Public Accounts Committee Report
Dec. 3rd, 2012 02:56 pmThe PAC has published a report based on the discussions it had with Starbucks, Google, and Amazon here: http://www.publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/716/71605.htm
It talks about the tax paid by a company in the context of its turnover. It accuses HMRC of failing to show that avoidance is not increasing, as if that is evidence that it is. It complains that HMRC, a department whose staffing has been massively cut, might not be acting robustly enough. It several times says "we weren't convinced of X", but never sees fit to provide any evidence for concluding not-X. It seems to think that agreeing how to tax something in the Netherlands is an arrangement designed to remove things from UK tax, rather than an exercise of that government's sovereign rights.
Above all, it harps on about looking at where economic activity takes place, but seems entirely ignorant of the normal rule that to decide this you look at where the contract is made. It betrays no understanding of the Permanent Establishment clauses of tax treaties, which are in there precisely to resolve this sort of issue, which have been carefully negotiated by the UK Government, and which almost universally agree that marketing and distribution operations do not constitute a taxable presence in a country.
But it comes to no conclusions whatsoever, beyond a general feeling that the companies and HMRC are in the wrong, somehow. Or rather, the cynic in me says, that the MPs want to show that they are in the right and therefore need to find someone else to be in the wrong.
It talks about the tax paid by a company in the context of its turnover. It accuses HMRC of failing to show that avoidance is not increasing, as if that is evidence that it is. It complains that HMRC, a department whose staffing has been massively cut, might not be acting robustly enough. It several times says "we weren't convinced of X", but never sees fit to provide any evidence for concluding not-X. It seems to think that agreeing how to tax something in the Netherlands is an arrangement designed to remove things from UK tax, rather than an exercise of that government's sovereign rights.
Above all, it harps on about looking at where economic activity takes place, but seems entirely ignorant of the normal rule that to decide this you look at where the contract is made. It betrays no understanding of the Permanent Establishment clauses of tax treaties, which are in there precisely to resolve this sort of issue, which have been carefully negotiated by the UK Government, and which almost universally agree that marketing and distribution operations do not constitute a taxable presence in a country.
But it comes to no conclusions whatsoever, beyond a general feeling that the companies and HMRC are in the wrong, somehow. Or rather, the cynic in me says, that the MPs want to show that they are in the right and therefore need to find someone else to be in the wrong.