Those of you who follow the news will know what I am on about.
I keep hearing, often from people from tax advisory, that it is all the fault of our law, which needs to brought up to date.
I beg to differ. It is the fault of HMRC and politicians who fail to understand how these businesses actually work. They keep saying it is so complicated. Oh yes? Well let me offer you a little analogy.
Suppose you build up a successful little business in, say, plumbing. Your sister lives in Dublin, and is an Internet wizard. You open up your company in Dublin, and "route the sales" as Amazon calls it, through the invoicing service your sister provides. For good measure she designs you a nice little website which is housed on an Irish server. Nevertheless your customers, and the central heating, taps and washing machines you fix, are all based in SE London
Try telling HMRC that you are eligible for Irish and not British corporation tax, because you have "routed the sales" through Dublin, and see where that gets you.
I don't see any substantive difference with what Amazon and Google are doing.
It is very difficult to "boycott" Google, but I have managed to almost 100% boycott Amazon since before Christmas. One thing in particular is, if it is a Marketplace deal, to see whether the vendor is online, and then buy directly from them. I wrote to Amazon telling them what I am doing, and will do so again after today's reports.
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Think it worked out amazon paid less than 1% in tax
Maybe we should all stop paying tax?
We should remember that our law is a flexible thing, open to interpretation based on what 'the reasonable man" might conclude. Amazon and Google run rings around our politicians and HMRC because neither of those authorities manage to educate themselves on how the companies do business. It is inexcusable. Of course they can "do something". The politicians can get advice from people who have experience in these areas of business, and they can beef up, rather than cut back on HMRC's senior staff. If HMRC poached a Chief Finance Officer from an international advertising agency and got him to work on Google's case, he'd nail them in weeks. Especially if he was on a bonus of % of increased tax take.
The government thinks by trying to publicly embarrass these companies that they are suddenly going to play ball, they won't.
It will be a lot of excitement as usual , and then it will die out.
In 12 months time , 90 per cent of Charlton Lifers who use Amazon now,will still be using them.
Seeing the crazy ideas politicians of either colour come up with and spend money on , if I was a filthy rich tax avoiding cheat, why would I want to give them any of my money?
You are probably right about the government - given that Cameron, Clegg and Osborne are all wealthy in their own right from family trusts many people will ignore what they have to say. But there are grassroots organisations such as UK Uncut who publicise tax avoidance by large organisations:
http://www.ukuncut.org.uk/
The cheeky ****s....
These companies are great at what they do but its very unfair that they operate on a different playing field to bricks and mortar retailers who are closing down as a result of the 'OTT' business model used by Amazon and Google.
The price you pay for cheap goods from Amazon and Google is that the taxation coffers of your own country suffer as a result, the money for essential services has to come from SOMEWHERE so the current behavior of these guys will not be tolerated for much longer.
The Irish in particular are coming under huge pressure to end their 12% corporation tax for these companies, that's why so many of these firms are based in Dublin.
;-)
@Prague touches on a good point about HMRC essentially being too lazy to educate themselves about the operations and executions of these companies. However, if HMRC did have a policy of educating their staff on these topics then I expect we'd probably see something akin to the MHRA (Medicines and Healthcare Regulatory Agency) and Pharmaceutical Companies.
It's really not out of the ordinary for people to work their way up the ranks of a regulatory body before being offered a senior position in a regulated environment; where their knowledge and existing network can be used to think of 'creative' ways of playing a system. (Yes, rules exist that try to minimise this - but they aren't always that effective.)
I think @IdleHans has the best idea really; a simple black-and-white concrete rule that can't be wiggled or wormed out of. A rule so astoundingly clear and simple that there is no lee-way for arguing over the legalities of paying x amount or routing sales through x region.
Who is going to get bitten in the ass though? Us. As it is we pay more than the US on a lot of things; even with shipping and exchange rates factored in. If Amazon, Google et al are now going to actually have to... shock horror... pay their tax - then are they going to let that eat in to their profit margins? Are they fuck. They'll just add a little wedge on to their sales to account for that and continue shafting us.
They either sell to us (at inflated rates compared with other markets already) and contribute sweet fack all to our economy; or they sell to us at prices that are even more inflated but reluctantly contribute the minimum they can to our economy.
(Disclaimer: Despite this, I love Amazon and have an Amazon Prime account & I'm a heavy Google Apps user that really likes their brand and outlook as a company)
As I think you are proving.
If I could get away with paying no tax, then I, like most people wouldn't pay it.
Just because its two massive companies everyone pisses and moans about it.
It wouldn't be too difficult to put into place or manage.
The consumer may end up paying slightly more for their orders, but it would save the government from raising everbody's taxes to account for the shortfall.
1 man's loss is everbody's gain!
It may even make it a little bit more of a level playing field for the bricks and mortar shops and keep the UK high streets going - those that do pay tax.
After all, if they all dissapear it'll be us UK wage earners who'd get taxed more.
Rant over. Any transfer news ?
There are even some people who use ask.co.uk (remember Ask Jeeves?)
Under LIEbour Google/Amazon and Starbucks paid billions in tax to HMRC as did the banks ---because those top people in the 13 years of Liebour were all good old working class miners who would never embrace deregulation, they would never infact be saying days before the wheels fell of the economy that MORE delregulation was required (Ed Total Balls).
I set up 2 companies, one in the UK that sells widgets and one in the Camen Islands that owns the rights to the company logo/branding.
The UK company makes 10million profit this year, so the Camen Islands company simply bills it for 9.5million licensing fees for using the logo. Result is on 500k taxable profit in the UK.
There's no way to stop that happening. You can't stop company A from billing company B for services rendered, even the companies are constructed in such a way that the service is largely fictitious.
Of course only companies can do this, self employed and individuals can't because we usually want to spend our income at some stage, so we have to bring that income into the country as earnings at some stage. A large company can do it because they will either sit on the cash and then bring it in as income at a latter date, or more likely either invest it elsewhere or pay it out to share holders as dividends. Those shareholders then pay tax on that income.
It gets more complicated in the Jimmy Carr scenario. There are lots of ways you could try and spend your income without spending it, but they are usually subject to taxation. For example you could stash your earnings in an offshore, then have that offshore company buy a house and you live in it rent free. Tax man will usually try and say that's a taxable benefit and hit you for what would be a reasonable rent for the property as if it was income. Gets complicated and there are way around it, but you need better accountants. The company structure above is simple enough that anybody could set it up in a few hours.
a) any company that is owned by the company's parent company
b) any company that is registered in a tax haven?
It wouldn't stop the Google trick of pretending that they are doing business in another country when they are actually doing it here, but if it worked then it'd stop the Stabucks shenanigans.