Ritz Hotel Cooking the books...

Generali

kabayiri wrote: »

And yet the government seem to be getting vexxed about a trifing £40m being lost to contractor types (amongst others) through the use of umbrella companies using innovative schemes to save their clients money. £40m is chicken feed compared to the money saved by Accenture;HP;IBM;Cap Gemini;Fujitsu;Amazon;Google;Apple; etc etc.

Surely, in a free market, these types of innovative but legal income schemes should be available to everyone?

It leaves you with the suspicion that tax avoidance is fine for the big guy, but woe betide the small guy in the street trying it.

The tax rules are the same for everyone. If you don't like the rules, talk to your MP.

Some laws like transfer pricing are open to abuse but most of this stuff is simply a reaction to very high taxes and over complicated rules.

kabayiri

Generali wrote: »

The tax rules are the same for everyone. If you don't like the rules, talk to your MP.
...

Talk to my MP? No need

Far more productive to use an umbrella company which is trying to maximise your income. Personally, I do stop short of the more extreme schemes though.

chewmylegoff

1) until more detail is provided it's impossible to say whether there is anything in the ritz story. Some of these stupid "business x pays no tax" stories have been written on the basis that the thicko journalist seems to think that turnover should be taxed, not profit. The "tax reliefs" might be offsetting things like their electricity bill against tax given the standard of some of the populist reporting on this issue.

2) Hamish's 'businesses don't pay tax, consumers pay tax' point is a bit of a red herring if you ask me. Say the government needs to raise £100 in tax. If business X 'should' be paying £10 in tax but instead pays £0, then that £10 has to be raised somehow. Ultimately consumers will have to pay it. So whilst making X pay the £10 it owes might result in consumers paying £10 more for the goods and services provided by X this is a neutral outcome for consumers, not a negative outcome, as they would have had to pay the £10 in tax via another (direct or indirect) route anyway. Either way, consumers end up with the same amount of goods and services and the same amount of money left at the end of the process.

chewmylegoff

Generali wrote: »

According to the article on the BBC website, the Ritz ploughs all its profits back into the hotel. Profits that are invested into the underlying business do not attract Corporation Tax so it's hard to see what the crime is here.

We do all understand that companies don't exist as cash cows to be milked by the Exchequer, right? Companies exist to make a profit for their owners, no other reason just like we all go out to work despite rather than because of our income tax bills.

It's not quite as simple as saying reinvested profits attract no tax. It depends what you reinvest them in. If you reinvest them in buying freehold property, for instance, you wouldn't get tax relief. If you reinvest them refurbishing all your hotel rooms in what can only be described as a visually offensive manner, then you would get tax relief (albeit spread over the economic life of the tasteless fixtures and fittings).

Thrugelmir

Generali wrote: »

According to the article on the BBC website, the Ritz ploughs all its profits back into the hotel. Profits that are invested into the underlying business do not attract Corporation Tax so it's hard to see what the crime is here.

Probably some "charges" from an overseas entity are invoiced through the books before the profit is declared.

Much in the same way Starbucks reduce their liability to UK Corporation tax.

Thrugelmir

Originally Posted by HAMISH_MCTAVISH
See sig...


It doesn't matter whether or not it's called VAT, import duty, or corporation tax, the only person that pays for it is YOU, the consumer.

And you pay for it via an increase in the price of goods and services you buy.

When governments raise taxes on businesses, it is paid for by you.

Not by the business.

Not by the business owners.

By you.

If Companies fail to pay their fair share. Then the liability still falls on us.

Personally I don't care what the Ritz charges. As the majority who frequent it can afford to do so. Without a second thought.

HAMISH_MCTAVISH

Thrugelmir wrote: »

If Companies fail to pay their fair share. Then the liability still falls on us.

The liability is already on us. It is all of us that ultimately pay all taxes through the revenue we provide to companies.

People should be campaigning for lower taxation, not being suckered into paying more taxes indirectly and less taxes directly.

grizzly1911

chewmylegoff wrote: »

1) until more detail is provided it's impossible to say whether there is anything in the ritz story. Some of these stupid "business x pays no tax" stories have been written on the basis that the thicko journalist seems to think that turnover should be taxed, not profit. The "tax reliefs" might be offsetting things like their electricity bill against tax given the standard of some of the populist reporting on this issue.

2) Hamish's 'businesses don't pay tax, consumers pay tax' point is a bit of a red herring if you ask me. Say the government needs to raise £100 in tax. If business X 'should' be paying £10 in tax but instead pays £0, then that £10 has to be raised somehow. Ultimately consumers will have to pay it. So whilst making X pay the £10 it owes might result in consumers paying £10 more for the goods and services provided by X this is a neutral outcome for consumers, not a negative outcome, as they would have had to pay the £10 in tax via another (direct or indirect) route anyway. Either way, consumers end up with the same amount of goods and services and the same amount of money left at the end of the process.

If company X pay their £10 and I as a consumer do not purchase goods or services from them. Indirectly I am benefiting as the tax burden on me is reduced.

Obviously some one else will pay more to use company X and in the circle of life it could be argued that it will impact me somewhere or other, but the rate to which it does will be variable an limited.

It could also mean that I have the ability to consume today, rather than in the future, if company X profits ever found their way into my pension fund.

Is it fair to society as a whole to exploit a situation just because you can.

grizzly1911

HAMISH_MCTAVISH wrote: »

The liability is already on us. It is all of us that ultimately pay all taxes through the revenue we provide to companies.

People should be campaigning for lower taxation, not being suckered into paying more taxes indirectly and less taxes directly.

But we will never will have lower taxation for individuals it is a myth.

If we lower corporation taxes do you think company X, who don't pay any and probably don't see why they should, do you really think they would be prepared to pay some?

Generali

chewmylegoff wrote: »

It's not quite as simple as saying reinvested profits attract no tax. It depends what you reinvest them in. If you reinvest them in buying freehold property, for instance, you wouldn't get tax relief. If you reinvest them refurbishing all your hotel rooms in what can only be described as a visually offensive manner, then you would get tax relief (albeit spread over the economic life of the tasteless fixtures and fittings).

Fair enough, I'm no accountant.

The fact remains that Corporation Tax is a tax on profits. Companies that don't make a profit, as defined by the Taxman, don't pay the Tax. It's completely disingenuous for journalists to link turnover to Corporation Tax paid, it would be like criticizing a checkout chick for only paying a few quid in NI having scanned thousands of dollars worth of groceries!

There are plenty of tax scandals out there and this doesn't look like one to me. At the best of times the BBC seems to define 'profit' as 'the difference between prices paid and the prices that should have been paid'.