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| Tax authority HMRC urged to get tough on global firms | |
| (35 minutes later) | |
| Global firms in the UK that pay little or no tax are an "insult" to British businesses, a committee of MPs says. | Global firms in the UK that pay little or no tax are an "insult" to British businesses, a committee of MPs says. |
| Public Accounts Committee chairwoman Margaret Hodge said HM Revenue and Customs (HMRC) needed to be "more aggressive and assertive in confronting corporate tax avoidance". | |
| MPs said HMRC must ensure everyone was seen to be paying their share of tax. | MPs said HMRC must ensure everyone was seen to be paying their share of tax. |
| The HMRC said it already ensured that international companies paid the tax due "in accordance with UK tax law". | The HMRC said it already ensured that international companies paid the tax due "in accordance with UK tax law". |
| UK-based companies pay corporation tax on their taxable profits wherever they are made. Companies based outside the UK must pay tax on profits made in this country. | |
| The influential committee's report comes after it took evidence in November from executives from Starbucks, Google and Amazon about the amount of corporation tax the companies have paid in the UK. | The influential committee's report comes after it took evidence in November from executives from Starbucks, Google and Amazon about the amount of corporation tax the companies have paid in the UK. |
| 'Evasive evidence' | 'Evasive evidence' |
| Margaret Hodge told the BBC that there was a danger corporation tax was becoming "voluntary" and that this had to change. | |
| "These global companies are making money in the UK. All we are saying is that if you have economic activities in the UK you are making profits and tax is payable on that," she said. | |
| It emerged on Sunday that coffee shop chain Starbucks is in talks with HMRC about the amount of tax it pays. | |
| Meanwhile, Chancellor George Osborne will unveil later details of £154m of funding to help tackle tax avoidance and evasion, amid public concern over the tax affairs of major international companies and wealthy individuals. | |
| The money will be used to take on extra staff to investigate high earners who aggressively avoid or evade paying tax and global firms that use legal loopholes to move profits out of the UK. | The money will be used to take on extra staff to investigate high earners who aggressively avoid or evade paying tax and global firms that use legal loopholes to move profits out of the UK. |
| The funding is expected to help bring in about £2bn a year for HMRC. | |
| In the report, Mrs Hodge said multinational firms with large UK operations generating "significant income" were "getting away with paying little or no corporation tax here". | In the report, Mrs Hodge said multinational firms with large UK operations generating "significant income" were "getting away with paying little or no corporation tax here". |
| She added: "This is outrageous and an insult to British businesses and individuals who pay their fair share. | She added: "This is outrageous and an insult to British businesses and individuals who pay their fair share. |
| "Corporation tax revenues have fallen at a time when securing proper income from taxes is more vital than ever." | "Corporation tax revenues have fallen at a time when securing proper income from taxes is more vital than ever." |
| Mrs Hodge said the evidence the committee had taken from large corporations "was unconvincing and, in some cases, evasive". | Mrs Hodge said the evidence the committee had taken from large corporations "was unconvincing and, in some cases, evasive". |
| She also said that HMRC lacked clarity when trying to explain its approach to enforcing the corporation tax regime. | She also said that HMRC lacked clarity when trying to explain its approach to enforcing the corporation tax regime. |
| "The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK," she added. | "The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the UK," she added. |
| "HMRC should be challenging this, but its response so far to these big businesses and their aggressive tax planning has lacked determination and looks way too lenient. Policing the tax system must be at the heart of what HMRC does. | "HMRC should be challenging this, but its response so far to these big businesses and their aggressive tax planning has lacked determination and looks way too lenient. Policing the tax system must be at the heart of what HMRC does. |
| "It must be more aggressive and assertive in confronting corporate tax avoidance. This is essential for the credibility of both the department and the tax system." | "It must be more aggressive and assertive in confronting corporate tax avoidance. This is essential for the credibility of both the department and the tax system." |
| 'Breathtaking hypocrisy' | 'Breathtaking hypocrisy' |
| In a statement to coincide with the committee's report, Amazon said it paid all applicable taxes in every jurisdiction that it operated in. | In a statement to coincide with the committee's report, Amazon said it paid all applicable taxes in every jurisdiction that it operated in. |
| "Amazon EU serves tens of millions of customers and sellers throughout Europe from multiple consumer websites, in a number of languages, dispatching products to all 27 countries in the EU," it added. | "Amazon EU serves tens of millions of customers and sellers throughout Europe from multiple consumer websites, in a number of languages, dispatching products to all 27 countries in the EU," it added. |
| "We have a single European headquarters in Luxembourg with hundreds of employees to manage this complex operation." | "We have a single European headquarters in Luxembourg with hundreds of employees to manage this complex operation." |
| Starbucks said in a statement: "We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more. | Starbucks said in a statement: "We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more. |
| "As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury." | "As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury." |
| The War on Want charity, which is campaigning for more to be done to tackle tax avoidance, accused the government of "breathtaking hypocrisy". | The War on Want charity, which is campaigning for more to be done to tackle tax avoidance, accused the government of "breathtaking hypocrisy". |
| It said: "Osborne and Cameron are happy to talk tough on tax. But, in reality, their plans will only go after the small fry on the fringes, while giving a green light to multinationals like Amazon, Google and Starbucks to continue avoiding billions in tax." | It said: "Osborne and Cameron are happy to talk tough on tax. But, in reality, their plans will only go after the small fry on the fringes, while giving a green light to multinationals like Amazon, Google and Starbucks to continue avoiding billions in tax." |
| Heather Self, tax expert, told the BBC assessing tax for major companies was not simple: "If you buy a book from Amazon you are actually buying from a Luxembourg company, It decides how many books to buy and at what price they sell them for. All you have in the UK is a warehouse, a very big warehouse that employs a lot of people but that is all it does. The risk is taken in Luxembourg. | |
| "Profits paid here are for the activities it undertakes here and that is not highly profitable. It is not as simple a situation as the Public Accounts Committee likes to make out sometimes." | |
| An HMRC spokesman said that it ensured multinationals paid the tax due in accordance with UK law and had been very successful in reducing tax avoidance by large businesses in recent years. | An HMRC spokesman said that it ensured multinationals paid the tax due in accordance with UK law and had been very successful in reducing tax avoidance by large businesses in recent years. |
| "We relentlessly challenge those that persist in avoiding tax and have recovered £29bn additional revenues from large businesses in the last six years, including £4.1bn in the last four years from transfer pricing enquiries alone," he said. | "We relentlessly challenge those that persist in avoiding tax and have recovered £29bn additional revenues from large businesses in the last six years, including £4.1bn in the last four years from transfer pricing enquiries alone," he said. |
| "These figures speak for themselves. Corporation tax receipts are dependent on the wider economy and the corporation tax rate set by Parliament, which was reduced by two percentage points for 2011-12." | "These figures speak for themselves. Corporation tax receipts are dependent on the wider economy and the corporation tax rate set by Parliament, which was reduced by two percentage points for 2011-12." |