UK Companies not paying UK Corporation Tax

[GardeningEcomm]

Hi All

Yes it's this old chesnut again - how our loveley multinationals are stealing all the trade yet not paying their due taxes.

Noticed today that B&M Bargains have made a nice massive annual profit but yet they are now incorporated in Luxembourg.
I guess that means good old blighty won't be getting its fair cut of Corporation Tax from these guys?
Happy to be proven wrong if incorrect.

So let's add them to the usual list of suspects:
Google
Starbucks
Amazon
.......

Any more that might surprise us? I think we should 'out' them all on this thread.

At a time when most of us UK businesses are being asked to pay 30% more Corporation Tax (19% to 25% of profits) how long until this becomes a bigger headline 'issue'. Or is it one rule for one and a different rule for us others?

I'm having a bad day work-wise and this news about B&M hit home
Feels like a 'tipping point' has been breached and they are all at it!!!

[Eric Mc]

Last I looked, Google, Amazon and Starbucks weren't "UK companies".

[Terminator X]

Whilst it is annoying (I probably pay more Corp Tax than them) at least the big companies have 1000's of staff all PAYE.

TX.

[jonsp]

That should be the value to the UK of companies locating here - not the corp tax.

Take McDonalds. Say they sell £1bn of burgers in the UK. The cost of them supplying those burgers is £700m - paying rent, ingredients, staff wages, head office overhead etc.

Is their profit in the UK £700m?

[MustangGT]

jonsp said:

That should be the value to the UK of companies locating here - not the corp tax.

Take McDonalds. Say they sell £1bn of burgers in the UK. The cost of them supplying those burgers is £700m - paying rent, ingredients, staff wages, head office overhead etc.

Is their profit in the UK £700m?

Nope, £1bn - £700m = £300m profit in simple terms.

[jonsp]

But it isn't - the only reason McDs sold £1bn of burgers in the UK is because of their brand/trademarks/systems etc that were developed in the USA.

Clearly they have to pay for use of that - which reduces their profit in the UK.

[Gweeds]

Eric Mc said:

Last I looked, Google, Amazon and Starbucks weren't "UK companies".

No but they absolutely have UK operations and companies.

[Eric Mc]

Gweeds said:

Eric Mc said:

Last I looked, Google, Amazon and Starbucks weren't "UK companies".

No but they absolutely have UK operations and companies.

Yes they do - but the trick is that they are owned and (crucially) managed from overseas. I am not condoning their behaviour in any way but the fact that they are bona-fide global companies does give them options that Hackney based Joe the Plumber Ltd does not.

[Olivera]

Eric Mc said:

Yes they do - but the trick is that they are owned and (crucially) managed from overseas.

The issue isn't so much that they are owned and ultimately managed from overseas, but rather their use and arguably abuse of transfer pricing. In other words sales being booked in low tax jurisdictions and UK operations being run as 'fulfillment only', hence making negligible profits.

[GardeningEcomm]

Yes but no McDonalds would probably allow room for a UK-based competitor to take their place.
I just think it's time that we had a level playing field on tax.

[deadslow]

Terminator X said:

Whilst it is annoying (I probably pay more Corp Tax than them) at least the big companies have 1000's of staff all PAYE.

TX.

yes, but that comes out of the staff's wages. The companies paying no/little tax make their staff (and the rest of us) look like right mugs.

[Eric Mc]

Olivera said:

Eric Mc said:

Yes they do - but the trick is that they are owned and (crucially) managed from overseas.

The issue isn't so much that they are owned and ultimately managed from overseas, but rather their use and arguably abuse of transfer pricing. In other words sales being booked in low tax jurisdictions and UK operations being run as 'fulfillment only', hence making negligible profits.

Yes - we all know that.

But the fact that they are genuine multi-nationals means that they can argue with some degree of actuality that they are ultimately not managed in the UK.

It's frustrating but difficult to stop.

[Eric Mc]

deadslow said:

Terminator X said:

Whilst it is annoying (I probably pay more Corp Tax than them) at least the big companies have 1000's of staff all PAYE.

TX.

yes, but that comes out of the staff's wages. The companies paying no/little tax make their staff (and the rest of us) look like right mugs.

Not entirely. The setting of staff wages is always decided taking into account the underlying tax and NI - especially Employer'S NI which most definitely DOES NOT come out of staff wages.

[Olivera]

This was introduced as a work-around to collect some of the off-shored profits: https://www.theguardian.com/technology/2022/nov/23...

[ralphrj]

GardeningEcomm said:

Hi All

Yes it's this old chesnut again - how our loveley multinationals are stealing all the trade yet not paying their due taxes.

Noticed today that B&M Bargains have made a nice massive annual profit but yet they are now incorporated in Luxembourg.
I guess that means good old blighty won't be getting its fair cut of Corporation Tax from these guys?
Happy to be proven wrong if incorrect.

The parent company might be incorporated in Luxembourg but the UK stores are owned and operated by B&M Retail Limited which is a UK company and will pay taxes in the UK.

The most recent accounts for B&M Retail Limited show that they paid £92m in corporation tax on a profit before tax of £514m.

They also employed 35,000+ people.

[s1962a]

meanwhile in Ireland

https://www.bbc.co.uk/news/articles/cpe9wz453elo

[wheelerc]

s1962a said:

meanwhile in Ireland

https://www.bbc.co.uk/news/articles/cpe9wz453elo

This is why UK gov should be reducing corp tax, not increasing it. It would help the small business, and encourage the multinationals to pay more tax in the UK rather than shift it to countries with lower rates.

[Gweeds]

They will still shift it.

[Terminator X]

wheelerc said:

s1962a said:

meanwhile in Ireland

https://www.bbc.co.uk/news/articles/cpe9wz453elo

This is why UK gov should be reducing corp tax, not increasing it. It would help the small business, and encourage the multinationals to pay more tax in the UK rather than shift it to countries with lower rates.

They were driving towards low Corp Tax hence they introduced Div Tax as well. As CT goes up I wonder if DT will come down

TX.

[GardeningEcomm]

Suppose that's part of my worry really.
As CT rates rise.....dividend tax too.....will this lead to more UK companies trying to wriggle out of paying these taxes?
Especially when they see reports of an increasing number of 'fellow' companies going down the Ireland/Luxembourg route?

I appreciate this is an age-old problem.
But it's not being dealt with or likely to go away is it?

I also appreciate it is 'difficult' or 'complicated' and UK Governments like to stay clear of such things.

Just feels like trading conditions are getting tougher and tougher.
Businesses in many industries at breaking-point.

If this issue continues to get 'swept under the carpet' I think resentment will grow and the final result will not be pretty.