FabSwingers.com forum: Corporate Tax

By *acread OP Couple
over a year ago

central scotland

I know its been done numerous times recently but just read that the amount of taxes the big corporations pay is 21% less than in 2001 and this is despite the disposable income (eg profits)rising by 65% in the same period

but at the same time taxes have risen for small businesses and of course the common or garden worker, oh how our governments look after these greedy fat cat bastards to the detriment of the rest.

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By (user no longer on site)
over a year ago

You can also argue that the tax breaks given to the large companies who directly employ thousands and provide contracts for many exterior companies have created so many jobs and wealth for normal people that it makes fiscal sense to entice them to stay and develop further.

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By *acread OP Couple
over a year ago

central scotland

"You can also argue that the tax breaks given to the large companies who directly employ thousands and provide contracts for many exterior companies have created so many jobs and wealth for normal people that it makes fiscal sense to entice them to stay and develop further. "

The profits from some companies are obscene and do you really think they would go if another few million was fairly taken from them? These companies are great exploiters and would abandon the UK and go to cheaper countries if it suited as has been shown in the past.

Also the small businesses collectively employ a lot of people but they are being squeezed till the pips squeak why should they be treated so differently.

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By (user no longer on site)
over a year ago

"do you really think they would go if another few million was fairly taken from them? These companies are great exploiters and would abandon the UK and go to cheaper countries if it suited as has been shown in the past.

U seem to contradict urself here by saying that u think they wouldn't miss a few million taken from them, but then state that they have left the UK when they are given a cheaper alternative somewhere else??

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By (user no longer on site)
over a year ago

Also the small businesses collectively employ a lot of people but they are being squeezed till the pips squeak why should they be treated so differently. "

They are treated differently because if 'youngs furniture removals' goes under, it means half a dozen ppl are out if work.. If Toyota close their production plant, thousands are in the dole queue... I agree, it's not fair, but it is one of the prices we pay for free market capitalism.

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By (user no longer on site)
over a year ago

Using starbucks as example the uk is a massive market for them the fact they decided out of goodness of their own heart 20 million quid backs this up its a business decision based on what they see as a lucrative nation of coffee drinkers so to me when people say companies will move business elsewhere is nonsense in this case.

Cam the sham and Clegg the blegg should ensure all overseas based businesses comply or tell em to fuck off instead of being blackmailrd they should force the issue.

All we hear is nation is hard up, billions are owed by businesses take it back or boot them out.

British based businesses who pay their taxes must be gutted to see how foreign based businesses pay fuck all.

If the systems at fault change the system.

Since the debacle came to light i stopped using amazon and starbucks some may say its futile but i am one to not just moan but to try make a stand for what is fair.

Rant over for now.

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By *acread OP Couple
over a year ago

central scotland

Not really contradicting myself the profit margins are not so thin that a Cpl of million would make so much difference that they would up and go they are still making a lot of money and yes they should pay the fair share other countries make them and they stay.

Maybe its only because I have always believed in fair play that I think this way.

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By *acread OP Couple
over a year ago

central scotland

"Using starbucks as example the uk is a massive market for them the fact they decided out of goodness of their own heart 20 million quid backs this up its a business decision based on what they see as a lucrative nation of coffee drinkers so to me when people say companies will move business elsewhere is nonsense in this case.

Cam the sham and Clegg the blegg should ensure all overseas based businesses comply or tell em to fuck off instead of being blackmailrd they should force the issue.

All we hear is nation is hard up, billions are owed by businesses take it back or boot them out.

British based businesses who pay their taxes must be gutted to see how foreign based businesses pay fuck all.

If the systems at fault change the system.

Since the debacle came to light i stopped using amazon and starbucks some may say its futile but i am one to not just moan but to try make a stand for what is fair.

Rant over for now.

That's right tell them to pay up or fuck off and if they fuck off someone will fill the gaps they leave.

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By *nnyMan
over a year ago

Glasgow

" .........

Since the debacle came to light i stopped using amazon and starbucks some may say its futile but i am one to not just moan but to try make a stand for what is fair.

...............

Nothing wrong with a 'think globally, act locally' attitude.

My 2013 resolution is to spend more of my money as close to home - in shops, cafes, pubs, barbers etc where possible.

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By *LIMAXMan
over a year ago

middlesbrough

" .........

Since the debacle came to light i stopped using amazon and starbucks some may say its futile but i am one to not just moan but to try make a stand for what is fair.

...............

Nothing wrong with a 'think globally, act locally' attitude.

My 2013 resolution is to spend more of my money as close to home - in shops, cafes, pubs, barbers etc where possible."

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By *LIMAXMan
over a year ago

middlesbrough

I pay mine every year so should everybody else .the only problem its always December and then tax bill January we get no help ..

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By (user no longer on site)
over a year ago

International Companies pay their taxes across many jurisdictions and to many different tax authorities. There are international tax treaties as well as localised European treaties to which countries like the UK are co signatories.

Corporation Tax is funadementally a punishment tax because it punishes companies for being profitable. Whether we like it or not, the country depends on successful companies to employ the mass population. One persons employer is another persons exploiter - that is just the way it is. Pinning Corpooration Tax at the optimum level is important for any country.

Don't be fooled into thinking that UK Companies are doing their fair share by paying Corporation Tax. Paying Corporation Tax at 21% and taking dividends instead of salary could also be viewed as tax evasion but it makes sense for UK based Companies to pay Corporation Tax instead of income tax and NI contributions for Directors/Shareholders.

My personal view is that Corporation Tax should be banded and International Companies should be encouraged to come to the UK with individually negotiated CT rates at very low levels.

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By *ikeC81Man
over a year ago

harrow

Interesting....I used to work in a tax position and now I work in a treasury position with some tax input.

One thing to make clear is that companies are not undertaking tax avoidance...they are using the current legislation to the maximum.......the problem is the law is broken

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By (user no longer on site)
over a year ago

[Removed by poster at 28/12/12 10:40:19]

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By (user no longer on site)
over a year ago

Mike and Toohot, I can't agree with you more.

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By (user no longer on site)
over a year ago

It is utter nonsense to compare British companies who pay CGT with foreign based companies - but it makes good shock newspaper articles.

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By *nnyMan
over a year ago

Glasgow

"It is utter nonsense to compare British companies who pay CGT with foreign based companies ............. "

Why's that?

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By (user no longer on site)
over a year ago

"It is utter nonsense to compare British companies who pay CGT with foreign based companies .............

Why's that?"

UK Companies would rather pay Corporation tax in Dividends to Directors/Shareholders than have to pay top rate income tax and NI contributions.

The great irony is that the headline of UK Companies paying more Corporation Tax masks a tax dodge in as much as HMRC are actually losing out by non payment of income tax and NI by Directors and Shareholders.

Multinationals who are overseas based have no need of this rather convenient loophole as they are likely to be listed or have overseas shareholders.

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By *nnyMan
over a year ago

Glasgow

Why does that make it wrong to compare them?

Surely it's possible to look at two companies with similar profits based in two different tax regimes and compare which contributes most money to the country in which they're headquartered

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By (user no longer on site)
over a year ago

Compare Directors salaries. Many UK based companies will show Directors having minimal or zero salaries. It makes sense for UK Companies to pay Corporation Tax and pay Directors / Shareholders in Dividends rather than pay them large salaries.

Top rate income tax and NI contributions is approx 50% therefore a 30% saving is made on money paid out to Principals.

One persons hero for paying Corporation Tax is another persons Tax Dodger.

To put this another way - almost all UK based small to medium sized Limited Companies would rather pay Corporation Tax than try to massage salaries upwards in order to "make a loss" because massaging the costs upwards to reduce CT would actually reduce net payments being received by the Principals.

Therefore flying the flag and comparing UK Company CT receipts against foreign company CT receipts is not comparing like for like.

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By *nnyMan
over a year ago

Glasgow

I'm not sure I understand.

You seem to be saying that because the processes are different we can't compare the outcomes. Is that right?

Surely the test can only be how much the Exchequer in each jurisdiction benefits from similar profitability in the two companies.

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By (user no longer on site)
over a year ago

"Why does that make it wrong to compare them?

Surely it's possible to look at two companies with similar profits based in two different tax regimes and compare which contributes most money to the country in which they're headquartered

Starbucks is an International brand with Corporate HQ in the USA. US tax rules dictate that the IRS collects tax on money repatriated to the USA. Costa Coffee is a UK Company and HMRC dictate that tax is payable on worldwide income irrespective of whether it is repatriated or not.

Just one very big example of why you can't compare tax regimes for two similar companies in different jurisdictions.

The UK has tax treaties within the EU and with the USA to prevent dual taxation of the same income and it is these treaties that enable google, Facebook etc etc to post billions in profit and pay virtually no UK Corporation Tax.

I would wager a good bet that the UK directors and shareholders of costa coffee pocket a good few million every year in Dividends on which 21% CT has been paid. Had that income been taken in salary, the CT contribution would be much less but the income tax take much higher. Another perfectly legal tax dodge.

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By *nnyMan
over a year ago

Glasgow

I think you're missing my point.

You seem to be concentrating on the fact different contries have different tax regimes and processes. I understand and accept that.

What I'm saying is that it doesn't matter HOW the eventual benefit to the Exchequer/ Revenue is derived, it's the amount of money received that counts.

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By (user no longer on site)
over a year ago

"I think you're missing my point.

You seem to be concentrating on the fact different contries have different tax regimes and processes. I understand and accept that.

What I'm saying is that it doesn't matter HOW the eventual benefit to the Exchequer/ Revenue is derived, it's the amount of money received that counts. "

Exactly.

Lets take a simple example. John Bodgit has a Limited Company - Bodgit ltd. he and his wife are directors and shareholders. During the year John has lived off expenses and his year end shows a balance of 100,000. If he takes the hundred grand as salary then the company has broken even and pays no corporation tax (but the Treasury has a take of 50,000 as does John).

Instead John declares a hundred grand profit and pays twenty grand in corporation tax - great news because the company is paying CT. meanwhile John pockets the 80,000 as a dividend and effectively robs the treasury of 30,000.

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By (user no longer on site)
over a year ago

Too hot.. You maths is incorrect but the basic principle is correct...

You don't pay 50% on everything... Just 50% on whatever is over the threshold.. Same as he would only pay 40% on what is earned between £42k(ish) and the upper limit and 20% on anything between £8.2k-£42k(ish).

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By (user no longer on site)
over a year ago

This is also a widely recognised and unofficialy supported method of tax minimisation as it encourages small business growth

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By *reelove1969Couple
over a year ago

bristol

"I think you're missing my point.

You seem to be concentrating on the fact different contries have different tax regimes and processes. I understand and accept that.

What I'm saying is that it doesn't matter HOW the eventual benefit to the Exchequer/ Revenue is derived, it's the amount of money received that counts.

Exactly.

legally !!

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By (user no longer on site)
over a year ago

"Too hot.. You maths is incorrect but the basic principle is correct...

Ok pedant!

I was not going to do a formal calculation for the sake of an Internet post but by the time you have added NI - you are not far off 50%.

There is also tax to be paid on dividends which is offset by tax credits but it was not that relevant to the point being made hence I chose not to over complicate the post.

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By (user no longer on site)
over a year ago

It is kind of relevant tho as I'm sure u see that when it comes to tax, there is no such thing as a 'simple example' like you tried to portray..

What about tax write offs re expenses? Family benefits that lower their tax obligation? Non taxable income from another source? Taxable income from another source? Property? Private pension plan subscriptions that can offset tax contributions? Dud the company make charitable donations??

The UK has an incredibly complex tax code and simple doesn't exist in it very often... Besides, alot of the loopholes are left open as the cost of raising and passing new legalisation can be prohibitive versus money to be recovered.

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By (user no longer on site)
over a year ago

I was not going to do a formal calculation for the sake of an Internet post but by the time you have added NI - you are not far off 50%."

What has NI got to do with corporation tax?? Adding that with personal income tax to justify ur 50% figure is irrelevant here...

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By *rightloonMan
over a year ago

Stafford

I can also confirm that paying CT is much better than paying NI if you are a director. The optimum salary is currently 7000 gross per year then take the rest as DIV's as the salary gets you just into class 2 NIC's thus qualifying for full state pension.

We might also note that these companies that have minimized tax have also minimized cost in many cases thus being able to undercut the competition and become the behemoths that they are.

Finally; we have the most complex tax system in the world and I see no real reason why we should.

It does not help government efficiency and the only benefactors as I can see are the Accountants who each year bung on some extra charge for the additional hoops they have to jump through.

Even online submissions have not reduced cost when intuitively they should have because there is now a "new" data entry system that seems not to be compatible with any other system in use so the statutory accounts have to be converted at extra cost.

Even the inland revenue tend to dislike advisers but with such a complex system its the only way for even a small business "one man band" to go.

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