HMRC and its 'cosy' relationship with big business

There are a number of stories doing the rounds today about HMRC 'cosy' relationship with big business and the large accountancy firms that help them to avoid tax.

Why double standards by HMRC mean you pay more. (Telegraph)

HMRC hid 'sweetheart' tax deals for big business, MPs say (Guardian)

Both articles, left and right, indicate that your owner of a smaller business is getting a raw deal in comparison to the bigger boys in town.

The Guardian article goes further, illustrating that HMRC simply doesn't have the manpower and in some cases, the expertise, to deal with these large companies.

Goldman Sachs are the most recent company to come under the spotlight, but the 10M of interest it is claimed they dodged is small beer compared to the 8Bn Vodafone is alleged to have dodged.

Personally, I find it a bit galling that these highly profitable firms are getting off with billions when your average small business owner is getting pushed over a barrel. It's also tough to take the level of government cuts in this sort of scenario.

No doubt, these companies employ a lot of people, which I welcome. But by the same token, they enjoy a lot of benefits that they wouldn't have in other parts of the world.

Surely corporation tax isn't that hard to work out? My accountants manage this every month with minimal fuss. Why are these business behemoths allowed to get away with it? Given that HMRC is the one area of Government that can actually generate income, shouldn't we be creating jobs there and not cutting them?

Surely corporation tax isn't that hard to work out? My accountants manage this every month with minimal fuss. Why are these business behemoths allowed to get away with it? Given that HMRC is the one area of Government that can actually generate income, shouldn't we be creating jobs there and not cutting them?

Im no expert on tax law - but as far as I understand it some countries like the US and Britain have a complicated system whereby the headline rate of corporation tax is quite high but that there are numerous allowances and exemptions - so there is a large gap between the headline rate and the rate actually collected. Other countries like Ireland have a lower headline rate but a more streamlined, simpler system with few exemptions.

I have no idea what the respective benefits / diadvantages are of both systems, other than some multinationals with clever lawyers seem to be able to milk the system.

edit: Report from the TUC on this issue here. Yes I know its the TUC, but interesting read http://www.tuc.org.uk/extras/corporatetaxgap.pdf

Interesting.

There is a campaign to get the Goldman Sachs decision reversed:-

They are looking for a donation of £1 ( £1.24 with transaction charges ) to cover their legal costs if they lose. Looking to raise £20,000 - already near the 10K mark.

I'm not condoning 'tax avoidance' per se but if these companies didn't/couldn't avoid paying these taxes wouldn't they simply increase the cost of their goods and services to cover the shortfall in profits.

So, the 'average man in the street' loses out regardless?

Im no expert on tax law - but as far as I understand it some countries like the US and Britain have a complicated system whereby the headline rate of corporation tax is quite high but that there are numerous allowances and exemptions - so there is a large gap between the headline rate and the rate actually collected. Other countries like Ireland have a lower headline rate but a more streamlined, simpler system with few exemptions.

 

I have no idea what the respective benefits / diadvantages are of both systems, other than some multinationals with clever lawyers seem to be able to milk the system.

 

edit: Report from the TUC on this issue here. Yes I know its the TUC, but interesting read http://www.tuc.org.uk/extras/corporatetaxgap.pdf

Interesting read. They make the point about HMRC being kept well-staffed too.

The coalition government has actually created an Office of Tax Simplification. It'll be interesting to see if it makes an impact.

I'm not condoning 'tax avoidance' per se but if these companies didn't/couldn't avoid paying these taxes wouldn't they simply increase the cost of their goods and services to cover the shortfall in profits.

 

So, the 'average man in the street' loses out regardless?

That's what they would want you to believe, but as is often the case this is substantially oversimplifying the issue and IMHO a red herring. The following article refutes this claim quite well (although I accept certain tax policies can hit the consumer at the till).

http://liberalconspiracy.org/2011/10/12/why-stopping-tax-evasion-would-not-increase-prices/

And apart from that I think the main cry from people on this issue is the notion that we're all in this together!!! this just doesn't come across as being equitable or just.

Having been involved with HMRC as both an individual and with a small company, I can assure you that HMRC at that level aren't quite as accommodating!!!!!!

I wonder if AA's company is regarded as a large accounting firm?

quote from op

"There are a number of stories doing the rounds today about HMRC 'cosy' relationship with big business

and the large accountancy firms that help them to avoid tax."

I wonder if AA's company is regarded as a large accounting firm?

Definitely not, UHY Hacker Young are small-fry compared to the likes of KPMG

TBF these stories have been in Private Eye for months and months....

I don't know why people buy newspapers. They are ****e.

I wonder if AA's company is regarded as a large accounting firm?

 

quote from op

 

"There are a number of stories doing the rounds today about HMRC 'cosy' relationship with big business

and the large accountancy firms that help them to avoid tax."

I reckon they mean the likes of KPMG, PWC, Grant Thornton not a tiddler like UHY

I reckon they mean the likes of KPMG, PWC, Grant Thornton not a tiddler like UHY

Thanks, I had no real idea about how big/small UHY are.

This is complete speculation on my part...

The hmrc may be doing deals with companies like gold mans and vodafone because they know that to force the issue will result in very expensive litigation. They also may suspect that the companies involved have a reasonable argument. They also knOw that if they lost they would set a precedent that other companies could exploit thus costing the treasury many millions more.

This is complete speculation on my part...

 

The hmrc may be doing deals with companies like gold mans and vodafone because they know that to force the issue will result in very expensive litigation. They also may suspect that the companies involved have a reasonable argument. They also knOw that if they lost they would set a precedent that other companies could exploit thus costing the treasury many millions more.

But they've already set a precedent by allowing Vodafone to avoid around £6bn of corporation tax just by channeling the money overseas, with an agreement from Hartnett that any future profits moved in this way won't be taxed either. Other companies will see that and have a legal precedent to use in court should HMRC come after them in the future.

It's genuinely incredible how this ****wit has been allowed to retire gracefully rather than booted out in disgrace.

TBF these stories have been in Private Eye for months and months....

 

I don't know why people buy newspapers. They are ****e.

Private Eye is a must for making sense of the crap in the papers.