Crickhowell: Jeremy Corbyn's economics guru condemns 'irresponsible' tax rebellion by 'offshore' Welsh town

Exclusive: Traders in the town are turning the tables by copying practices used by companies which pay little or no tax

Adam Sherwin
Media Correspondent
Wednesday 11 November 2015 19:15
Comments
Crickhowell, pictured, has received hundreds of messages of support on social media
Crickhowell, pictured, has received hundreds of messages of support on social media

The “tax justice” campaigner behind Jeremy Corbyn’s economic policy has condemned as “irresponsible” a rebellion by local traders in the Welsh town of Crickhowell who plan to employ the same offshore loopholes used by global brands to avoid paying tax.

The Independent revealed how independent traders in Crickhowell are turning the tables on the likes of Google and Starbucks by copying the accountancy practices used by multinational companies which pay little or no tax.

Tax experts are advising family businesses including the local smoked salmon smokery, book shop, café and bakery, on how they can exploit tax havens and create offshore subsidiaries in order to minimise their contribution to HMRC.

Participants in the experiment, being filmed for a BBC2 documentary, say their protest is designed to force the Treasury to adopt measures which will ensure a level playing field between large and small businesses.

Crickhowell has received hundreds of messages of support on social media, with campaigners in other towns planning to join the tax rebellion.

But Richard Murphy, the economist and tax expert who is credited as the creator of “Corbynomics”, criticised the Crickhowell campaign. “This is an irresponsible stunt which actually places those involved at risk of an unforeseen tax bill and penalties from HMRC,” he said.

Richard Murphy, economist: 'It is reckless and counter-productive'

“There isn’t a level playing field and multinational companies are able to operate in a way which small individual businesses cannot.”

Mr Murphy, whose plan to pursue an estimated £120bn lost each year through tax avoidance, evasion and uncollected tax debt was adopted by Jeremy Corbyn during his Labour leadership campaign, said he refused an approach to act as an adviser on the series.

“It is reckless and counter-productive. We don’t want a lowest common denominator race to the bottom with more people refusing to pay tax.

“There are better ways of ensuring that multinational companies pay more tax. I hope the BBC has indemnified everyone involved because they could face an unforeseen tax bill at the end of it.”

HMRC said the Crickhowell traders had met with James Harra, the Director General of Business Tax, to discuss George Osborne’s latest crackdown on loopholes.

Their offshore tax avoidance proposals face close scrutiny however. A spokesman for HMRC said: “We will take a look at the Crickhowell plan and will make sure the correct amount of tax is being paid.”

Companies that shift their profits overseas in order to avoid paying tax in the UK will now be subject to a 25% “diverted profits tax”, or “Google Tax”.

Crickhowell

A small market town on the southern edge of the Black Mountains and in the eastern part of the Brecon Beacons National Park, Crickhowell is a popular tourism destination.

John Evans described Crickhowell as the “Glittering Jewel of the Vale” in his 19th century book, The Garden of Wales.

The chain-free High Street prides itself on being one of the few thriving thoroughfares left where local businesses sell local produce.

The town has a population of around 2,800 people.

Crickhowell’s most notable son was the surveyor Sir George Everest (1798–1866), a Surveyor-General of India, after whom Mount Everest was named.

Companies that have an annual turnover of £10 million or more must tell HMRC if they think that their company structure could make them liable for the new tax, which has been structured to avoid hitting small and medium-sized businesses.

The spokesman added: “The Government has brought in all necessary measures, including the Google Tax, to ensure that multinationals cannot shift their profits elsewhere to avoid paying their share.”

However the Welsh campaigners received widespread public backing for their plan to turn the protest into a nationwide rebellion. “If more towns did this the government would have to crack down,” tweeted one supporter.

This week the Crickhowell community bought a historic pub from Punch Taverns for £500,000 which had been earmarked for a supermarket chain. Nearly 200 residents bought shares priced between £500 and £30,000 and the property will now be converted into flats above shops leased to independent traders.

In the BBC film The Town that Went Offshore, due for screening next year, the traders examine the complicated tax structures used by Starbucks, which has paid just £8.6 million in corporation tax since starting up in the UK in 1998, and Caffé Nero, which has paid nothing since 2008, despite operating more than 500 UK outlets.

Caffe Nero has previously rejected accusations that its complex corporate structure involving various holding companies is designed to avoid corporation tax.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in