I've made occasional use of the Freedom of Information Act to ask about big tax cases, and the government's view on non-domiciliaries (the latter being surprisingly successful, in that the Treasury sent me a document detailing the £1bn annual presumed cost of the rule).

The government is however proposing restrictions to the Act. It can reject claims if they are too expensive to answer, and it proposes to include 'reading time' in that figure.

Frankly, any further restriction is unacceptable, since it is so hard to get information out of the government through this route anyway. Anyone who is interested in opposing the move can sign a petition here.

November 27, 2006 | Permalink | Comments (0) | TrackBack (0)

David Cameron has snubbed the CBI conference, deciding to go to Iraq instead.

I have always got on well with CBI people, but I have to confess I think skipping it is a good plan as far as Cameron is concerned.

The CBI repeated its claims that companies are all about to leave the country today, saying that business taxes are too high.

I think there is a strong case for lowering business taxation, in that corporates drive prosperity. There is a sense in which we all benefit, from employment, from investment in ideas and from the sense of properity and wealth created, when businesses are making significant profits (not to mention the more direct link in dividends paid out to our pension funds).

But the CBI endlessly makes the case for lower business taxes, and does it on the basis that business is awfully hard done by. Which I don't really buy.

Some companies have left (insurers, where regulation is a more important issue). HSBC backtracked on its earlier ballsiness in saying it might leave.

But the suggestion of a flood of departures is unlikely. The UK is a great place to be to do business, given the respected regulatory climate, and, as we have all seen, the light burden of listing on UK markets.

The only real possiblity here is that companies could through various accounting tricks locate their HQs offshore. That carries reputational risk, but probably not a significant one. At the risk of alienating those who think it's legitimate for companies to do that, I'd say there's a good case for HMRC making the situation so watertight that companies can't do it. If you're a British company, you're a British company.

The problem is not so much whether or not the CBI is right, it's that it moans and bleats so much. It's tone is so negative, at a time when British business has much to be happy about. Realistically, the tax situation is not that bad. When you are a politician trying to associate yourself with positivity, a can-do rather than a self-pitying attitude, I'd say it's right to give this one a wide berth.

November 27, 2006 | Permalink | Comments (0) | TrackBack (0)

Private Eye reports this week that Sir Clive Thompson, the former Rentokil boss and now well-known chairman of Farepak before it went bust, was being paid his salary through a private company, called Storm Financial. (He also seems to have missed an accounts deadline, too, for a company called Barslondon).

Such companies as Storm Financial obviously have various benefits, the main one being you don't pay income tax on the earnings but corporation tax. You can then distribute the cash as and when you feel, according to whatever maximises the tax advantages.

Neat, you might say, and something for Farepak savers to ponder this christmas when they're without the products Sir Clive and others promised them.

There can also be a benefit for the company in paying senior employees through companies, in that they might not have to pay national insurance contributions. Though, as far as I and thousands of IT contractors remember, there is the hated IR35 to contend with here, which sets aside the arrangements and charges the tax as if the set-up was not in place.

We don't know what tax Farepak and Sir Clive have and have not paid, just that these structures could have allowed them to do the above. Let's just say that collapsed companies often have, er, interesting tax complications at the bitter end, meaning Farepak's final accounts for 2006 could make for some fascinating reading.

November 22, 2006 | Permalink | Comments (0) | TrackBack (0)

The outcome of the Varney review appears to be significant. The former chairman of HM Revenue & Customs has proposed clearance procedures for businesses, something they had long argued for.

The detail will be interesting. How far do these go, on which areas? Some are mentioning business deals larger than £100m. I wonder whether managing things by size doesn't give rise to criticisms that this hands an unfair advantage to big business, but let's wait and see first.

Another thought that occurs is that this is quite a clever political idea. Businesses are hankering for lower taxes and, to a lesser extent, less of this silly anti-avoidance crackdown. By giving business this, the Chancellor can fairly say he has made the UK more competitive, without losing the moral high ground or giving in to the race to the bottom on tax.

And credit where credit is due: I suggested here that Sir David was not the man to do this job. Perhaps I was wrong on that front.

The final thought, and one that I think has the most significance, is this. Clearance procedures are not as simple as you might think. You need people to clear things. There is a reason why enquiries take a long time, and that is that some of the issues being discussed are very complex, and finding out the devil in the detail is expensive. Can the government possibly clear things within 28 days, AND carry out the Gershon savings?

More than that, this seems to presage two things: an effective general anti-avoidance rule in having the clearance procedure. And the handing back of compliance to the government and away from the taxpayer. Since self-assessment we have talked about taxpayers doing the taxman's job. Now the onus is back on the taxman to make decisions about right and wrong.

November 17, 2006 | Permalink | Comments (0) | TrackBack (0)

I was amused to read at the weekend that the government wants to convince the online gambling industry to come onshore. I already knew that the government had a vague aim of trying to become an international centre for the industry, but there was also some discussion in The Observer about tax rates.

This is all quite amusing, in the sense that you have to wonder in what parallel universe a company would move from paying no tax, to paying a 30% rate. There appear to be some discussions going on, but it is practically impossible to see why any of the gambling firms would forfeit such a considerable amount of money when their competitors are unlikely to follow suit.

I may not have fully understood the tax situation for people operating out of Gibraltar - there is some talk of changes. But those ministers involved in this really must have a very funny idea of business if they think that offering people the prospect of paying hundreds of millions of pounds in tax is really attractive.

November 6, 2006 | Permalink | Comments (1) | TrackBack (0)