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Sep. 27th, 2010

Intriguing news that you may not have come across if you’re not a Private Eye regular or Twitter devotee: the Revenue looks to be allowing Vodafone off around £6 billion in dodged UK taxes. Private Eye’s full story is here, while financial website This Is Money tells it more concisely here.

HMRC has been looking increasingly tatty over the past few years, ever since Revenue and Customs were merged into one, clearly now too small, organisation. Its loss of half the nation’s data was the first prominent clue that something was up, and now it appears to have fewer and fewer resources available to investigate, let’s say, “sensible taxation management”.

There’s something darkly amusing about the fact that the offshore technique Vodafone has successfully employed to avoid UK tax has just been thoroughly rejected by the Indian High Court, which is ordering the company to pay around $2 billion in taxes it accrued when it bought Hutchinson’s mobile phone network in India. In this case all Vodafone’s nifty footwork with offshore registration in the Cayman Islands has counted for nothing, although obviously it will vigorously appeal. (I’ve actually seen Vodafone’s appeal submission. It’s just all the original documents with the words “Cayman Islands” highlighted and ringed repeatedly in indelible marker, surrounded by arrows and exclamation marks. It just might work.)

In unrelated news, Vodafone’s financial director, Andy Halford, is on a “business forum on tax and competitiveness” set up to advise the government. (NB Disappointingly, not this Andy Halford.)

Remember, that’s around £6 billion that’s just been written off for a corporation. The government has said it will impose drastic cuts on the poor, the sick and those who rely on public services because it needs to save £4 billion. Toy with that next time you see Nick Clegg doing his hilarious “fairness” routine on TV.*

* I know it’s not all Clegg’s fault, but we’ve been over this; the Tories can’t help themselves. This is just what they do. And they aren’t wasting too much effort on pretending that what’s coming is going to be fair.

Comments

( 5 comments — Leave a comment )
autopope
Sep. 27th, 2010 02:10 pm (UTC)
I find it amusing that they're simultaneously threatening everyone who is paying income tax at the top bracket with an audit.

Aren't the folks paying 50% tax, by definition, the ones who aren't successfully avoiding income tax?
pseudomonas
Sep. 27th, 2010 03:19 pm (UTC)
They're by definition not avoiding all of it. They may still be under-paying to some extent. I have no clue what the prevalence of underpaying is in that group or how much the govt stands to recoup by auditing them.

It does seem crazy to let Vodafone off the hook if they're going to the hassle of auditing quite a large number of people earning slightly over the 50p threshold.
autopope
Sep. 27th, 2010 04:39 pm (UTC)
The only person I know for sure who's in the 50% bracket got audited a few years ago (before the 50% band appeared).

Then he got summoned to a meeting with the Revenue.

Crapping himself, he turned up to the office to find a couple of inspectors and a very senior person.

"We're sorry, Mr B., but we're afraid there's been a mistake in your taxes." The senior man slid a piece of paper across the desk. "We've been over-charging you."

The piece of paper was a refund cheque for roughly a quarter of a million quid.

(Mr B is a rather successful creative type. Like a lot of creative/arts types who strike gold, he doesn't have a financial head on his shoulders. He just did what he thought he was supposed to do, filed a tax return, and paid the invoices from Inland Revenue. It's not just bankers and accountants who earn a lot, and not all high earners are financially literate.)

This is anecdotal, I know, but my point is: people who are making serious efforts to avoid paying tax will generally either not be paying at all, or be paying small amounts.

People in the 50% bracket are declaring taxable incomes over £100K a year and paying up; they're almost certainly doing so because they're not taking specialist advice about minimizing their tax profile, which means they're basically honest, so the gains from auditing them are likely to be tiny -- either that, or they're bazillionaires who are leaking a small surplus, in which case their lawyers and accountants will tie HMRC in knots.

(NB: the "honesty" I refer to may be pragmatic: if you're earning £1 over the higher tax threshold, it's just not worth your while to pay an accountant lots of dosh for "wealth planning" advice.)

I agree completely about letting Vodafone off the hook being crazy. Especially because Vodafone, being a company in the business of milking the public for services, can't throw a snit and retaliate by moving all their operations outside of the UK.

PS: I am not now, nor have I ever, earned enough money to be liable for tax at the 50% rate.

Edited at 2010-09-27 04:41 pm (UTC)
moleintheground
Sep. 27th, 2010 09:45 pm (UTC)
So when I lose my job helping disabled kiddies in March I should unload three rounds in Clegg's skull, not Cameron's?

Let me know.

Regards etc.
webofevil
Sep. 28th, 2010 08:44 am (UTC)
Assuming your vivid metaphor here to mean “strongly worded letters of complaint to Clegg’s parliamentary secretary”, I would merely mention as a matter of historical interest that no military tactician has ever suggested taking aim only at a deputy leader.
( 5 comments — Leave a comment )

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