Further to my earlier comments on multi-nationals avoiding paying UK tax. Would any of the advocates of free and unfettered capitalism care to comment on the ethics of this?

[iThat this House regrets that corporate tax avoidance costs the UK Exchequer billions annually, and that several international companies have been largely responsible; is dismayed to learn from the report Alliance Boots and the Need for Corporate Tax Reform, published by Unite/War On Want/Change to Win, that Alliance Boots, an ostensibly British company, has lawfully avoided more than £1 billion in corporate taxes since 2007 when it entered private ownership in the largest leveraged buyout in UK corporate history, following which the company reincorporated in the tax haven of Zug, Switzerland, where it earns no revenue, and is controlled by entities in Luxembourg, Gibraltar and the Cayman Islands; is concerned that it avoided taxes by loading most of the £9 billion buyout debt onto the highly profitable UK business, thus shifting profits abroad; notes that Alliance Boots significantly lowered its UK tax bill while deriving an estimated 40 per cent of its revenue from UK taxpayers, primarily via NHS prescriptions; further notes that Alliance Boots is seeking to increase its taxpayer-financed profits on the back of NHS privatisation; and calls on Alliance Boots to fully disclose its profits and taxes for all countries where it has significant revenue, on HM Revenue and Customs to comprehensively investigate Alliance Boots' tax practices, and on the Government to modernise the taxation of private-equity and heavily debt-financed businesses, and to require companies to disclose significant revenues that are derived from public sector contracts, and to reform the financial and taxation regulations in British Overseas Territories.[/i

We have a government who are quite happy with that arrangement

I think it's a mistake to assume they are happy with it. The truth is they don't have any choice. Or they won't be in government.

I may be growing rose-tinted eyes in my dotage but I have a gut feeling that there is an underswell of discontent with the status quo. This movement will not recognise national barriers, the only thing that may hinder it is various governments' attempts to introduce a "snoopers' charter". But hinder it is all it will do, it won't stop it.

Slowly, but surely, the rose tinted spectacles and blinkers are becoming an out of date fashion accessory for so many.

I wonder what the new season my bring?

We live in interesting times.

That doesn't make any sense for the likes of Starbucks to pay CT at 35% on profits in the UK when it could pay CT at a much lower rate.

There has been much written about Apple and its tax avoidance strategy - perhaps all is not so great in US.

20% isn't preventing the likes of Vodafone and others paying, although it doesn't help when the likes of Brown bring in legislation to stop them paying tax on asset sales either.

The government should make sure its money is spent with companies that do pay their share, your example of Boots is a good one. Just make sure prescriptions are not valid at Boots. Government departments cannot get mobile phones from Vodafone etc.

The alternative being: transparent country-by-country reporting and paying taxes in the country the revenues (and profits) are generated.

HMRC should be allowed to present an estimated bill and then it would be up to the company to dispute the figure. It might go against natural justice (innocent until proven guilty) but it is the way HMRC currently operates with individuals and SMEs

Your first point would require an agreed method of allocating HO costs - Apple sell product via a website in the UK which is maintained and developed in the US where do the costs sit? This is one of the issues with Starbucks I think - the huge management charges applied by the US on its UK operation.

It would be easy to project a profit for Starbucks just compare their trading figures i.e. Sales less coffee, less labour to the likes of Costa etc and you will not be far wrong. Rent and rates should be easy they all seem to be on the same streets.

You see this is precisely why they should just get a whopping great tax assessment and be obliged to pay it, same as would happen to typical UK businesses or taxpayers. With full appeal rights of course. the reason? Why, that simple starting proposition is that, if the "huge charges" or "licence fees" or whatever are not just a scam via associated companies, then why TF would a company invest millions in starting and continuing to operate and expand a gigantic UK business which never makes a profit? Occam declares this to be transparent bullcrap.

If, really, they do go to all this huge trouble in the UK despite never making a bean taxable profit, then I'm sure they'd be easily able to convince the authorities on appeal against their assessment.

I have no problem whatsoever with eg Starbucks paying a trillion in annual licence fees to Starbucks SARL (or whatever) to use the Starbucks name. So far as their accounts are concerned they can do what the hell they like. It's just that that payment, being the most obvious scam, simply shouldn't be allowed as a legitimate business expense for tax purposes. More to the point, while i'm no expert, I'm pretty damn sure it isn't, but so far as I can see, successive governments have never challenged these sort of scams in any way. They are therefore being allowed to sail through by a curious and totally unacceptable default.

What annoys me, and many others, is that the Luxembourg etc scams are so blatant and so [iobviously[/i a scam, that surely the only reason they get away with it is because the government is determined that they can, or has absolutely zero appetite to make sure that they can't.

There is no rate at which you can set it at that would encourage a company that can pay zero CT to start paying it. Why if you pay zero CT now, would you start paying it if the rate was set at 10% or whatever? Surely you would be taken to task by your shareholders for voluntary coughing up 10% of your profit when you didn't need to?

There is really only one solution which is to close the loopholes and have the companies pay whatever rate you deem fair. Trying to second guess what they would pay is simply a race to the bottom as that rate is bound to be 0% given the choice.

It is impossible to close the loopholes its unrealistic to think any government can do that where global companies are concerned.

You have to shame them as they did with Starbucks but create a rate that encourages them to contribute. Companies do not trade in isolation and their reputation/brand is worth a lot culturally they will not want to damage that so perhaps to maintain that reputation then they will have to contribute. Also government could ensure no tax payers monies are spent with them unless they pay as the should.

It is quite simple provided there is global co-operation. Tax should be levied relative to turnover in a jurisdiction.

Tim Berners-Lee the inventor of the World Wide Web worked as an engineer for Plessey the telecoms company which later became GEC and then BAE. He first came up with the Hypertext concept while working at CERN as an independent contractor in 1980 and built a prototype system called Esquire. He then returned to the UK to work for a computer company where he gained 3 years experience in computer networking. He then returned to CERN and developed the WWW from his Esquire model to link up the private networks . As a precursor to this was the important work done by Paul Baran of the Rand corporation on packet switching and various other firms developing computers.

Private enterprise has played the major role in inventing, developing and manufacturing products and services that touch every area of our lives. Be it transport: the motor car, the railway, air travel or the industrial revolution with the steam engine transforming manufacturing and agriculture or communications with the telegraph, telephone and TV, or the phonograph, motion pictures and the electric light bulb.

Of course state funded Universities played key roles in inventing and creating important ideas but the state relies on the private sector to supply the major funds via taxes for this to happen. It then needs the private sector to commercially develop the idea and then produce it for the public to buy.

That is the issue, whilst ever you have countries competing over tax revenues you will always have disparity in rates and taxation policy. Also the economic state of a country will also dictate its fiscal policy - as no two countries are the same then taxation parity is a non starter.

So, you simply prevent them offshoring revenues.

Hardly rocket science

Most of these offshore centres are British dependencies / British overseas territories.. How would we fund them if we stopped it?

You do the maths:

Offshore dependency takes 1% CT, we get nowt

We get 20% CT and give the dependency 2%

We're 18% better off

I think you are being very naive here in suggesting we can force firms to pay up by shaming them into it. Matalan were pursued by one of the petition lobby groups, 38 degrees I think, following on from the disaster in India where hundreds of workers died when a factory producing for them collapsed to offer meaningful compensation.

They coughed up token amount and I bet virtually no one outside those who subscribe to 38 degrees even knew about this. Matalan simply toughed it out. It is not a tax issue but a useful example that shows the limit of any indignation and how it can force companies to change policy.

Eventually people tire of constantly trying to force companies to behave ethically and morally via campaigns and petitions. They are useful for drawing attention to unscrupulous practice but ultimately the only way to ensure a consistent and fair approach is by regulation.

Your idea that it is impossible to close loopholes is based on what exactly? It is certainly true tax law lags behind the effects of globalisation but the Yanks have done a pretty good job recently of going after companies who want to relocate for tax purposes. They didn't do that by offering them sweeteners. Boots won't be relocating back here any time soon but there is nothing to stop legislation being drafted that removes the ability to take such large companies private so they can relocate to dodge taxes for example.

For many people there now is little alternative to Boots. Here in Wincanton, we had a Boots in the high street and an independent a few doors down. About four years ago Boots bought the independent and they traded together for a year or so. Boots then closed the former independent at the same time as they opened a dispensary adjoining the new health centre.

So, unless people are willing to do what I do and drive 7 miles to an independent chemist in a nearby village, the choice is Boots or Boots.

Boots also operate many dispensaries in hospitals. I don't know how true it is but I read the other day that while the NHS dispensaries are subject to VAT, private companies operating dispensaries in the NHS are not

Not sure how true that is but I know from dealing as an NHS supplier that they have to pay VAT on supplies and cannot register as a business to claim it back, they are classed as an end user by HMRC rather than a business - it was one of the bargaining tools they tried to use to screw a discount when (like all businesses) you quote your prices as Nett plus VAT, they always come back whining that they can't reclaim the VAT and can you knock something off, I didn't dare use the line that my father used to use with lots of success, "Yeah, if you pay cash we'll knock the VAT off, and I mean cash not a bloody cheque"

Who is being naive now - you cannot pass legislation to stop large firms being taken private - you are saying shareholders can't sell their shares in these companies unless the government says its OK.

If it were so easy to close these loopholes every government would be doing it. The 14% tax that Obama has just offered on overseas earnings is that not a sweeter!! Apple is a good example of how well the US government is doing when it comes to collecting the taxes the largest company in the world should be paying? Obama is a socialist and he thinks he can bully the likes of Apple, Facebook, Google into complying - he has no chance they are far to clever and can afford the very best brains to resolve these technical financial issues. When you are talking

The only way this works is if you can get uniformity across the globe that is never going to happen, there will always be countries like Ireland that need tax revenues and are prepared to offer attractive rates to get their hands on the cash.

You don't need tax uniformity if you have tax transparency and country by country reporting.

A company simply pays the tax, at the prevailing rate of the country they book their revenues. Revenues that do not include overt or covert transfer pricing margins

The government has published draft tax legislation to implement the new tax on diverted profits which has been referred to as the 'Google tax'. The introduction of a new Diverted Profits Tax which was announced in the 2014 Autumn Statement will target multinational enterprises with business activities in the UK who 'enter into contrived arrangements to divert profits from the UK by avoiding a UK taxable presence and/or by other contrived arrangements between connected entities'.

The Diverted Profits Tax will be applied using a rate of 25% from 1 April 2015 and is expected to raise £1.4bn over the course of the next five years.
[url=http://www.boxwell.co.uk/news/tax-diverted-profits-dubbed-new-google-tax?goal=0_cf476628b8-79a28c0204-412294561linky[/url

The CBI says it's "unfortunate" that the govt. has decide to 'go it alone', so that's all good.

Is that all its going to raise - 280m a year - there will be individuals who saved that let alone multi national corporations - some of the Russians in London come to mind

It's not what it's expected to raise that's the point, if tax is paid on all 'diverted profits' then that's all good.

Unless you suggest the tax should be at 200% or something to make it worthwhile?

Something is being lost in translation here - the numbers people on here are talking about are for this tax dodge are "allegedly" huge, whilst £1.4bn is a big number it isn't huge in terms of the tax avoidance taking place in this area. It nnis estimated this tax dodge is worth £12-15bn a year so to recover £1.5bn of £60bn seem paltry?