TaxCorporate TaxThey fought the taxman, and who won?

They fought the taxman, and who won?

‘IF multinational corporations can get away with it, why can’t we?’ was the question asked by one of Crickhowell’s SME owners on BBC Two’s documentary The Town That Took on the Taxman. Accountancy Age tuned in

They fought the taxman, and who won?

FOR most people, tax isn’t sexy. That’s why you don’t see many TV programmes with the word ‘tax’ in the title.

However, Wednesday night saw Twitter’s keyboard army turn away from Celebrity Big Brother or another repeat of Top Gear to watch comedian Heydon Prowse convince a group of SME owners from the Brecon Beacons to take their taxes offshore.

From the outset the entertainer knew he had a job on his hands to convince patriotic and law-abiding shopkeepers to avoid paying their fair share of tax. When asked whether they would take their taxes to the Isle of Man or the Cayman Islands, many said that avoiding tax was unpatriotic; ‘it pays for hospitals and roads, so why shouldn’t we contribute?’

However some business owners were persuaded by Prowse’s research into the relationship between big firms and their taxes. As soon as he mentioned that Facebook paid less than £5,000 in corporation tax in 2014, people started to listen.

The social media platform wasn’t the only company to be mentioned by Prowse. One resident looked like he was about to explode when he learned that Amazon’s tax rate in the UK works out at 0.002%.

Twenty minutes in and the comedian had convinced a handful of small business owners to potentially move their company’s books offshore. One of the biggest supporters of Prowse’s idea was independent coffee shop owner Steve, who was disgusted at how little tax is paid by beverage giants Café Nero and Starbucks. 

Soon enough the Crickhowell crusaders had come up with a name for their movement – The Fair Tax campaign.

Prowse and Co then left Crickhowell to travel to Amsterdam, visiting a group of Dutch accountants who had a poster with the words “Where I pay my tax, that’s my home” proudly displayed in their office. Around €8trn a year flows in and out of the former province via a loophole that helps big corporations avoid paying tax.

Irritated at this statistic, the Crickhowell residents argued whether the loophole was morally sound, with one Dutch accountant replying with “moral responsibility is make believe, it’s like Santa Claus”. It seems like Christmas always comes early for this Dutch adviser.

After Amsterdam, The Fair Tax Campaign travelled to London to visit Jim Harra, HMRC’s director general of business tax.

The campaigners questioned Harra on how he’s trying to clamp down on corporation tax avoiders, with Harra denying that HMRC has a “cosy relationship” with big firms.
When confronted by one SME owner who asked for a “level playing field” for small business owners and their taxes, the director general said that HMRC simply does not have the ability to put a “named person on every small business” to educate them on how to emulate the tax schemes of huge companies.

HMRC commented on yesterday’s programme, stating that the government “is clear that big businesses must pay its fair share of tax, so new legislation has been introduced to prevent multinationals from diverting their UK profits from the UK tax system”, adding that extra funding has been invested in the government department to tackle abuse by multinationals.

However Harra left the door open for small businesses to employ the same legal tax avoidance loopholes as multinationals. But what if the backbone of the UK economy all decided to start avoiding tax at the same time?

The decision would plunge the country into chaos, a realisation for one Crickhowell resident who asked: “If we all do it, and we all live here, who’s going to pay for the roads?”.

Ultimately, The Fair Tax Campaign is striving to change the rules on UK tax avoidance and not to adopt them for themselves.

It was enjoyable and uplifting to see a group of normal taxpayers stand up against multinationals and the taxman, but whether the programme makes any difference to the British tax system is a question that many simply won’t know the answer to.

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