Archives For tax avoidance

1) Six firms including Facebook and Google, made £14bn last year but paid just 0.3% tax

Image: PA/Reuters

Image: PA/Reuters

An investigation by the Sunday Mirror has revealed that Facebook, Google, Amazon, Ebay, Apple and Starbucks have paid less than 1% tax.

The companies reported revenue of £2.6bn but further income by sister companies have been collected and have avoided tax through havens. The total they are estimated to have made is actually £14.2bn.

“The Sunday Mirror also reported that there was £9bn black hole in corporation tax, helped along by corporate tax cuts brought in by George Osborne.

“These changes include a scheme “so blatantly a tax avoidance arrangement for big business” it is now being reformed after protests from Germany and the EU, said Richard Murphy of campaign group Tax Research.

“Meanwhile, ordinary people were clobbered with a 2.5 per cent VAT hike within weeks of the Tory-led Government taking office in 2010.

“A group of 17 leading charities, including ActionAid, Oxfam and the Equality Trust, are urgently calling on all political parties to support a Tax Dodging Bill.”

Further support for tax avoidance was shown by Mayor of London, Boris Johnson who defended Boots Boss Stefano Pessina’s tax avoidance, insisting that Pessina had a ‘duty’ to avoid tax for his shareholders.

Crucially, in this defence figures like Boris never highlight that this is money owed to the UK, that should be used for social good, public services and resources. Boris is attempting to make this acceptable, but Frankie Boyle put it succinctly enough on Twitter last year:

‘If you’re rich don’t look at it as tax avoidance, look at it as a children’s hospital buying you a pool.’

Read more about this story here.

2) Number of City backers doubles for Tories

The number of City donors has doubled for the Tories since 2010 with figures from the Square Mile, the Financial Times reported last week.

We’re sure this has nothing to do with the lucrative money grabbing policies for the city allowed by the Tories through corporate tax cuts and the free reign and support of loopholes and avoidance as above. But they clearly like something about them.

Image from Financial Times – read the full story here.


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3) 40 MPs on guest list for dinner with arms trade dealers

40 MPs were on the guest list for a dinner organised by trade organisation ADS, at the Hilton Hotel in Park Lane, according to information passed to The Independent by Campaign Against Arms Trade (Caat).

Jeremy Vine gave a speech at the event for a five figure fee, and Business Secretary Vince Cable also attended the event.

Andrew Smith from Caat said: “It’s outrageous that the government actively supports and promotes this deadly trade.

“The fact that arms dealers were swilling champagne with over 40 MPs is a disgrace and shows the extent of the arms trade’s connections and political lobbying.”

Read more about this story here.

4) Costs of Universal Credit plans not to be revealed until after election

The costs of the troubled Universal Credit System will not be revealed until after the May 2015 election, according to information received by Computer Weekly.

The new system has faced trouble from the start, and was estimated to cost £12.85bn in 2012. However, since then problems and costs have mounted and the government has failed to release a new estimate for 2 years.

“The Department for Work and Pensions (DWP), which leads development of Universal Credit, and the Cabinet Office, which has responsibility for project oversight, have concealed the revised cost estimate since tearing up plans for the computer system in 2013 after two years of development – a process they called a “reset”. “

Minister for Work and Pensions, Iain Duncan Smith, has also used taxpayer’s money to fight the release of information in the Courts, appealing several times.

This is a clear manipulation of information, in order to serve the current government’s PR in the run up to the election.

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Read more about this story here.

5) Hinchingbrooke hospital handed back to NHS

Hinchingbrooke hospital, the first hospital to be given to private management will be handed back to the NHS by the end of March.

Steve Melton, head of Circle Health who ran the hospital, was answering questions to the Public Accounts Committee on the hospital’s failures and a Care Quality Commission report that declared Hinchingbrooke as ‘inadequate’ – the first hospital to be declared so by the CQC.

Melton denied that the report gave the full picture of the problems.

Read more about this story here.

6) Number of teachers quitting classroom reaches 10-year high

The number of teachers quitting the profession has reached a 10-year high according to figures released by the Department for Education.

50,000 teachers quit in the year to November 2013 (the latest figures to hand), a 25% increase over 4 years.

Christine Blower of the NUT said falling working conditions and pay were pushing candidates away:

“A combination of unacceptable number of hours worked, a punitive accountability system, the introduction of performance-related pay and being expected to work until 68 for a pension has turned teaching into a less than attractive career choice.”

Read more about this story here.

 

 

 

1) Chancellor holds back £30bn surplus in National Insurance pot, as families are driven to poverty and food banks

Image: businessforscotland.co.uk

Image: businessforscotland.co.uk

It has been revealed that Chancellor George Osborne sat on a £30bn surplus in National Insurance last year. The House of Lords Library shows that £106bn was spent from National Insurance contributions last year, with £85bn spent  on the benefits system and £21bn on the NHS.

Writing in the Daily Mirror, Deputy Prime Minister John Prescott explained his findings:

“I discovered something that stunned me – the Government last year held back nearly £30 billion”, he said.

“National ­Insurance money can only be used for the NHS or benefits. So since he can’t spend it on anything else and chooses not to fund ­hospitals, the Chancellor lets it sit there.”

Can there be a clearer display that the economic policies of this government are ideological?

Bear this act in mind when the Chancellor claims we need to cut welfare by £25bn, that we don’t have enough to fuel the NHS, but do have room for another tax cut for millionaires.

Read more about this story here.

2) Autumn Statement: Misery and lies

The Chancellor George Osborne announced his Autumn Statement on Wednesday. Again, he manipulated statistics and attempted to appease the public with some extra funding for the NHS (expect more of this appeasement in the run up to the elections) however, these statements are insincere.

One big trope used by Conservatives is feigning that we all of a sudden have a ‘strong economy’ – ‘the fastest growing in the G7’ is a phrase that gets bandied about. What Conservative representatives fail to tell you is that fast growth following harsh stagnation for long periods is not difficult to achieve, but more importantly we are also the only country in the G7 to have wider inequality than we had at the turn of the century.

This means that for most of us, things are no better or are worse, but for a small handful, the top echelons of society, bank balances are still growing.

The richest 1000 people have increased their wealth by 50% since 2008 – enough to wipe out the deficit. Bank managers have paid themselves bonuses worth £81bn since 2008. Again, enough to wipe out the deficit. Yet, George Osborne fights to stop limits to these bonuses and gives us Autumn statements that tell us we must cut further from welfare and the poorest, knowingly plunging people, families, children into insecurity, poverty, hardship and illness.

Osborne also claimed that because we have such a ‘strong economy’ he can afford to give the NHS an extra £2bn. This isn’t true. Firstly, there is no strong economy. There is no strong economy. The Conservatives have borrowed more in their four years than 13 years of the previous government. Borrowing has had to increase due to weak tax receipts because lots of rich people don’t pay their tax, and the growth of low pay employment has meant that those in work are not earning enough to pay tax. The deficit would be gone by the next election said Conservatives in 2010, yet every target has been missed.

And on the protection of the NHS, a senior Tory was recorded saying that Cameron would have to renege on promises to ringfence NHS spending if he is to win the next election and cut the deficit. Further, plans to overhaul A&E services have been put on hold due to risk of backlash described as potential ‘political suicide’ this close to the election. This means that they would do it despite it being clearly against public interest and opinion. And they will do it if given the chance of another term. And let’s not forget all those lucrative connections for Conservative Ministers who want to profit from our NHS, like Steve Dorrell MP who was also acting as adviser for KPMG while they eyed up a £1bn NHS contract.

The Conservatives do not care for our NHS, our welfare or the lives of those not in the top 1%. Apparently, they ‘have no need to attract dog-end voters in the outlying regions’ and in these sorts of statements we see not just the understanding of who this party is for, but also their indifference to the treatment and lives of those they aren’t.

In the run up to the election, we must also be aware of attempts by government to shut down any challenges and debates, as we saw when the Chancellor blasted the BBC when a reporter described the budget as ‘utterly terrifying’ and condemned the deepest cuts since the 1930s. The Chancellor claimed it was ‘nonsense’ and called the BBC ‘hyperbolic’. Though with the Institute for Fiscal Studies also claiming that government spending cuts would have to happen on ‘a colossal scale’ (with £35bn having already taken place, and £55bn yet to come) it seems difficult for the Chancellor to keep his facade even in Mainstream press.

Though that doesn’t mean that there isn’t plenty more hidden within these statements. While the Chancellor withholds money from benefit claimants and our NHS, PR for corporate companies is happily funded:

https://www.facebook.com/GuyMcV/photos/a.146354958854507.33377.133561296800540/399461633543837/?type=1&fref=nf

Read more about this story here. (Though be aware – these points about the Autumn Statement from the BBC do not challenge the things that Osbourne said, such as his comments G7 as we have above. This is merely a list of the points from the statement).

3) Lack of anti-tax avoidance laws contributing to ‘yawning’ tax gap

Image: blogs.telegraph.co.uk

Image: blogs.telegraph.co.uk

And as we are told that there ‘is not enough to go around’ and we must ‘tighten our belts’ and the Chancellor creates budgets to eat away at the morsels of life for those at the bottom of the economic scale, a study from Tax Research LLP on behalf of the PCS Union, shows that the tax gap – the gap between what should be paid in UK tax if the system worked as intended and what was actually paid – is over £119bn.

“The figures clash significantly with those produced by HMRC, the government’s tax collecting body. The PCS-commissioned research estimates that over 2013 and 14 the UK lost £73.4bn to tax evasion (“tax lost when a person or company deliberately and unlawfully fails to declare income that they know is taxable or claims expenses that are not allowed”) over the course of the studied period, dwarfing the official government estimate of £22.3bn.

“The other areas that contribute to the tax gap are tax avoidance – defined as “tax that is lost when a person claims to arrange their affairs to minimise tax within the law in the UK or in other countries”. The PCS estimates tax avoidance costs the UK economy £19.1bn over the course of the year. Tax debt – tax which is not paid by a person or company who knows that they owe it, but who don’t pay or delay payment – cost the UK £18.2bn over 2013-14.

“While the total tax gap has narrowed slightly from the £120bn Tax Research estimated in 2010, tax evasion has been rising quite sharply over recent years and is predicted to do so.

“Tax Research estimates that the £73.4bn estimate will grow beyond £100bn in 2018-19 should the UK government not take action.

“In a pamphlet written to accompany the report, the research’s author Richard Murphy recommended that the UK government introduce wholesale reform to its tax law to incorporate avoidance strategies, and “the introduction of country-by-country reporting for multinational corporations” combined with “a reversal of the cuts to staff in HMRC and at Companies House”.

Where is the clampdown on this loss of vast amounts of money? Richard Murphy once described tax evasion as ‘the cancer eating our democracy.’

Read more about this story here.

by Kam Sandhu @KamBass

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How Wealth Is Divided

kamsandhu —  January 20, 2014 — Leave a comment
Source: Oxfam Image: The Independent

Source: Oxfam Image: The Independent

The Crown Prosecution Service have announced that they will push for increased penalties for benefit fraud, with maximum sentences reaching ten years in jail. In a sudden move, Keir Starmer, Head of the Crown Prosecution Service apparently said that society was “hurting as a result of people taking advantage of the benefit system, and he would crack down on perpetrators.”

However, benefit fraud is NOT increasing which makes this move far more dubious and unnecessary. This story has once again inflamed a public slamming of benefit claimants, and the hard line will certainly have an effect on the voting public.

Image: Join Public Issues

Image: Joint Public IssuesTeam

Fraud currently accounts for 0.9% of benefits expenditure, equalling £1.2bn.

1.2% of benefit expenditure is paid out in overpayment error by the claimant or by the DWP. Thus, more money would be saved if the DWP ensured that all claims were simply paid correctly, but there seems to be no hard line taken against this.

The Joint Public Issues Team believe that a quarter of media coverage of welfare refers to fraud. Earlier this year, a TUC poll revealed that members of the public thought 27% of the welfare budget was lost to fraud, when it actually stands at 0.9%. The press bombardment of welfare ‘moral panic’ has implied that there is a real culture of fraud and criminality amongst benefit claimants – ultimately turning the public opinion against them. Taking a hard line against the faux-criminal persona put upon claimants, could provide a strong political move by government as we edge closer to the election period. And the press have relayed the message to the extent that the public believe in this charade.

The press, the government and Keir Starmer QC have failed to supply the facts above. They have failed to mention how rare benefit fraud is. They have failed to mention that the figure for benefit fraud is dwarfed by the figure for unclaimed benefits, which stands, according to the DWP, somewhere between £7.5bn – £12bn.

This figure is further dwarfed by the amount lost to tax avoidance and tax evasion. Yet, the CPS has taken no such ‘hard line’ here. HM Revenue and Customs estimate the amount lost to tax avoidance and evasion at £32bn. The European Union estimate £95bn.

In the below graph, the fraud figures from the DWP of £1.2bn have been added to the HMRC figures for Working Tax Credit and child benefit fraud (equalling £870m – rounding to a total of £2bn):

Image: Fact Check C4

Image: Fact Check Blog – Channel 4

The move to increase the penalty for those committing benefit fraud is a prejudiced attack on the poor. Because CEOs, bankers and companies walk free of penalties for money fraud worth millions and sometimes billions, but the government want us to see benefit claimants found guilty of committing fraud for tens, hundreds, thousands of pounds as dangerous and as criminally punishable as violent offenders, rapists and murderers, who are likely to receive similar or less severe jail terms.

Richard Murphy, author and manager of the blog Tax Research, commented on the new laws:

“Tax fraud is now subject to maybe 400 prosecutions a year. The penalties are small. But ten years is being threatened for benefit fraud. The publicity, the sentences and the messaging is all disproportionate and the allocation of resources is all wrong.

“Tax evasion is the cancer really causing a crisis in the UK, undermining fair competition, destroying trust, eroding professional standards, fuelling austerity, driving misery and denying our children a future. But it’s benefit fraud that is picked on. That’s warped logic if ever there was evidence of such thinking.”

There must be punishment for breaking the law – few would disagree. But when a law is changed to persecute and punish an entire section of society, whilst another group are immune from the same laws, it is a smear against our justice system. And when the PR of party politics runs over into the laws and punishment of society, we are reaching a very worrying stage indeed.

by Kam Sandhu @KamBass
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1) Sickness and Disability Benefit appeal costs reach £66 million

The cost of appeals against the ESA (Employment Support Allowance) has reached £66 million – 30% more than in 2009/10.

The figures came to light when shadow Work and Pensions Secretary, Liam Byrne asked the question in parliament.

The number of appeals have increased by 66% since 2009. Liam Byrne blames the increase in appeals and overturned decisions on the private firm used to carry out the Work Capability Assessment, ATOS. He said:

“Atos is now spinning out of control and it is costing the taxpayers millions to clean up the mess.

“The hard truth is that more decisions are wrong than ever before, and the result is more and more appeals and a price tag that has soared by 30 per cent in just the last year.”

ATOS are paid £150 million a year to carry out the fit-to-work tests

ATOS are paid £150 million a year to carry out the fit-to-work tests

Despite these statistics and the strong campaigning taking place across the country against ATOS, the DWP defends the firm and the decision process. They said:

“It is completely unsurprising that the number and cost of appeals has risen, because the number of work capability assessments carried out has increased substantially since we started reassessing 1.5 million incapacity benefit claimants in 2010.”

Adding that they had already made improvements to the assessment and that most decisions are upheld.

Read more about this story here.

2) GPs in South Wales told not to help patients appeal against fit-to-work decisions

GPs have been told to stop writing letters to help patients appeal against sanctions and benefit payment cuts, calling it an ‘abuse of resources’ and adding that ‘GPs were not contracted or resourced to provide this kind of service.’

Bro Taf, the local medical committee representing GPs says it stops doctors from seeing ill patients.

Some patients require evidence from their doctors to prove they are not fit to work. Without this evidence these patients may be unfairly sanctioned or be declared fit to work when they are not. Disability Wales called the decision “almost callous.”

Read more about this story here.

3) Iain Duncan Smith caught lying once again over homeless firgures

In an attempt to defend against criticisms of the benefit cap, IDS resorted to his old trick of fabrication by claiming that homeless figures had ‘hardly moved’ under the Con-Dem coalition.

The benefit cap which is limited at £500 a week for families and £350 for single persons, has been criticised for it’s ‘one size fits all’ approach.

A leaked letter from Eric Pickles’ office warned that over 40,000 people would be made homeless due to the benefit cap and the bedroom tax.

However, IDS told BBC News:

“The great talk about thousands being made homeless has not come true – the homeless figures hardly moved at all.”

Read more about this story here.

4) UK Uncut Protest takes over 13 HSBCs across the country

UK Uncut Protest 20/07/2013

UK Uncut Protest 20/07/2013

13 branches of HSBC were turned into food banks as part of a protest against the bank’s tax avoidance and use of tax havens, as thousands more Britons go hungry and rely on food banks in light of ‘unneccessary’ cuts.

“In Nottingham, activists set up a food bank blocking the entrance to HSBC with supplies of cereals, tins of food, and toilet paper. In London’s Regent Street, 100 activists brought bags of food to the store distributed the supplies, forcing the branch to close down. Meanwhile in Brixton a large crowd gathered and created a food bank inside the HSBC branch.”

Robert McGarr, from Northampton, said: “While families go hungry, this government of millionaires lets its friends in the banks and big business avoid billions of pounds of tax. HSBC uses more tax havens than any  other UK bank, but the government is only interested in punishing the poorest rather than going after the real cause of the problem.

“The government need to know that people want real change to stop tax dodging, not cosmetic tinkering, that’s why we’re taking action against the government’s failure to stop HSBC’s abuse of tax havens.”

After UK Uncut’s plans were announced the bank offered to meet to discuss activists’ concerns. However the bank rejected repeated offers from UK Uncut to hold a public discussion on 20 July.”

UK Uncut Press Release

See pictures of the protest and find out more here.

UK Uncut Protest 20/07/2013

UK Uncut Protest 20/07/2013

by Kam Sandhu @KamBass

by Kam Sandhu @KamBass

The Department for Work and Pensions released a press release this month on fraud and error, and declared that ‘hard work must continue to cut a £3.5bn loss’ which makes up 2.1% of benefit spending.

In the press release, the DWP say they have increased their ‘crackdown on benefit fraud’ over the last year, a huge focus made by government, says Lord Freud, Minister for Welfare Reform:

“Our fraud investigation teams are also continuing their hard work – targeting areas of high suspected fraud, using the latest technology to investigate these criminals and going back over old claims to uncover people trying to swindle the taxpayer.”

However, while £3.5bn is a lot of money, £3.5bn is not what is attributed to fraud alone.

‘Fraud and error’ includes fraudulent claims, overpayments made by claimant error and overpayments made by official error. When broken down like this, these are the figures released by DWP:

Fraud – £1.2bn

Claimant Error – £1.6bn

Official Error – £0.7bn

The fraud figure now equates to 0.7% of the overall benefit spending figure which stands at £166.8bn.

Overpayment by error adds up to £2.3bn (1.3% of overall spending), nearly double the fraud figure, and yet there seems to be no ‘crackdown’ by government on this.

Further, overpayment errors are not necessarily a loss of money. This money can be recovered, and the DWP got back around £890m of overpayments in the last year. Bringing down the error figure to £1.31bn.

These figures also do not include underpayments. In 2012/13 underpayments to claimants amounted to £1.4bn or 0.9% – higher than the fraud amount.

It is of course, important to combat lost or fraudulently claimed money. However, there needs to be perspective and context on these figures. Fraud and error are not the same. One is illegal and one is not. Putting the figure of error in with fraud and then announcing a crackdown on fraud alone, can skew the size of the problem.

There has been a lathering of media courage and fear placed on the idea that claimants are playing the system and making huge claims that they don’t deserve. Cue the recent rise in tabloid front pages with pixelated stills of incapacity cheats dancing around, or people claiming for more children than they have. The truth is the figure for fraud has hardly changed in the last few years. There has been no surge in the crime. It has just received more coverage by tabloids, and for a government that wants to introduce harsh reforms, it has favorably put in its elbow grease to the skiver vs. striver divide, that now works to punish and stigmatise 99.3% for the actions of 0.7%.

And of course, the figure for fraud is dwarfed by the figures for tax evasion and avoidance. The cost of tax evasion, which unlike tax avoidance – is a crime, is thought to be around £5bn a year. The same for tax avoidance. In fact, Oxfam said in an article today that ‘Britain was the centre of a tax system that was a ‘betrayal of people here and in the poorest countries”, with a claim that around a third of £12trillion of tax evasion from around the globe is held here. Far more taken out by far fewer, which begs the question, who is really ‘trying to swindle the taxpayer?’

Read the full DWP report here.

Image: www.mirror.co.uk

Lord Freud – Image: http://www.mirror.co.uk

KS

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George Osborne vows to target corporate tax avoidance and evasion after meeting with the G7, shortly before announcing that the latest Star Wars film will be shot and produced in the UK leading to speculation and criticism that the production could be eligible for tax breaks.

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Image: huffingtonpost.co.uk

11th May saw the UK’s Finance Minister meet up with the G7, a group of industrialised nations comprising of U.S, U.K, France, Germany, Italy, Canada and Japan, where they agreed to take “collective action” on tax evasion and avoidance. “We must put regimes in place… to deal with failing banks and to protect taxpayers and to do so in a globally-consistent manner,” he said. “It is necessary to collect tax that is owed and it is necessary to reduce tax avoidance.”

During the 2-day summit, Osborne took to Twitter to make a second announcement that the 7th installment of the Star Wars franchise was returning to the UK. Sounds good to us. Except that the production is thought to be eligible for tax relief. That’s right. A discount for Disney-owned Lucasfilm. Film Tax Credits were brought in last year to attract production companies to the UK and prevent British ones heading elsewhere. It’s for films which spend a minimum of 25% of their production costs in the UK and Lucasfilm could qualify for a rebate to a maximum of 80% of core production costs.

Source: Wired.co.uk

Source: Wired.co.uk

Given the chancellor announced further cuts to Arts Council funding during his budget announcement last month, it would seem that while grass roots organisations are having their funding decimated, a multi-billion dollar company could potentially save £100,000,000. There’s no cap to the amount that can be claimed. You might enjoy this pantomime analogy.

You could argue that the production will boost the UK economy. But as Osborne knows, tax avoidance costs the UK economy £25 billion a year annually while tax evasion robs the state of £15 billion. Both those estimates are conservative. And when compared to the £350 million saved by cutting the legal aid budget, leaving the most vulnerable people in society unable to access legal representation, or the “Bedroom Tax” which reduces the welfare bill by £480 million, discriminating against disabled people in the process, it’s clear we are not all “in this together”.

The extent and depth of the “tax haven” habit became all the more clear when Actionaid published a report earlier this week revealing that only two companies listed on the FTSE 100 have no subsidiaries in tax havens while companies like Barclays and Tescos have hundreds. Reinforcing the need for change, the charity said this “hidden obstacle in the fight against global poverty” needs to be tackled.

Image: Guardian.co.uk

Source: Guardian.co.uk

And it gets bleaker still. Today we hear that the amount Amazon paid in tax last year is less than the government grants it received. Yep, just £2.44 million of corporation tax was paid on UK sales of £4.2 billion, receiving £2.5 million from the Scottish Government.

But Osbourne’s happy. He got to post the lamest Star Wars-related tweet ever.

Photo: Twitter.com

Source: Twitter.com

JM

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