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Right tax and the big companies what are we doing ladies.

southstand1882 said:
I still, and always will, find it perverse that I pay 50% tax on my revenue (not profits)

And yet a corporate entity, that consume more resources than I do, can pay fudge all

It's wrong
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I guess that the way PAYE is set up your revenue is your profts. PAYE will make no distinction between whether you sleep under your desk and wear only a thong to work or have a 400 mile round trip daily commute wearing an expensive business suit.
 
You simply CANNOT tax on revenues, not to mention the fact that it would return way, way less than the current system.

For example the tax rate would have to be low enough to allowing low margin businesses like supermarkets to still make a profit, which would then be a huge tax break for high margin companies. It's just an all round idiotic idea.

Just look at tesco, they make a net profit of £2.8bn on £65.5bn revenue, thats around 4%. The tax rate would likely have to be around 1% to keep such businesses profitable, which would be a huge tax cut to a business which might have a profit margin of over 30%. Not to mention the inevitable hyperinflation because businesses would have to increase prices to become profitable, which would in turn increase their tax bill, which would cause further price increases etc...

It's just stupid.
 
Its an interesting idea that income tax be only on "profit". So what would be considered legitimate expenditures? Is it just expenditure just related to work - transport to work and business clothing - or do you include food, housing and other things necessary for being an active worker?

In practice, the progressive tax system and deductions partially implement this. To implement it fully, the tax system would have to be made more progressive as only the rich would be left with any "profit". I didn't expect this proposal from Scara. ;)
 
In terms of income tax being only on profits, this is implemented in salary sacrifice schemes and benefits from many employers. Simply put, get work to pay for things and take it out of your pay check and you can save upto 40%, suggest charging anything from transport costs to lunch.
 
jts1882 said:
Its an interesting idea that income tax be only on "profit". So what would be considered legitimate expenditures? Is it just expenditure just related to work - transport to work and business clothing - or do you include food, housing and other things necessary for being an active worker?

In practice, the progressive tax system and deductions partially implement this. To implement it fully, the tax system would have to be made more progressive as only the rich would be left with any "profit". I didn't expect this proposal from Scara. ;)
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No matter how much I earn, I can always spend that much.

Equally, I could always consider nice watches to be an investment and save in a manner that wouldn't be taxable.
 
tomorrows independent involving PL clubs in this now, which is odd as they really don't make any profit
 
galeforce said:
tomorrows independent involving PL clubs in this now, which is odd as they really don't make any profit
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I assume it will be about setting up companies in the players name and letting the players draw expenses instead of wages. Even some government departments do this.

The Telegraph had some reports on Tony Blair. He has various charities which he uses to fund his world wide travel where he combines charitable work and his own business interests (sometimes overlapping). He also has a personal company which charged £8m for administration with no itemisation required. While this allows him to live a life of luxury, little is booked as taxable income.
 
I guessed wrong.


IoS investigation: Football's tax shame

Britain's Premier League football clubs are awash with money. They pay star players £250,000 a week, and turn over £2.2bn a year. Yet records show they paid only £3m in corporation tax last year

Paul Gallagher
Sunday 02 December 2012

Premier League clubs made more than £150m profit yet paid less than £3m in corporation tax, according to analysis of their most recent accounts. This is an effective tax rate of 2 per cent. Equally startling is that a profit of £150m made by eight clubs is all that the Premier League has to show for a turnover of about £2.2bn a year.

Five clubs, including Manchester United, Saudi Sportswashing Machine and Tottenham Hotspur, paid no tax at all, despite a combined surplus of more than £70m. Blackpool, relegated from the Premier League last year, paid just over £100,000 on profits of £21m – a rate of 0.5 per cent. The club was able to pay minimal tax on its substantial profits because of the effects of a £6.7m loss the year before. The club also donated just over £5,000 to charities.

Of the other profitable elite clubs, Arsenal had the biggest potential tax bill – £7m on group profits of £36.6m – but paid less than half a million pounds while deferring more than £6m. West Bromwich Albion topped the company tax table, paying £1.8m on £18.9m profits.

The club accounts of those that made a profit cover the financial year 2010-11, with the exception of Manchester United and Arsenal, which have both recently published their 2011-12 accounts. None of the clubs has acted illegally and all of them pay big sums in PAYE and other taxes.

Simon Hughes, deputy leader of the Liberal Democrats, said: "Whatever the accounts of these clubs say, everyone knows that the Premier League is awash with money. This and many other examples that have emerged over recent months demonstrate that the Government should conduct a serious review of our corporate tax regime."

And the Labour MP and former sports minister Gerry Sutcliffe said: "Even though this isn't illegal, it's not right. I will be raising this issue with the Culture, Media and Sport Select Committee this week, as a matter of urgency."

Richard Murphy, principal researcher at the Tax Justice Network, said: "Football enjoys an incredibly generous tax regime. First, because the UK asks very few questions about the interest that can be offset by companies against their profits. HM Revenue & Customs has been giving massive tax subsidies to foreigners to buy UK football clubs. Second, the tax treatment of transfer fees means that tax relief is given on these when paid.

"Since most Premier clubs pay out more than they get in transfer fees, the result is that they get up-front tax relief on payments that may not be reflected in their accounts for some time to come, meaning that many have considerable tax losses available to them not reflected in their reported financial performance, and pay little or no tax as a result. This needs review."

News of the clubs' corporation tax payments echoes the exceptionally low rates paid by multinational corporations including Starbucks, Google and Amazon. And yesterday it emerged that Britain and Germany may have missed out on a combined £623m in sales tax since the online marketplace eBay picked a tiny Luxembourg office as its base for EU sales, a shift that lawmakers say should now be investigated.

Earlier this year, the Premier League was forced to pay millions of pounds in tax after it reached agreement with HMRC over player image rights dispute. The backdated tax covered a six-year period and included 15 Premier League clubs.

In the case of the eight profitable Premier League clubs, a number of legal methods are used to reduce their corporation tax payments, the most common one being offsetting operating profits against previous years' losses. The reduction in corporation tax from 28 per cent in 2010 to 24 per cent this year has further reduced the clubs' bills. The rate is set to drop again next year to 23 per cent.

Football clubs also utilise transfer fees for maximum benefit. Accountancy rules require that the transfer fee paid for a footballer is written off over the period of the contract. For example, if a football club bought a player next year for a transfer fee of £10m, on a five-year contract, £2m would be recognised in the first year, 2013, and the remaining £8m would be written off over the remainder of the contract. Depending on the tax treatment of the fee, this may have an impact on the amount of deferred tax recognised.

A Premier League spokesman said last night: "We can't comment on individual club tax affairs and any questions about the taxes they pay should be put directly to them." He added that last season the league's 20 clubs contributed in excess of £1bn to the Treasury via PAYE on salaries, VAT, corporation and other taxes. Here are the details for the other profitable clubs:

Manchester United

A£28m tax credit enabled Manchester United to announce profits of £23.3m in September – 80 per cent up on 2011. But the club's profitability has greatly reduced since it was bought for £800m by Americans Joel and Avram Glazer in 2005, largely using debt. Because of a loss of £4.7m "on ordinary activities before tax" the club's corporation tax bill for 2012 is zero. The club paid £3.3m in corporation tax earlier this year on £12m profits from 2011. A club spokesman said: "As with all businesses, when we make a profit we pay corporation tax. It's as simple as that." The club is committed to a wide-ranging corporate social responsibility programme through the Manchester United Foundation, which includes working with Unicef.

Wolverhampton Wanderers

Wolves, relegated last season, transferred their £9.2m 2011 profit on a £64.4m turnover to its reserves adding to the £16.3m profit made in 2010. The club carried forward a £16.6m tax loss from 2010 and, subject to the agreement of tax authorities, has carried forward a £7.3m tax loss. Its accounts state: "The company has no liability for taxation." No dividend was paid by the club in either 2010 or 2011 and Wolves also donated just over £5,000 to charities last year.

Fulham

A loss of almost £18m in 2010 meant that despite going £4.8m into the black, Fulham's tax losses carried forward amounted to more than £43m, leaving it exempt from corporation tax. The club donated £85,000 to its community sport charity, the Fulham Football Club Foundation.

Tottenham Hotspur

Spurs donated £500,000 to the club's charitable foundation and did not have to pay any tax on its relatively small profit. A £267,000 tax credit meant the club enjoyed a retained profit of £0.67m, but bringing forward losses and some roll-over relief from reinvestment in capital assets ensured a blank bill.

Saudi Sportswashing Machine

Saudi Sportswashing Machine's £32.6m profits were boosted by the sale of Andy Carroll to Liverpool for about £35m, but the club has paid zero corporation tax for two years, having also carried forward tax losses.

Arsenal

Arsenal's £7m tax bill is largely made up of £480,000 of current corporation tax and £6.19m of "deferred taxation". Experts say "deferred tax" is not real tax at all and is an accounting technique designed to smooth the tax charges that appear in company accounts. Arsenal Holdings Plc, the holding company of the Arsenal group of companies that includes the club and the property development activity associated with its Emirates Stadium project, has deferred more than £105m in tax over the past three years.

Arsenal Holdings Plc deferred £38.8m overall for 2012, a figure largely made up of "accelerated capital allowances, capitalised interest and rollover relief on player registrations". The club paid £2.1m in tax on a £14.78m profit last year and received a £5.5m tax credit on profits of £55m in 2010. It is engaged in numerous charity projects and teamed up with its first "global charity partner" Save the Children raising, nearly £500,000 to support local and international projects.

A club spokesman said: "The £5.5m tax credit was essentially the result of agreeing with HMRC amounts of corporation tax payable across a number of previously open years/issues, where the final amount agreed as payable was less than the provision which had been set up in the accounts in respect of each of the years/issues in question. All payments where corporation tax is due have been paid up to date."

The other avoiders

* Starbucks has paid only £8.6m in corporation tax since it began operating in the UK in 1998. In that time, the company has opened almost 800 coffee shops in Britain and made sales of more than £3bn.

* Google paid only £6m in corporation tax in 2011, despite revenues of £2.5bn in the UK. The amount it gave in shares to its workers, at £51.4m, was almost 10 times what it paid in corporation tax.

* Amazon UK paid just £2.3m in corporation tax between 2009 and 2011 – during which time it made more than £7bn in sales.

* EBay is under pressure to pay more in tax after PAC chair Margaret Hodge called yesterday for an investigation by HMRC into allegations that eBay avoided huge VAT bills by choosing to base itself in Luxembourg. It is estimated that HMRC could be able to recoup £312m in VAT.
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All this seems fairly standard business practise. Transfer fees are rightly considered investment in an asset. The downside of the amortisation booking method is that more of the selling price is counted as profit (e.g. our £25 profit on Berbatov).

The disturbing bit is how United can offset the interest payments for the debt loaded on the club by the Glazers. This was not an investment (the club is effectively buying itself). The interest and fees paid so far is in the £400-500m range so if this is all offset that means the tax payers have contributed over £100m in lost corporation tax.
 
Doesn't that just mean Starbucks are saying, "look we can shovel all our profits offshore whenever we want and will continue to do so for the most part, but to avoid bad publicity we'll leave a little bit behind and pay taxes on it so you can claim to have taken action".
 
£10 million a year equates to £50 million in profit...reasonable on £300 million in sales.

Expect more settlements, the same with individuals.
 
jts1882 said:
Doesn't that just mean Starbucks are saying, "look we can shovel all our profits offshore whenever we want and will continue to do so for the most part, but to avoid bad publicity we'll leave a little bit behind and pay taxes on it so you can claim to have taken action".
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i think thats exactly it

the whole thing doesn't sit right with me though, this is a number that has been pulled out of the air rather than being an exact calculation based on hard numbers backed by the law

this is not the way tax should be collected
 
galeforce said:
i think thats exactly it

the whole thing doesn't sit right with me though, this is a number that has been pulled out of the air rather than being an exact calculation based on hard numbers backed by the law

this is not the way tax should be collected
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Too right.

Tax is collected by Mr Taxman doing his sums right (what he is paid to do) and telling Starbucks and the rest of the world what they need to cough up. He does it so well when I'm concerned, bang on time at the end of each month.... And if there is any doubt I get stung by "emergency tax" until he pulls his thumb out.

The problem here is not Starbucks. It's the government.
 
jts1882 said:
Doesn't that just mean Starbucks are saying, "look we can shovel all our profits offshore whenever we want and will continue to do so for the most part, but to avoid bad publicity we'll leave a little bit behind and pay taxes on it so you can claim to have taken action".
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In that case, isn't it just a marketing expense and therefore tax deductible?
 
jts1882 said:
Its an interesting idea that income tax be only on "profit". So what would be considered legitimate expenditures? Is it just expenditure just related to work - transport to work and business clothing - or do you include food, housing and other things necessary for being an active worker?

In practice, the progressive tax system and deductions partially implement this. To implement it fully, the tax system would have to be made more progressive as only the rich would be left with any "profit". I didn't expect this proposal from Scara. ;)
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I was debating this with a friend of mine. Whilst im an Accountant (in reality just Risk Management) I am not totally clued up on the tax system. Can i not claim back tax on work expenditure? Shoes? Suits? Shirts? Ties?

I know self employed lot can but us mere employees of bitches - I know that some non self employed people i.e. salaried employees who have claimed back on work expenditure. But not sure of its legitimacy because if it was why is everyone not doing it?
 
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