Can pay, must pay: Vast tax avoidance by multinationals that rely on the stability of our country to make their profits has to end



Between now and January, hundreds of thousands of Britons who are self-employed or whose income is not taxed through PAYE will have to undergo the annual grind of filling out tax forms, a tedious task for which their only reward is to be told, when the job is done, how much of their money they must surrender to their Treasury. Nobody likes paying tax, but people will accept that it is something they have to do, if they feel that the system is fair, and everyone who can contribute to the Exchequer is doing so.

However, since the crash of 2008, there has been rising resentment over big companies who appear to use their wealth not to pay their share but to hire accountants to devise elaborate schemes to avoid paying. The plumber or the small shop keeper cannot locate their head offices in a distant tax haven: small UK businesses have no option but to pay UK tax rates. But if the company is big enough, it can move its headquarters to some other place where tax rates are low.

The Independent has this week highlighted the case of Vitol, an oil-trading firm doing lucrative business in London, which keeps its tax bill below UK rates by having its head office in Geneva. This is not the most extreme case of its kind. In an average year, by our calculation, Vitol pays 10.5 per cent of its profits in tax – whereas Amazon, for example, which funnels its business through Luxemburg, pays about one 10th of 1 per cent of the profit it generates in the UK as UK tax.

However, there is an aspect to this story which does not apply in the case of Amazon, in that Vitol’s chief executive, Ian Taylor, is a major donor to the Conservative Party who has given the party in the region of £1m. There is no suggestion that his company has broken the law, or that there is anything improper in Mr Taylor using his personal wealth to support the Conservatives, but that party incessantly warns us that the extent to which the Labour Party is subsidised by trade unions such as Unite can potentially influence how a Labour minister would think and act when in office. How, then, can the average taxpayer be confident that a Conservative government will be motivated to take a cold, hard look at the tax structure of a company such as Vitol when it is run by an individual to whom the party is so very indebted?

Leading Conservatives are well aware of the political sensitivity of how much tax is paid by those who can most afford to pay it. The Chancellor, George Osborne, has repeatedly promised to bear down on “aggressive” tax avoidance, and HM Revenue and Customs has shown some determination in dealing with tax schemes used by wealthy individuals. The acute embarrassment this has caused to the likes of  Gary Barlow is more than compensated for by the reassuring message it sends to the average taxpayer. But the amount of money even a mega-rich showbiz figure can store in a tax scheme is tiny compared with the multinational firms.

The people who run multinationals will say that their first duty is not to any government or to taxpayers but to their investors and shareholders, and so it is part of their job to make sure that the company pays only such taxes as the law requires. But companies owe their profitability to the fact that they are able to trade in orderly stable communities, which would very soon descend into anarchy if nobody paid their taxes. Big companies should pay their share, and should be seen to be doing so.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive - OTE £45,000

£18000 - £45000 per annum: Recruitment Genius: A Sales Executive is required t...

Recruitment Genius: Test Development Engineer

£35000 - £40000 per annum: Recruitment Genius: Are you inspired to bring new a...

Recruitment Genius: Trainee Motor Engineer

£14000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Technical Administrator

£15000 - £18000 per annum: Recruitment Genius: This company are a world leadin...

Day In a Page

Read Next
Nick Clegg (R) Liberal Democrat Leader and former leader Charles Kennedy MP, joined the general election campaign trail on April 8, 2010  

Charles Kennedy: The only mainstream political leader who spoke sense

Tim Farron

The strangely parallel lives of Oliver Letwin and Ed Miliband

Matthew Norman
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral