This topic contains 39 replies, has 24 voices, and was last updated by  Niles 3 weeks, 6 days ago.

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  • #3277

    Niles
    Participant

    Just reading this https://www.theguardian.com/commentisfree/2017/dec/19/debtors-court-ministers-destroy-business-lives… and it makes sad and worrying reading.

    However its rather odd, it starts off mentioning how people and businesses , which if not a ltd company is people, get pursued for Tax they cannot pay. Few debtors turn up, no doubt devoid of hope. The main creditor is the state, HM Revenue & Customs seeking unpaid VAT and income tax, or councils chasing council tax. The state has first call. .

    However it seems to end calling for more tax to get paid They are the direct consequence of government policy. Paying people too little, tightening the austerity tourniquet, cutting tax credits and benefits, allowing extortionate lending, shredding public services, permitting gig jobs, freezing public pay.

    #3278

    nev
    Participant

    Surely it’s talking about Google, Amazon, etc. not paying their fair share, which includes companies TM is falling over giving NHS contracts to like Virgin, who as part of their business planning have offshore funds FFS!

    There should be no private companies given any government contracts that don’t hold their tax accounts in the UK.

    #3279

    Niles
    Participant

    There should be no private companies given any government contracts that don’t hold their tax accounts in the UK.

    @nev I would agree with that. However what would you say if the NHS used a company that cost 20% more because it did not manage its finacial affairs as efficently as possible.

    Its same old same old, people want public services, but always seem to want someone else to pay. Its just like DFS with its interest free thing, everyone wants to get something for nowt, so everything needs to be smoke and mirrors.

    #3280

    fred
    Participant

    There should be no private companies given any government contracts that don’t hold their tax accounts in the UK.

    @nev What if they are not wholly UK based? Virgin may have started here, Amazon and Google didn’t.

    Corporation tax is a mess. What would you like to tax? There is already VAT on the sale, government takes 1/6th of the transaction. Any payments out of the company (dividends, salaries) are taxed again. Why additionally tax money held in the company and not spent – all you do there is reduce the ability of companies to build cash reserves. What really needs to happen is not to tax net profit but to tax all payments out of the country that are solely destined to be dividends. But then you can’t distinguish between the £1 google sends back to it’s owners (which would be taxed as income if they were in the UK) and the £1 is sends back to the US to pay for technology (it’s royalty payments) without requiring audit of the US accounts for UK tax purposes. Which is probably doable, but unlikely they would want to disclose the relative profitability of individual countries.

    #3281

    nev
    Participant

    I would agree with that. However what would you say if the NHS used a company that cost 20% more because it did not manage its finacial affairs as efficently as possible.

    Its same old same old, people want public services, but always seem to want someone else to pay. Its just like DFS with its interest free thing, everyone wants to get something for nowt, so everything needs to be smoke and mirrors.

    If the NHS provides the service for 20% more it’s still a bargain, since the profit goes back into the NHS and the tax gets paid. There not much of a argument there really! Pissing money out of the NHS or to privatised rail doesn’t make any sense.

    If you looking at something for nothing you need look no further than your local council, if it’s owt like ours. New housing development needs to be built, council asks for sponsorship of a bus service for the next 15 years, where does that money come from?

    And after 15 years the bus service stops!

    #3282

    nev
    Participant

    What if they are not wholly UK based? Virgin may have started here, Amazon and Google didn’t.

    I am pretty certain they know where there profits are coming from.

    > Why additionally tax money held in the company and not spent – all you do there is reduce the ability of companies to build cash reserves.

    you only get taxed on the interest income of the cash reserves not the reserves themselves.

    #3283

    sammy
    Participant

    There should be no private companies given any government contracts that don’t hold their tax accounts in the UK.

    I would go further. Public services, such as telephone, gas, electricity, water and rail should be taken away from private companies and put back into public ownership. The privatisation of these facilities was like inviting Dracula to a blood bank,

    #3284

    dave
    Participant

    @sammy You clearly were not around when you had to wait months for the former publicly owned BT to install a phone.
    And the publicly owned water companies were not allowed to invest in upgrading their sewarage and environmental services to meet standards as the govt of the day could not afford the upgrades.Being private allowed those companies to get investment from sources not open to the govt.

    #3285

    katy
    Participant

    @sammy A big part of government not being able to afford investment was the bloated nature of public services.
    I do a lot in the water industry and sites that had 40 or so people working on them have been cut back to 4 people and are still working.
    If a private business can provide a service and make a profit there is no reason government shouldn’t be able to do the same thing if it was managed correctly.

    #3286

    nobroo
    Participant

    @niles I thought the same. Typical Toynbee- conflate two completely unrelated strands of argument to make a political point. I despair at the state of the ‘quality’ press these days.

    She begins by talking about those whose businesses have gone bust and goes on to attempt to show a link to individuals’ low pay and low benefits. Would get perhaps a C minus at GCSE level.

    #3287

    sammy
    Participant

    You clearly were not around when you had to wait months for the former publicly owned BT to install a phone.

    My next point covers this too.

    And the publically owned water companies were not allowed to invest in upgrading their sewarage and enviromental services to meet standards as the govt of the day could not afford the upgrades.

    The (Tory) government of the day starved investment in the public services, so they could con the public into wanting privatisation. British Rail is the best example of this, but I’m sure the other utilities suffered in a similar manner.

    Being private allowed those companies to get investment from sources not open to the govt.

    Being private allows these companies to rip off the public in or4der to over-pay their top directors.

    #3288

    Adam
    Participant

    If you looking at something for nothing you need look no further than your local council, if it’s owt like ours. New housing development needs to be built, council asks for sponsorship of a bus service for the next 15 years, where does that money come from?

    And after 15 years the bus service stops!

    That’s happened in Sheffield, the bus which went up the hill near my home no longer runs, not so helpful as people age, or for older people already in the area. It only vanished once the buses were privatised.

    #3289

    jack
    Participant

    The (Tory) government of the day starved investment in the public services, so they could con the public into wanting privatisation. British Rail is the best example of this, but I’m sure the other utilities suffered in a similar manner.

    @sammy Good job we’d never fall for that now eh? Otherwise they’d probably be busy privatising the NHS or something.

    #3290

    troll
    Participant

    @nev You obviously don’t know how corporation tax works.

    #3291

    nev
    Participant

    That’s happened in Sheffield, the bus which went up the hill near my home no longer runs, not so helpful as people age, or for older people already in the area. It only vanished once the buses were privatised.

    @adam It’s not just buses either, I only found out recently the coppers get a slice of pie from a new housing development.

    So it would be interesting to see what other services get a slice of the pie, it’s no wonder house prices are so high!! You don’t get owt for nowt, is right!

    It’s no wonder the Tories don’t want council houses, because having a stock of council houses controls the price of the rental market, which in turn controls the housing market. Any drop in that means less money for services or more demand for government money.

    Meanwhile we’re all paying private landlords to house council tenants and pissing money out of the system into private companies, who can charge what they like just about because there is no one offering a cheaper alternative.

    You obviously don’t know how corporation tax works.

    @troll No your right, I’ve ran my own limited company for 14 years and I’ve never paid corporation tax on our savings, you pay it on the profit (before it’s savings) and you pay it on the interest once it is savings.

    Simply having money in the bank means nothing apart from the interest earned.

    #3292

    Duck
    Participant

    @sammy OMG do your history. There were plenty of Labour govts at the time who also starved those industries of investment. They also had far higher rates of tax- both corporation and personal – then they do now and still could not afford the investment.

    Over paying their top directors. The pay of directors is insignificant compared to the costs of running these businesses.it would make no difference to the price you pay even if their pay was cut by 50%.It might save you 0.25p on your annual elec bill, probably even less.

    You are mixing up too many issues .

    #3293

    el
    Participant

    @niles Good grief. Her conclusion is a complete non-sequiteur. And that’s being kind. Don’t read the guardian it sucks bad! #fakenews

    #3294

    chris
    Participant

    If a private business can provide a service and make a profit there is no reason government shouldn’t be able to do the same thing if it was managed correctly.

    @katy Agreed. In principle. The trouble was that publicly owned organisations were often very inefficient. If they were taken back into public ownership the business model would have to be different. Maybe having several businesses all owned by us and competing with each other.

    #3295

    callum
    Participant

    @chris Money motivates people. People in the private sector get performance related financial bonuses. I’m not aware of this being allowed in the public sector. This leads to people ‘just doing their jobs’ in the main. Pay rises are fixed across the board everyone gets the same rate regardless of how they have performed that year.

    Certainly in my company, people get zero rated pay rises if the company can’t afford it or if he employee is not pulling their weight. There’s no 1% automatic rise negotiated by a union.

    #3296

    sammy
    Participant

    Agreed. In principle. The trouble was that publicly owned organisations were often very inefficient. If they were taken back into public ownership the business model would have to be different. Maybe having several businesses all owned by us and competing with each other.

    @callum @chris It seemed to be working OK at Southern Rail though before they we privatised again.

    #3297

    jack
    Participant

    Utilities companies (majority overseas owned) VERY profitable.
    rail operating companies ( majority overseas owned) – very profitable. Or they couldn’t pay dividends, so wouldnt have been bought.

    But to your basic point; no they dont. Companies can make a loss without having to turn to the shareholders for funds in the short term. Obviously long term losses cannot be sustained, that leads to cash shortage and liquidation.

    Alternatively, wouldnt it be nice to have the option to do that rather than just turn to customers via price increases? Oh hang on, private companies already can, if you are a bank thats been allowed to get too big for everyones boots.

    #3298

    guy
    Participant

    @jack Rail operating companies borrow money from banks and pay the government a franchise.

    #3299

    howard
    Participant

    As long discussed in the EU, the obvious solution would be to tax multinationals a fraction of their turnover in each country, based on an estimate of the profit eventually made from that turnover, regardless of the time and location of where that profit is eventually realised (that could remain at the convenience of the company).

    The onus would then be on the company to prove that they incurred actual costs above the estimate and in the country in question that should then obviously and fairly deducted from the taxable amount.

    The obvious advantage of such a setup isthat the tax authority (and courts) would decide which costs are admissible, and which are purely frivolous tools for tax avoidance (patent boxes, royalty fees, etc..).

    Of course the lobbyists and tax havens are agitating like hell against any such proposals, but that presumably just proves that the proposals hit precisely the right spot.

    Also, I cannot see why this approach should be unfair to the poor multinationals. At least in Germany, that is exactly how the tax authority dealt with my income as a nominally self employed recipient of a research stipend (i.e., the same rules as for self employed contract work).

    #3300

    jack
    Participant

    @jack Rail operating companies borrow money from banks and pay the government a franchise.

    They do; some of them also receive a subsidy from the govt to operate the franchise (and so they can pay dividends to their shareholders).

    From http://actionforrail.org/the-four-big-myths-of-uk-rail-privatisation/

    The cost of running the railway has more than doubled in real terms since privatisation from £2.4bn per year (1990–91 to 1994–95) to approximately £5.4bn per year (2005–06 to 2009–10).
    Official figures show that all but one of the private train operators in the UK receive more in subsidies than they return in the form of franchise payments to the government. In 2013–14, the government contributed £3.8bn to the UK rail industry.
    The top five recipients of public subsidy alone received almost £3bn in taxpayer support between 2007 and 2011. This allowed them to make operating profits of £504m – over 90 per cent (£466m) of which was paid to shareholders.

    #3301

    Jimjam
    Participant

    @howard Your proposal doesn’t work on a supranational basis as the following example demonstrates:

    Let’s imagine a company with two branches in countries A with a CT rate of 20% and B where the rate is 10%. Branch A makes a profit of £1m. Branch B makes a loss of £1m. Taken in the round, the company’s profit is zero and no tax is due, and rightly so.

    Under your scheme, however, the company will have to pay tax at 20% in country A and can only secure an eventual deduction against CT in country B in later years and then only at a rate of 10%, leaving them unfairly out of pocket.

    Only if you consider all international firms to be aggressively avoiding tax could you argue that the unfairness corrects a greater inequality, but even then you would be punishing compliant companies for the misdemeanours of others. I run an international company and I’m just not convinced the problem is as widespread as you believe. Most business owners are keen to minimise their tax bill, of course, but usually only by the mildest forms of compliant tax policy, like claiming R&D allowances or the employer’s NI deduction.

    #3302

    jack
    Participant

    @howard Very much like the building industry already in the UK. In the mid noughties, the govt decided to clamp down on builders as being likely tax avoiders, so introduced a scheme to tax at source (CIS32?), ie the builder/contractor raises an invoice for £1000, the customer pays them a percentage and the tax man a percentage, which is then held as a tax credit on the builders account until his / her accounts are submitted. Seemed to work ok despite being a bit complicated (and thoroughly hated by those who night have had a fleeting propensity to do “cash only” jobs).
    Dunno if the scheme is still with us, but it certainly wouldn’t be beyond the wit of man* to come up with similar schemes that might help simplify local accounting for those corporations finding themselves with huge overseas internal royalty payments / license fees etc

    * David Davis excluded, obviously……

    #3303

    Niles
    Participant

    Under your scheme, however, the company will have to pay tax at 20% in country A and can only secure an eventual deduction against CT in country B in later years and then only at a rate of 10%, leaving them unfairly out of pocket.

    @jimjam How is that unfair? If they make a profit in A, why shouldn’t they pay tax on that in A. What goes on in B isn’t very relevant to the citizens of A who need the tax revenue.

    Isn’t this part of the problem – that by shunting profits and losses around internationally large, obviously hugely profitable companies with a little sleight of hand claim to make no profit anywhere.

    #3304

    howard
    Participant

    @jimjam Your hypothetical, multinational company used the infrastructure of country A, relied on training of their staff in the schools of country A, and even if not relied on the entire society of country A generating sufficient wealth for them to sell enough of their products or services to make a local profit (at least when using fair accounting practises).

    Paying taxes in country A is therefore the least they can do, and considering that unfair seems almost perverse.

    The loss in country B should be treated entirely independently. If the losses are real, they should of course be able to offset them against the local rate.

    edit: I believe that you are right about most medium sized companies operating across several countries, but IKEA, Apple, Google, Amazon, and their ilk have been taking the piss for too long.

    These companies deprive the countries where they either make or sell most of their goods of a realistic and deserved share of the profits, by systematically inventing fake internal costs. The Amazon business model in particular puts a rather high stress on the transport infrastructure, and by way of thanks they refuse to enforce tax compliance by their marketplace traders, adding insult to injury.

    If the eventual backlash will generate unnecessary red tape or costs for your company you will know who to thank!

    #3305

    Jimjam
    Participant

    How is that unfair? If they make a profit in A, why shouldn’t they pay tax on that in A. What goes on in B isn’t very relevant to the citizens of A who need the tax revenue.

    Isn’t this part of the problem – that by shunting profits and losses around internationally large, obviously hugely profitable companies with a little sleight of hand claim to make no profit anywhere.

    @niles But the profit in A might arise out of the fact that a disproportionate balance of overheads is located in country B. Maybe there’s a particularly successful distributor generating sales in A while almost all the economic activity, including the reliance on state infrastructure, turns out to be in country B. Yet the taxes go to to country A where the profit accrues, not B where the majority of the activity takes place.

    The basic principle that taxes should be paid where profit is earned is not in dispute. But the complexities of supranational profit generation makes a one size fits all solution completely unachievable.

    #3306

    jack
    Participant

    Let’s imagine a company with two branches in countries A with a CT rate of 20% and B where the rate is 10%. Branch A makes a profit of £1m. Branch B makes a loss of £1m. Taken in the round, the company’s profit is zero and no tax is due, and rightly so.

    Under your scheme, however, the company will have to pay tax at 20% in country A and can only secure an eventual deduction against CT in country B in later years and then only at a rate of 10%, leaving them unfairly out of pocket.

    Only if you consider all international firms to be aggressively avoiding tax could you argue that the unfairness corrects a greater inequality, but even then you would be punishing compliant companies for the misdemeanours of others. I run an international company and I’m just not convinced the problem is as widespread as you believe. Most business owners are keen to minimise their tax bill, of course, but usually only by the mildest forms of compliant tax policy, like claiming R&D allowances or the employer’s NI deduction.

    @jimjam Country A could argue that the company could transfer operations from the obviously rubbish country B and reduce their overall tax burden that way, increasing operations and employment in their country, which is clearly a good place for this company.
    Most companies dont have an issue (or a perceived issue); its where the very large corps such as the coffee shops, amazon, google etc pay crazy low amounts of tax , but transfer what are utterly ridiculous amounts to clear tax havens, then these questions get asked. The profit transfers follow a path that is designed to minimise tax by whatever means possible, using any legal loophole possible, and there is no possible commercial logic otherwise in these transactions.
    It wouldnt be as bad if (for eg) apple transferred profits to the USA, from where they are controlled, and paid USA corp tax, but they offshore it and refuse to repatriate the cash to america. Cant remember the last time I saw the amount thy are sitting on, buts its a just stupid number (easy enough to find).

    #3307

    bill
    Participant

    VAT or local sales taxes can be viewed as a different method of extracting taxes from those companies.Although in turn these can get complicated!

    With yesterdays changes in USA corporation tax rates, it is expected that Apple will start pulling those offshore billions back into the US. One of the big issues in this is ( or should I say was) that USA corporation tax rates were out of line with everybody else, so there was an incentive to keep money offshore.Equally Google has announced that it now intends to avoid these mechanisms to reduce tax by putting Uk sales through Ireland. So the picture on this sort of issue is changing and most of your arguments will be old hat in a year or so’s time. Big corporates are getting the message that it is no longer acceptable to do this sort of thing.And the EU has come down pretty hard on Apple’s dealings in Irleand.

    #3308

    pat
    Participant

    @niles The government could start by a bit of joined up thinking.
    I recently posted about a dodgy roof job.
    Got involved with trading standards who kept crying they are underesourced.
    I pointed out the Trader had given me an invoice for 4.8K with a fake address, so probably ducking tax.
    I gave them phone number, van reg, facebook profile and stuff.
    Asked trading standards if they would report to HMRC
    No, was the answer.

    #3309

    Person
    Participant

    How is that unfair? If they make a profit in A, why shouldn’t they pay tax on that in A. What goes on in B isn’t very relevant to the citizens of A who need the tax revenue.

    @niles It’s more complex though. Hq and R&D in north west Europe, parts manufactured in far east, assembled in eastern Europe, sold through individual franchises in each country globally. Where the the profit lie? Arguably everywhere apart from far east, but it won’t be an equal split.

    #3310

    ratface
    Participant

    @person I agree, it is more complicated than I made out above, but the general idea that the tax authorities should make an estimate of the local profit (which would obviously have to take into account the points you listed), and it should be the job of the company to prove them wrong if they feel the profits assigned to their operation in a specific country are too high.

    Much easier for services, though: If a company like Amazon make 20% of their sales in a given country, they should pay tax on 20% of the total profits in that country. One shitty office in Ireland or another tax haven simply does not count compared to the use of public infrastructure, which these companies rely on 100% for their business model to be feasible at all.

    #3311

    sammy
    Participant

    OMG do your history. There were plenty of Labour govts at the time who also starved those industries of investment. They also had far higher rates of tax- both corporation and personal – then they do now and still could not afford the investment.

    @duck Being a bit more historical – at least Labour nationalised these industries in the first place. Later Tory governments did have the benefits of North Sea Oil revenue (no genuine Labour government had this), and they probably had a bit left over for public utilities (at least not for them to starve completely) after funding tax cuts for the yuppies and crushing the miners’ strike in 1984-5.

    Over paying their top directors. The pay of directors is insignificant compared to the costs of running these businesses.it would make no difference to the price you pay even if their pay was cut by 50%.It might save you 0.25p on your annual elec bill, probably even less.

    Doesn’t mean it’s right. Top directors wages are a national scandal at the moment. I did forget the money wasted on shareholders (which would be saved if companies were in public ownership).

    You are mixing up too many issues.

    What makes you think this? I was talking about privatisation of state utilities and the taxes we currently waste on subsidising these top directors and shareholders.

    #3312

    gregory
    Participant

    @sammy I’m 50, and remember clearly what a terrible experience it used to be to get a utility connection. At best a new phone would take months, and there was never any certainty over anything. Similarly using British Rail was equally miserable. Central planning and a command economy was not a success in the UK

    Also, do you really appreciate that Nationalisation means that the shareholders have to be bought out? It has to be done fairly and above board otherwise inward investment would greatly diminish as investors take flight. How do you think those sorts of large sums should be raised? Taxation, borrowing? Let’s not forget we ended up getting the money from the IMF in the end, and had to accept the imposition of the structural reforms that Thatcher gets the ‘credit’ for.

    #3313

    mo
    Participant

    @sammy you can argue the rights and wrongs of nationalisation but it’s important that in the 70’s and early 80’s the country was very much broke, and there wasn’t money to pay for updating various utilities. The lending rates at the time made borrowing prohibitive, so the appeal of privatization was partly to access private money.

    I’ve worked as a civil servant in the old Department of Energy and work in the energy industry now. Saying that people in the private sphere work harder for a comparatively small bonus is just not true. Both sectors have committed workers , and slackers too.

    #3314

    sammy
    Participant

    I’m 46. I have lived in the UK since the age of 21 and unfortunately can’t comment about phone lines. I can say, however that public transport seemed better to me when it was a nationalised service. This is partly my comparison of the old BR with current privatised services. Even more stark is the contrast between the publicly owned Edinburgh buses (thankfully still the case) and the utter farce that passes for a bus service in Glasgow. Lucky the trains are so good there.

    #3315

    Ali
    Participant

    My girlfriend works in the public sector. She’s a civil servant at the DWP. If she gets a particularly good annual review she gets a ‘bonus’ of a £50 Argos voucher.

    #3316

    Niles
    Participant

    My girlfriend works in the public sector. She’s a civil servant at the DWP. If she gets a particularly good annual review she gets a ‘bonus’ of a £50 Argos voucher.

    She gets her bonus after she has sanctioned enough vulnerable disabled people for no reason? SCUMBAGS!

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