TaxCorporate TaxWhat’s fair about MPs’ tax sniping?

What's fair about MPs' tax sniping?

HMRC and big corporates might be on the receiving end of MPs' ire - but our elected representatives would do well to look closer to home

FAIRNESS AND MORALITY. What do they have to do with tax?

As much as it would seem easy to say ‘nothing’, they can’t be dismissed.

It’s understandable that we can look at Starbucks and say that is unfair that it has paid barely any corporation tax in the UK over the past 15 years.

But is it immoral? Don’t think so.

Call me mischievous, but I wonder if most of the public’s ire is down to that fact that, without complex tax affairs of their own, they’re not in a position to mitigate their own bills. No one in their right mind would hand over more than they have to. It’s not that Starbuck’s deserves a pat on the back for its actions, but without any moral arbitration and principles expertly enshrined within legislation, then companies will do what they have to do to keep their tax bills down.

For Starbucks to have apparently stepped forward to make a change to its structure seems like madness. It certainly should structure itself to not overpay tax. The question then becomes – if what it pays (or doesn’t) is unfair, then what is fair?

Perhaps it has reached a tipping point where the furore will do it more financial harm than merely maintaining its current tax strategy. Perhaps the taxman has indicated it will again run the rule over Starbucks’ tax affairs – or try and retrospectively target the ‘loopholes’. In that sense, corporate pragmatism continues to rule. Ironically, it would be the public that has stepped in where the government has failed miserably.

Is Starbucks a corporate angel? Well, it seems as if it’s gone to great lengths to end up in a situation where it pays little UK corporation tax. Has the taxman done enough? Perhaps not – but it is merely an agent of government.

Let’s talk about fair and unfair. Maybe it’s unfair of Hodge, Gauke, Osborne and other publicly appointed representatives to blame others. They need to spend a bit more time navel-gazing, and accept that they need to work harder to enshrine ‘fairness’ and ‘principles’ into legislation.

So it will be fascinating to see if the GAAR can add fairness or morality-checking into the UK’s tax framework. But if it creates uncertainty and complexity, then we might need something stronger than an espresso to protect investment into the UK.

Kevin Reed is editor of Accountancy Age and Financial Director

Related Articles

HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

1w Emma Smith, Managing Editor
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

3m Alia Shoaib, Reporter
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

4m Alia Shoaib, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

4m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

4m Austin Clark, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

4m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

6m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

7m Emma Smith, Managing Editor