James Moore: Start paying your tax or the little dog gets it

Outlook HMV's famous fox terrier (he's called Nipper) isn't barking any more. He's whimpering at the plight of a business that could be the next big High Street name to come crashing down.

After a rotten start to the Christmas period, the 91-year-old company has just 12 days to turn things around if it wants to avoid breaching its banking covenants.

You'd think it would be doing okay. Its major competitors in the field of entertainment retailing have steadily disappeared and while the supermarkets have moved in, only the really big outlets offer much more than a token selection.

The trouble is, the limited number of people who pay for music increasingly do so online, where they can also find a vast selection of DVDs, games, headphones and other things HMV sells, all at knockdown prices. It helps no end if, like Amazon.co.uk, you don't pay much tax because you can pass some of your savings on to consumers.

This is by no means HMV's only problem. But it must be a contributor.

The demise of the chain might ultimately be beneficial to the High Street, encouraging new, independent outlets to set up. Some of them might be run by former HMV staff.

But they'll also have to pay UK tax, not to mention high business rates.

A lot of people have recently argued that tax avoidance is simply good business. Which it is, for the tax avoiders. For their competitors, not so much. As HMV is proving.

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