Saturday, December 29, 2012

The Alphabet Lottery

As years go, 2012 hasn't been a bad one from a sporting perspective. So it was always going to be interesting to see who got what when it came to the traditional New Year's Honours announcement.

Whatever your opinion of the honours system and whether it should exist at all, it gives a reflection of what the "establishment" thinks of the recipients achievements during the year.

The higher up the MBE-OBE-CBE-Knighthood-Peerage ladder you appear, the "greater" your achievement is regarded as being.

Some honours were fairly obvious. Nobody would deny that Bradley Wiggins career achievements, both on the track and on the road, are not worthy of a knighthood given the precedent set by giving one to Sir Chris Hoy.

Likewise Dave Brailsford, who has revolutionised British cycling with his approach to the sport making it the most successful track cycling nation in the world.

Staying on the cycling theme, Sarah Storey's achievements both as a Paralympic cyclist and previously as a swimmer mark her out as being more than worthy of a Damehood. And this is where things start to get a little complicated and in my view, discriminatory.

Let me get this straight. I have no axe to grind with Jessica Ennis. She's done well for herself, winning titles at major Championships. Being a multi-eventer is the most difficult challenge for an athlete. She was under immense pressure heading into London 2012, and coped with it admirably to win gold. She was rewarded with a CBE, same as Mo Farah who achieved something only six other men in history had achieved - the 5 and 10k double.

Let's compare their career achievements with our next recipient of the CBE.

Six time Olympic gold medallist.
Six time World Championship gold medallist
Six time London Marathon Winner
Four time Great North Run winner
Winner of the New York Marathon

No offence to either Ennis or Farah, but I don't think you can possibly say that their career achievements are even close to being on the same scale.

The winner of all these honours is a guy called David Weir. So why isn't Weir getting a Knighthood?

Pretty simple really. He's in a wheelchair. This, in the eyes of those responsible for dishing out the honours, clearly diminishes his achievements somehow.

Much was made after the massive success of the Paralympics about the terrific example set by the athletes in their triumphs over personal adversity, and how it would change the UK's attitude to disability and disability sport in particular.

While it may have had a short-term impact, it appears that warm glow has worn off and the disabled and disability sport have returned to their normal place in the public consciousness.

More's the pity.

Wednesday, December 12, 2012

"On Starbucks, On Google, On Amazon etc..."

As someone working within the tax industry, I've watched the feeding frenzy developing over the "tax avoidance" activities of major multinationals trading in the UK with a mixture of bewilderment and laughter.

Starbucks decided to try and mitigate some of the bad publicity recently by offering to pay an additional £20m over to the UK exchequer, as some sort of goodwill gesture. In the best traditions of the well-advised, they of course stopped short of admitting any liability or malfeasance in their tax affairs.

They will also cease to use what is referred to in the trade as "transfer pricing" arrangements with their US parent company. These are arrangements common to all multinational groups of companies, where one part of the business in one country buys a product or service it needs from another part based elsewhere. It might be a part or a piece of equipment, or something you can't lay your hands on like the rights to use a trademark.

While the purchaser gets to claim the cost of whatever it is they have bought as an expense in their accounts, the seller has to show that income in their accounts and will pay tax in their jurisdiction on whatever profit they make.

These sort of arrangement are commonplace and are perfectly legal, indeed HMRC has a whole team of people dedicated to making sure these sort of arrangements are not being abused by the setting of artificially high or low prices between parts of the same group.There are plenty of British companies out there using transfer pricing to reduce their tax liability in one part of the world or another.

If Starbucks in the UK stops making these payments to its US parent, it will make more of a  profit and potentially pay UK Corporation Tax. Starbucks in the US however, will make less of a profit as it no longer has this income stream, and therefore pay less US tax. The net effect on Starbucks the worldwide group is going to be absolutely minimal.

Let's be clear here. Starbucks have, based on the facts that are in the public domain, done absolutely nothing wrong. Once the payments they make to the US parent company, which they are entitled to claim as a deduction, are taken into account they make a loss on their UK operations.

So what of this £20m they are paying over the next two years then? It's not tax, as they don't owe any based on their accounts as submitted. HM Revenue & Customs have said that they are not set up to accept "voluntary" payments, just payments of actual tax liability. Indeed if you overpay your Corporation Tax to HMRC, they will usually just send you a cheque back in the post.

So presumably, when Starbucks attempt to pay it, HMRC will be unable to accept it. If it does, this sets an uncomfortable precedent for public opinion - rather than fact - being what dictates how much tax an entity should pay.

That Amazon and Google have got sucked into this furore shows how wide the lack of understanding of their tax affairs actually are. Neither company is based in the UK. When you order something from Amazon, you are not making a purchase from a UK company. When you click on a link or advert that generates income for Google, that income is not going to a UK company. So why should they have to pay UK Corporation Tax on their profits, rather than tax in the country in which they are based?

Don't like it? Don't buy from Amazon and don't search on Google. Use a UK based company, if you can find one.

Politicians through the ages have used tax as a tool of social or economic engineering. This time, before lighting the torches and storming the castles of the rich and powerful they might want to stop and consider whether there is any legal or ethical basis for what they do. Otherwise, the UK is going to become a much less attractive place for multinationals to do business, and that's in no-one's best interests.

Saturday, December 01, 2012

Please Give Generously

This is an urgent appeal on behalf of the British Red Tops.

You may have seen in the media recently about the impact Hurricane Norman has had on the Fourth Estate. Lasting thousands of hours and causing millions of pounds of expenditure, Hurricane Norman had serious and far reaching consequences on the future of the British press.

This is Rebekah.

Prior to Hurricane Norman, she was one of the most powerful women in the British media. Norman has left her with no job, no hope, no future. She may be forced to sell one of her horses just to meet the mortgage payments on her big house in the Cotswolds.

Rebekah is not alone.

There are dozens more like her, struggling to survive in the aftermath of Hurricane Norman. These people face being deprived of their most basic human rights:

The right to bribe police officers for sensitive, confidential and potentially prejudicial information.

The right to access the emails, text messages and voicemails of anyone they think might be newsworthy.

The right to manipulate politicians into setting standards and legislation in a way that best suits their needs, under threat of withdrawing their support otherwise.

If you believe that the likes of Rebekah should have these basic human rights, please give generously.

Send a cheque, made payable to Murdoch, Dacre and Co to:

Save The Scumbag
Murdoch Towers
A Tax Haven

On behalf of Rebekah, Andy and others like them, thank you.