eBay won’t also be present, but to be honest the answers from all the companies will probably be similar.

The problem is that companies have a responsibility to shareholders to be profitable. Voluntarily paying higher taxes doesn’t tend to align with maximising shareholder returns.

As companies are free to legally base themselves wherever they like it makes sense for them to base themselves in countries where their corporation taxes will be lowest. That doesn’t tend to be the UK. It’s worth remembering that this is nothing new, but in recession governments tend to shout a little louder when they need the coffers filling. It’s pointless the government haranguing HMRC to collect more tax when companies are paying what’s legally due.

It’s also worth bearing in mind that whilst companies have been hitting the headlines due to their low corporation tax payments, many of the same companies will be paying VAT and Income Tax and National Insurance for their employees.

The current story is that the public are outraged that some companies have huge turnovers in the UK, but pay little corporation tax. The truth is that the public enjoy being consumers of these companies and successive governments, both Conservative and Labour, have allowed a tax regime to exist which benefits the companies. There’s no question that all of the companies have paid every penny of tax due in the UK, the only question is should they be allowed to operate in the UK and pay taxes in another territory.

I have to say the one thing that really irks me about this isn’t that some large companies are arranging to pay tax outside the UK to minimise their bills. It’s the unfairness that it wouldn’t be financially viable for myself and countless other small businesses to do the same.

We may get some answers after Monday’s Public Accounts Committee meeting, but the truth is we’ve had the answers for years. If we want companies to pay more tax in the UK two things need to happen – We need to be a country which is attractive to do business in and taxation rules need to be changed so that large companies trading in the UK are required to pay tax in the UK.

  • 5 years ago

    Its about time that ALL of the foreign, especially American, Companies operating in the UK were fully investigated. After all we regularly see in America UK based Companies being hammered by American Regulators(Just think BP while the American contractors who actually caused all the oil spill problems got away almost scot free).

    So I am all for EVERY aspect of ALL Foreign Companies in the UK being given a complete audit and for every breaking or “bending” of the rules they are hammered.

    After all the EU regulations allow a fine of 10% of the companies TURNOVER. So the fines could be very interesting Might even build a few Hospitals and Schools.

    We should stop allowing all of the foreign companies seeing the UK as a soft touch.

  • rick
    5 years ago

    politicians need to look at the cost effectiveness of all these committees and quangos,
    playing to the gallery

    • Stuart
      5 years ago

      Good point, it’s all very well have all this investigations and hearing but just how much do they cost.

      Often investigations cost more than the fines given or the tax avoided.

      I am not saying that people shouldn’t be investigated, I am saying these companies are working within the law. If you don’t like the law change it, just don’t bang on about it otherwise.

      If they did change the law, it would probably end up that we would all pay more anyone as the companies would just put the prices up!

    • Nitbuntu
      5 years ago

      @Stuart

      “If they did change the law, it would probably end up that we would all pay more anyone as the companies would just put the prices up!”

      Well, if they did put the prices up then it’ll only make the local British companies, who do pay full and proper taxes, more competitive. Costa Coffee is one that comes to mind.

    • 5 years ago

      Are they working within the Law???

      Surely that is one of the reasons why they are investigated to check to see if they are Working within the Law. It is totally wrong to assume that they are Working within the Law.

      Obviously if they are Working within the Law then all is well and good. But what if they are breaking or “Bending” the Law surely we should know about it? After all if they are breaking the Law then we might be suffering from that.

      So let us hope that the English Government and the various Regulators have a very good look at ALL of the Foreign(especially American) Companies Working in the UK.

      After all we have seen over the years UK Companies working in America being hammered by the American Authorities often for very minor infringements of American Law and then similar American Companies caught doing the same thing treated much more leniently.

      So lets investigate ALL Foreign Companies and if caught doing anything wrong Hammer them.

  • rick
    5 years ago

    pratting about in the Jungle on Tax payers time, or buggering up the BBC and receiving a £400.000 Bung to sling your hook from the licence payers worries me more

  • Ian
    5 years ago

    In the meantime boycott foreign companies, especially U.S. ones: if the British public were not so apathetic, Kraft and Starbucks would not be able to generate a single penny of turnover in the UK. There will often be better alternatives from UK-resident companies anyway e.g. Nero. Buy British whenever possible.

  • mw
    5 years ago

    More to the point….. If you don’t like the way these companies work their taxes, then don’t use them. There are alternatives out there if you look properly and not just take the most convenient route, then moan about them.

    • Jimbo
      5 years ago

      I agree.

      I think it is worthwhile flaging up certain companies and making people aware of how they manage things. Possibly it can affect their thinking and our own.

    • Gerry007
      5 years ago

      .
      Maybe a badge like TRS,, but with UK tax payer on it, added to websites, etc!!.

  • Robert Mansell
    5 years ago

    Amazon refuse to divulge information of profits in the uk

    http://www.bbc.co.uk/news/business-20301381

    • Gerry007
      5 years ago

      .
      Why does this remind me of the Murdochs?.

    • 5 years ago

      It doesn’t really matter if Amazon or indeed any other Multi National Corporation discloses figures. HMRC employ very able Accountants who can take a Company apart and estimate very accurately what its turnover and indeed costs are. So HMRC can still accurately estimate exactly what profits and therefore Tax the Corporation should be paying.

      The trouble with Multi National Corporations is that after the Accounts have been transfered from Country to Country a few times the Corporation ends up paying very little tax anywhere.

      They basically operate like a 21st Century Al Capone’s. So lets hope that HMRC and all other Official Bodies and Regulators take the companies apart and hit them all with massive fines.

  • rick
    5 years ago

    bet there is no one that looks to pay more tax than they need to

    so why the sanctimonious bollocks

    • 5 years ago

      That is spot on. Why would anyone pay more? If the outraged government want to collect more they need to change the law.

    • mw
      5 years ago

      Because we make up the shortfall in tax revenue.

  • 5 years ago

    Big Business of all sorts think that they can get away with murder. Usually our soft almost useless Government lets them get away with it. But think about the Payment Protection Insurance Scandal. For years we were all(or almost all) charged with insurance that was totally useless for us. I argued several times that it was of no use to me but the Bank just ignored my arguements. Then the Banks were found to be in the wrong. I have just got one lot of PPI back(with interest) I am still argueing about another lot of PPI but I would never have got the first lot back(about £2,000) without the OFT’s hard work.

    Now we need the Government and the Regulators to chase the especially foreign companies and hit them hard for every penny they have cheated out of the country plus Fines and Penalties. Then if the same big companies have cheated us the little people(as the Banks did with PPI) make them compensate each and every one of us with what they have cheated us out of.

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