Britain's Fake Recovery: Middle Class Young Worse Off Than Parents

John_Pierpoint

CLAPTON wrote: »

I'm not entirely sure what you mean by 'fair' share: is that 'equal' share?

In the end each country can only consume what its peoples produce ; if productivity is low then they are poor, if productivity is high then they can be richer.

We will have to see how things play out but there is scope for all to be richer even if some decline in relative terms.

I was under the impression the Britain has been in deficit most years since about 1905. Reserve currencies enable reality to be postponed for generations.

I still marvel at the way Uncle Sam keeps on issuing greenbacks and gets the rest of the world to swap real goods for paper promises pledged against future tax payers.

CLAPTON

John_Pierpoint wrote: »

I was under the impression the Britain has been in deficit most years since about 1905. Reserve currencies enable reality to be postponed for generations.

I still marvel at the way Uncle Sam keeps on issuing greenbacks and gets the rest of the world to swap real goods for paper promises pledged against future tax payers.

seems a good system to me

chewmylegoff

vivatifosi wrote: »

I couldn't agree more. The foreign-owned businesses that I have worked for do this and it is seen as normal business practice. In fact, I'd go as far to say it is ingrained normal business practice for a trans-national corporation.

I don't know why it isn't addressed. Any idea? Presumably it is harder to get to grips with. Would it be something that you need management accounts rather than financial accounts to see in detail and spot abuse? I'm not an accountant but would like to know the answer.

It is more difficult that dealing with contrived interest charges and you do need to look at detailed underlying figures for most inter company charges (although Starbucks stupid approach of charging twice what their coffee really costs to move profits around the supply chain would be fairly easy to tackle in my view).

In terms of group management charges it would be complicated to address on a case by case basis, but HMRC could simply create a rule whereby tax relief was restricted to a certain level. Say for the sake of an example you might decide to restrict tax relief on a group management charge to 20% of turnover or something like that. I am not suggesting that is the right level but it would be fault easy to introduce some sort of policy. I guess the concern would be that it would discourage investment because if you set up a UK start-up subsidiary and provided it with services from group overseas, you could get hit with a tax charge even though no profit was being made.

An alternative approach would just to be to focus on the group management charge in accounts where no tax is being paid as a result of a large management charge and direct all your resource at unpicking the most suspicious cases. I expect some companies would really struggle to produce any evidence to justify the % they apportion to the UK.

Loughton_Monkey

chewmylegoff wrote: »

........An alternative approach would just to be to focus on the group management charge in accounts where no tax is being paid as a result of a large management charge and direct all your resource at unpicking the most suspicious cases. I expect some companies would really struggle to produce any evidence to justify the % they apportion to the UK.

If it would work, that's just one 'legitimate' method. Stateless companies now exist and (as I understand it) there is not any law in mainstream countries that can stop it. It is now becoming the 'norm' for big business not to pay tax.

This is something for G20 to sort out - if they have the balls to do it. I'm sure they could introduce laws that would largely put an end to it, without the need to employ another 420,000 accountants. It might include (for example) the concept of a 'witholding tax' on turnover, just like individuals all get on savings interest. Individuals can 'opt out' but would potentially be committing a criminal offense by lying on the R85. Should be the same for companies. We could build a large number of "Accountants Prisons" who could be forced to do hard labour by examining the accounts of all large companies and earning remission by pointing out all the "anomalies" theirin.

chewmylegoff

The g20 won't do anything about it, but we don't need them to. We are still in charge of our own tax law, and large corporations want to sell things to people in this country so they can make loads of money. Furthermore global corporations often cannot afford to be absent from a major economy because they will lose their clients in other jurisdictions (banks being a case in point - why else would UBS still have a US operation?).

It's not the g20 which needs to grow some balls it's our own govt, or rather a combination if the govt and HMRC. Having low corporate taxes is a sensible policy to attract investment but you should make sure you actually collect those taxes. A lack of efficiency in collecting those taxes creates a competitive advantage for foreign corporations.