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

 

Share

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
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Office / Sales Manager

£22000 - £32000 per annum: Recruitment Genius: Established and expanding South...

Recruitment Genius: Administrative Assistant / Order Fulfilment

£14000 per annum: Recruitment Genius: An exciting opportunity to join a thrivi...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

Day In a Page

Read Next
 

Syria's Kurds have little choice but to flee amid the desolution, ruins and danger they face

Patrick Cockburn
A bartender serves two Mojito cocktails  

For the twenty-somethings of today, growing up is hard to do

Simon Kelner
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones