Friday, 30 November 2012

Jewish Lizard Bilderbergers

Not quite, but we're pretty close in conspiracy terms:
A campaign to radically reform and open up the secretive workings of the powerful local authority governing the City of London has been launched by a diverse group whose supporters include activists from the Occupy movement, clerics and the Tory MP David Davis.
Now I'm all for transparency but there really isn't a lot to see here. As I've said previously on this blog, the Corporation of the City of London is a local authority with a few ancient traditions and fancy titles. It doesn't control how banks operate or are regulated, people and businesses are subject to the same laws there as the rest of the country, and whilst it may well lobby for the financial services industry, I would expect any local authority to do the same for businesses within their boundaries. That it has special secret powers and privileges is quite frankly bollocks.

Now the other argument is that it is undemocratic and that businesses can outvote residents on matters; well 7,000 residents v. 300,000+ workers suggests that it overwhelmingly commercial and therefore unique for any local authority in the UK. Therefore to not let the businesses within have a say in how it is run would be undemocratic. And on that subject and somewhat ironically, the group behind all of this, City Reform, are a bunch of outsiders attempting to impose their wishes on the residents and businesses of the City of London, whether they like it or not.

Sunday, 18 November 2012

Wrong priorities

Now here's something that boils my piss:
Nicola Probert and Tony Hodge, 28 and 30, live in Bristol with their two sons, Finlay, four and Bobby, seven months.
I try to buy fresh food but costs are going up so much that our fortnightly shop – which costs about £80 – is getting smaller, almost every time. I make big sacrifices to buy Bobby the fresh peppers he likes so much but we simply can't afford to eat fresh stuff every day. Too often, it's frozen chips and processed chicken. The problem is that when you start buying less fresh food, you stop wanting it. My little boy tends not to go for it so, if I buy it, it tends to be wasted.
I sympathise about the cost of things increasing as I don't think that anyone keeping an eye on their spending could not have failed to notice their food bill going up. But I have two problems with this story; the first is the claim that child won't eat fresh food. From my experience as a parent, and I'm far from perfect in this regard, children soon learn to eat their fruit and veg if the other option is to go hungry. The key is persistence and not giving in, I'm the boss not them. The second is this:
We have the most basic Sky TV deal – £24 a month. I would get rid of that entirely if I had to but Tony would have a problem with that, because the sport is important to him. Getting rid of Sky would create problems in our relationship, and that's the last thing we need.
Tough shit. There are four Aldis in Bristol who do a weekly selection of fruit and veg for 39p/69p an item. Eggs are £1.35 a dozen, milk is £1 for four pints, a box of cereal is less than £1 as is 1kg of carrots. If you want meat then 1kg of frozen chicken breasts is £3.99 and a big pack of beef mince is around £2.50. You need to get rid of Sky so that you can feed your children properly.

Saturday, 17 November 2012

An "oversight" I'm sure

Whoops - looks like UK Uncut Legal Action are late in filing their annual return:

Which is a bit naughty because:
Failure to file accounts or annual returns is a criminal offence which can result in directors being fined personally in the criminal courts. The registrar may also take steps to strike the company off the public record.
Tsk, tsk.

Wednesday, 14 November 2012

UK Uncut Legal Action are alive!

Yep - just seen this posted to Facebook on 11th November, although they're not responding to tweets or emails:

Ignoring the court date update (and there will be a blog post on this on Saturday), it looks like Goldman Sachs have been up to no good (full article behind a stupid paywall):
GOLDMAN SACHS expects to receive a £13m tax rebate just months after a row blew up over a “sweetheart deal” between the bank and HM Revenue & Customs. Despite the bank’s multi-billion-pound profits, Goldman expects its British tax bill to shrink this year.
The tax credit is revealed in accounts filed recently by the bank’s ultimate holding company in Britain, Goldman Sachs Group Holdings (UK). The revelation comes amid an increased scrutiny of the taxes paid by big business. Global firms such as Google, Starbucks and Amazon have been left facing questions.
 Or is there in fact a completely innocent explanation for this?
The Sunday Times: Goldman Sachs due £13m tax credit after shares fall 
Goldman Sachs is expecting a £13m tax credit in the UK. Accounts show that the US banking giant had set aside the money to pay tax on staff share options. But Goldman's shares nearly halved in 2011, meaning the tax bill was less than expected, prompting the bank to book the £13m tax credit.
So this was tax that GS thought was due but actually wasn't. There's no story here.

John Lewis MD gets it

Andy Street, MD of John Lewis was on Sky News today:
Mr Street said: "If you actually improve your business by investing ... you have got less money to invest if you are giving 27% of your profits to the Exchequer than, clearly, if you are domiciled in a tax haven and you've got much more.
Ignoring that just because another country has a lower tax rate than us doesn't make it a tax haven, he has a point; too great a percentage of a companies profits end up in the pocket of the taxman compared to some of our buddies in the Single Market/EEA/EFTA. So when your next door neighbour offers all the benefits that you do (English-speaking skilled, educated workforce, stable(ish), credible currency, located in a time zone conducive to international business, decent infrastructure) but with a corporation tax rate of almost half of yours, where do you think that the multinational setting up a European HQ is going to put it?

Saturday, 10 November 2012

Dealing with corporate "tax dodging"

Rather amusingly, Margaret Hodge, Taxfinder General chair of the Public Accounts Committee and outspoken critic of big business paying little corporation tax in the UK, has been the subject of an article in the Telegraph revealing that she owns a chunk of her large family company that pays little corporation tax in the UK. This is in advance of the likes of Google, Amazon, Starbucks, eBay, and Facebook getting a grilling by the PAC on their tax arrangements.

The issue is not companies avoiding tax but the media, the public, and staggeringly, the people who make the tax laws not understanding the tax laws. I can forgive the first two to an extent but there's no excuse for MPs not to get to grips with the basics - I don't profess to be an expert on international taxation but I'm more than capable of reading up on something complex and distilling it into something more simple. With the aforementioned companies, their low or non-existent corporation tax liabilities can be explained by two things:

1. The European Single Market - this allows a company to set up in one country and trade with all other members without any barriers or restrictions. Any corporation tax liability will arise in country where the company is located, which is not necessarily where its customers are. Using Google as an example, Google Ireland Ltd, based in the Republic of Ireland, sells internet advertising to companies in other countries like the UK. Any profits will be taxed where the sales were made which in this case will be Ireland. Google UK Ltd doesn't sell to the public; it only sells services to Google Ireland Ltd and Google Inc.

2. Transfer Pricing - the Starbucks issue is down to transactions with other group companies and whether or not these have been conducted on an "arms length" basis, that is to say that the cost of the transaction would be comparable to that of one between unrelated parties. This is to stop profits being shifted to lower tax jurisdictions by using artificially inflated transactions. Starbucks in the UK has been paying royalty fees to cover use of the brand, new product development, and marketing as well as loan interest to its parent in the US. In addition it buys its coffee beans from a related company in Switzerland and then pays to have them roasted in the Netherlands, again to a related company. These payments, combined with operating costs like wages and rent, mean Starbucks in the UK is loss making and therefore doesn't pay any corporation tax. They have gone on record in stating that they were investigated on the issue of transfer pricing by HMRC and no further action was taken. There are guidelines on transfer pricing set by the Organisation for Economic Co-operation and Development (OECD) agreed by the members, of which we are one, that HMRC would have referred to when investigating Starbucks.

Ultimately what we are seeing here is exactly what the laws and guidelines intended; no one is try to evade or even avoid tax. To haul a bunch of companies who invest a hell of a lot in this country in front of a committee to barrack them for complying with the law is not only ridiculous and ignorant, it's damaging to future investment.

If you want to change things then you are looking at an end to the Single Market, corporation tax harmonisation across the EU, and unpicking longstanding agreements with multiple countries. On the other hand, you could drop your corporation tax rate as because Ireland is well aware, 12.5% of lots is better than 24% of fuck all.

Update on 10/11/12 - Link to Telegraph article updated as they inexplicably changed it.

Tuesday, 6 November 2012

Good news on executive pay

We have this from the BBC:
Senior executives in the UK's biggest companies have seen their average earnings go up by more than a quarter in the past year.
New research suggests the bosses of top firms made an average of £4m a year.
*Awaits lefty rage*
But Incomes Data Services, which compiled the figures, says pay and bonuses have hardly risen at all.
Instead the increase is due to a rise in value of long term incentive plans which have replaced cash bonuses.
And that's how it should be; align the interests of the execs with those of the shareholders over the long term. The lefties should be happy as a substantial chunk of any payout will be winging its way in the form of tax to government coffers. Or perhaps not:

So basically they can't fucking win.