Many UK-based businesses, particularly at the smaller end of the SME market, support the aims if not the conduct of UK Uncut and applaud the politicians playing a form of class warfare against multinationals over their failure to contribute \u201cfair\u201d levels of Corporation Tax. Are they wrong?<\/p>\n
They are. What they\u2019re missing are two fundamental ingredients to the argument \u2013 they pay more Corporation Tax than they need because they don\u2019t make full use of the panoply of allowances and structures larger corporates use, and when it comes to the smallest businesses, what they pay in Corporation Tax is merely a replacement \u2013 usually discounted – of the Income Tax they would suffer were the company profits taken as personal income.<\/p>\n
Why not use the allowances? Fundamentally, most tax breaks are against costs incurred. If the tax break is only worth 24-odd % of the cost incurred to obtain it, only a fool would incur that cost unless there was a sound business reason for doing so. And smaller companies, particularly owner-managed ones, are either reluctant or unable to incur significant extraneous cost \u2013 so they don\u2019t get the associated tax breaks.<\/p>\n
If, like Starbucks, you give away equity in your own business to your employees, you\u2019ll get a tax break. How many SME\u2019s would contemplate doing that? If, like the same company, you\u2019re prepared to fund an office infrastructure in Switzerland to handle all your purchasing requirements, then some part of your overall profits will be attributable to your Swiss location \u2013 hardly realistic for most SME\u2019s.<\/p>\n
If you\u2019re prepared to move your corporate headquarters to Eire, incur the establishment costs over there, pay the exit charge on leaving the UK, then yes, you can benefit from the lowest Corporate Tax charge in the EU. But it is hugely complex and comes with an enormous price tag, both in terms of cash and time.<\/p>\n
Better still, move to Mauritius. Get a really, really low corporate tax rate. More complex still.<\/p>\n
If you think you\u2019re going to be making Capital Gains, emigrate to Belgium \u2013 no CGT!<\/p>\n
If you\u2019re looking at VAT on distance-selling, try Luxembourg.<\/p>\n
Work all over the place, but not in Hong Kong? Get yourself employed by a Hong Kong company, make sure you become resident there, you\u2019re home free! No tax!!<\/p>\n
And if you\u2019re French resident, own your own company generating income from Intellectual Property and taking remuneration and dividends in excess of \u00a3800K pa \u2013 quick! \u2013 get out!! \u2013 cross the Channel and save yourself, and your company, a fortune!!!<\/p>\n
And that\u2019s the case for the Prosecution. It\u2019s nothing to do with the taxpayer, it\u2019s everything to do with the competition between countries to entice business into their territory. Why do they do it? Because business creates employment, and the vast bulk of government revenues are extracted by taxes on income and taxes on expenditure. Better by far to have more than 700 Starbucks here employing 9,000 people than have another 700 empty stores and 9,000 more on the dole. It pays no corporation tax? Legitimately? Not an issue.<\/p>\n
There\u2019s nothing \u201cfair\u201d about tax. It\u2019s whatever each government wants it to be. A revenue-collecting device. An enticement. <\/strong> A discouragement. You don\u2019t get foreign companies setting up in your jurisdiction by discouraging them from doing so. One can hear voices off-stage shouting \u201churrah! Let them go!! We don\u2019t want those nasty multinationals here!\u201d \u2013 they\u2019re plain wrong. We want the employment prospects, and as consumers, it seems we want what they offer.<\/p>\n Where the UK gets its taxes<\/a>:<\/p>\n Many UK-based businesses, particularly at the smaller end of the SME market, support the aims if not the conduct of UK Uncut and applaud the politicians playing a form of class warfare against multinationals over their failure to contribute \u201cfair\u201d levels of Corporation Tax. Are they wrong? They are. What they\u2019re missing are two fundamental[…] <\/p>\n\n
\n Income
\ntax<\/td>\n<\/td>\n \u00a3155 Billion<\/td>\n <\/td>\n 26% of tax revenues<\/td>\n<\/tr>\n \n National Insurance<\/td>\n <\/td>\n \u00a3106 Billion<\/td>\n <\/td>\n 18% of tax revenues<\/td>\n<\/tr>\n \n VAT<\/td>\n <\/td>\n \u00a3102 Billion<\/td>\n <\/td>\n 17% of tax revenues<\/td>\n<\/tr>\n \n Corporation Tax<\/td>\n <\/td>\n \u00a344 Billion<\/td>\n <\/td>\n 7% of tax revenues<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"