'Defend yourselves over tax haven claims'

TWO senior UK parliamentarians have urged finance centres such as Guernsey and Jersey to do more to defend themselves from attacks that imply they are nothing more than havens for tax cheats.

Former Tory chief whip Lord Blencathra

TWO senior UK parliamentarians have urged finance centres such as Guernsey and Jersey to do more to defend themselves from attacks that imply they are nothing more than havens for tax cheats.

Former Tory chief whip Lord Blencathra, pictured, and Mark Field, MP for the Cities of London and Westminster, both argued that international finance centres needed to be more forceful in presenting arguments as to why they act as a force for good for the UK and European economies.

They said at a London conference last week that the offshore centres now needed to be prepared to publicly fight the misconception that they merely exist to allow the wealthy to avoid their tax obligations at home.

‘We have got to defend what we do as much of the criticism is nothing more than political jealousy.

‘The lack of speaking up for ourselves has never been greater,’ said Lord Blencathra, who was an MP for 27 years and now represents the Cayman Islands in London.

Comments for: "'Defend yourselves over tax haven claims'"

A.J.

How much more can we do? After all,for more than four years, didn't we have Minister Trott telling everyone how marvellous we are? Wasn't anyone listening?

Realist

It is all very well speaking up about the legitimacy of our financial services industry, but it only takes one or two scandals (e.g. Jimmy Carr, HSBC money laundering etc.) and our voice is completely drowned out by the howls of righteous indignation coming from the popular press.

We are deeply disliked in the UK and elsewhere at the moment - sitting somewhere in the public conciousness just above paedophiles but below estate agents in terms of popularity.

Ray

Realist

Jimmy Carr,Starbucks,Google,Amazon and no doubt a host of others are merely taking legal advantage of woefully drawn up tax rules in the UK

If the loopholes were to be properly sealed then there would be no need for the UK to go off on an 'immoral' tizzy

Jamie

Actually the rules are drawn up by the EU ... its called the single market, basically you can base anywhere in the single market and thats where you get taxed. It swings both ways, companies that base in the UK and sell to France, do not pay tax on their profits in France but in the UK. Companies that setup in Luxembourg, Ireland etc and sell to the UK pay tax in Lux / Ireland. Seems a fair rule to me. Just banish corporate tax, level the playing field after all the incidence of corporate tax ends up back on the people anyway.

Joshua

Or else what? - is what we should be saying, like all the other offshore financial centres.

GM

According to our old "friend" Murphy, there is some real sh*t on the way from the UK right now.....

Realist

I agree - trouble is coming and it is exacerbated by populist media scandal stories and misguided left wing agendas.

It is irritating for example that the likes of Murphy take such a simplistic view of such a complex subject.

Yes tax evasion, money laundering etc is totally unacceptable and illegal and cannot be excused - but that is not the same as legal and legitimate tax planning within the laws of another country.

Take the issue of Starbucks / Google / Amazon not paying UK corporation tax for example.

According to HMRC:

If your company or organisation is based in the UK, you'll have to pay Corporation Tax on all your taxable profits - wherever in the world those profits come from.

If your company isn't based in the UK but operates in the UK - for example through an office or branch (known to HMRC as a 'permanent establishment') - you'll only have to pay Corporation Tax on any taxable profits arising from your UK activities

Those companies are not based in the UK and they are only taxable on profits arising from their UK activities. If they are not making profits in the UK they don't pay Corporation Tax. Not difficult to understand.

Those companies do however pay other taxes and employ tens of thousands of people and if they pulled operations out of the UK the effects would be disasterous. The likes of Mr Murphy would rather see them leave the UK and ruin the economy rather than let them 'get away with' legally minimising their tax bill.

Forcing those big companies to leave the UK may be a moral victory for the likes of the Tax Justice Network but it really would be a case of cutting of your nose to spite your face. All those people losing their jobs would not thank them for it.

GM

Realist

Your moniker is very apt. Your are right on the button there.

Murphy has multiple failings on many fronts, but one of his biggest ones at present is that he fundamentally refuses to recognise what the Single European Market was deliberately set up to achieve. A company can set up in one EU country and then has the right to freely operate throughout the EU. The tax consequences of that are precisely what the EU created. So a Starbucks or a Yahoo or Apple or Microsoft from the US chooses Ireland, Luxembourg or the Netherlands as its EU base. Why? Because its more tax-efficient than having an EU headquarters in somewhere like Paris or Frankfurt or London. Why ? Because the EU says that they can. Do they have to choose somewhere that has a high tax rate? Of course not.

Until and unless there is full corporate tax harmonisation in the EU, and probably globally, this sort of thing will always exist. That will not happen in our lifetime.

I don't believe that the UK will even still be in the EU within 5 years. That ironically may solve the UK's problem re. the inability to tax companies differently to what EU membership stipulates.

West

Was it not Mr Cameron only 6 months or so ago saying Britain wants to attract foreign business to be based in Britain and as I recollect the other one was, we will welcome the French wealthy who are being driven from France by its new 75% income tax rate. Are these words not of someone representing a tax haven.

Don

And the CDs arriving around the world with the details of tax cheats is just the start.The world is changing!