RBS fined £14.5m over mortgage advice http://www.bbc.co.uk/news/business-28948518
US bank in record $16.7bn settlement http://www.bbc.co.uk/news/business-28880307
In a so Uganda moment; we refer to the parliamentary committee meeting aired during local televisions’ news, this week in regard to the NSSF’s purchase of Umeme shares…
EU compensates fruit and veg growers http://www.bbc.co.uk/news/world-europe-28834170
As members of the Ugandan agricltural sector are still lobbying for the removal of the taxes on agricultural inputs that were introduced in June 2014.
Paying for life’s basics by Bitcoin http://www.bbc.co.uk/news/technology-28802887
Smartphone stress: Are you a victim? http://www.bbc.co.uk/news/business-28686235
Jackson video premiered on Twitter http://www.bbc.co.uk/news/technology-28787377
Major UK-based companies have been found to be cutting secret tax deals with Luxembourg authorities to avoid paying corporation tax in Britain.
An investigation led by BBC’s Panorama programme has claimed to have uncovered evidence that companies such as pharmaceutical giant, GlaxoSmithKline (GSK) and the media company Northern & Shell have been exploiting tax loopholes to decrease the amount they paid to the UK Exchequer.
The programme obtained confidential tax agreements detailing plans to move profits offshore to avoid what was a 28% corporate tax rate at the time. These documents were devised by accountancy firm PricewaterhouseCoopers.
The BBC outlined that in the case of GSK, the UK headquartered firm set up a new company in the European financial centre of Luxembourg in 2009. In 2010, the new subsidiary lent Pounds 6.34 billion to a GSK company in the UK. In return, the UK company paid nearly Pounds 124 million in interest back to the Luxembourg subsidiary – effectively removing that money from the UK company’s profits. That move meant that the money was no longer available to tax in the UK at 28%.
In Luxembourg, tax authorities had agreed a generous deal to levy tax on that pounds 124 million at effectively less than 0.5%, or just over 300,000 pounds. As a result, GSK in the UK potentially avoided up to pounds 34 million in UK corporation tax.
Northern $ Shell, owners of Channel 5, the Express newspapers and OK! magazine, transferred loans to a company it set up in the Luxembourg totalling pounds 804 million. As a result of an incredibly low tax rate of less than 1%, the media company had secluded profits which would otherwise have gathered pounds 6 million in UK corporation tax.
Richard brooks, a former investigator with HMRC, said the documents reveal in detail ‘machinations of tax avoidance on a large scale’ with the full cooperation of Luxembourg.
‘We’re seeing really with these, for the first time, exactly how companies avoid tax through a jurisdiction that wants to help them do it,’ he told the BBC.
In a statement following the knowledge of Panorama’s intent (prior the screening), the GSK said, ‘Both the UK and Luxembourg tax authorities are agreed that we have paid all the taxes that are due. We take very seriously our duty to pay tax. We also have a duty to our shareholders and patients to be financially efficient so that we can maximise returns to investors and fund the development of future medicines.’
A spokesperson for the company also stressed that over the period the investigation is looking at, GSK paid around pounds 1 billion in UK corporation and business taxes.
Margaret Hodge MP, who chairs the Public Accounts Committee, which questioned settlements HMRC had reached with major companies, expressed concern over the ability of parliament to scrutinise them.
‘Because of the veil of secrecy surrounding all these decisions around tax, we’re talking big numbers here, lack of transparency means that we, on behalf of the taxpayer, cannot be certain that this was a good, honest, proper deal,’ she said.
The above article was published under newswire, on page 8 in the June 2012 edition of Chartered Secretary magazine.
In present day 2014, as an economy in the developing world borrowing from developed tax systems and the locals copying the multinationals’ tax avoidance transactions in the developed world:
1. Would our accountants be able to avail the same levels of secrecy with our current laws and governance principles?
2. Would our lawyers be able to draft such detailed ‘substance over form’ agreements that would be able to withstand detailed scrutiny from various tax authorities?
3. Would the aspiring tax avoiders be able to afford their lawyers’ fees for notarising such multi -jurisdictional contracts?
4. Would the members of our public accounts committees be able to diligently scrutinise the transactions and in so doing, also respect the quote below?
Lord President Clyde held in Ayrshire Pullman Motors Services and DM Ritchie V IRC (14 TC 754) that,
“No man in this country is under the smallest obligation, moral or otherwise, to arrange his legal relations to his business or to his property so as to enable the In-land Revenue to put the largest possible shovels into his stores. The Inland Revenue is not slow – and quite rightly – to take advantage, which is open to it under the taxing Statues for the purpose of depleting the tax payer’s pocket. The taxpayer is in the like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Revenue.”