Greater transparency ‘would discourage aggressive avoidance and boost confidence in the system’
Concerns that disclosures of UK corporation tax bills could be misinterpreted do not amount to a strong argument against transparency, according to The Times.
In a leading article the paper noted that Labour MP Chuka Umunna, the shadow business secretary, called for reporting rules to be changed to ‘make it clearer’ how much each company pays in UK corporation tax.
‘The idea would be to highlight the huge contribution most companies make and to prevent a few high-profile cases of aggressive tax avoidance from tarnishing the reputation of business as a whole,’ the paper said.
‘[Umunna’s] concern is well-founded. There is evidence that the publicity surrounding some controversial tax cases has further undermined confidence in business.’
It added: ‘At present, companies are required only to disclose global figures for tax payments. What the public wants to know is how much tax individual companies pay in Britain. The recent controversy over Starbucks, Amazon and Google focused on how they structure themselves so that they shift tax otherwise payable on activities in the UK to countries with lower tax rates.’
The Times reported that Umunna thought voters were ‘increasingly disillusioned with multinationals and large conglomerates that pay little tax’. He believed that businesses should declare what tax they pay in their annual reports, but also wanted HMRC to publish ‘details of all companies’ tax contributions’.
Umunna said: ‘It is entirely reasonable for a society that provides custom, talent and infrastructure to expect them to make a decent contribution back by paying tax. You can’t have a situation where if you are a large company you can negotiate a deal with HMRC, but if you are a small company they will get you for every last penny. There has to be equal treatment and there isn’t a level playing field at the moment.’
He added: ‘We shouldn’t name and shame but name everyone and celebrate those who do contribute.’
David Davis, the Conservative MP and former shadow home secretary, said last year that there was ‘no commercial confidentiality argument’ against requiring public limited companies to publish accounts of their tax affairs as well as financial reports and accounts.
However, some experts argue that the complexity of the system, governed by national tax laws and international treaties, means that better scrutiny by trained tax professionals – rather than campaigners and the national press – is what is required to restore confidence.
Anonymised figures
The Times leader said: ‘Labour also suggests that HMRC should publish an annual figure for how much business as a whole pays in UK tax. The CBI estimates that for 2010/11 total taxes paid by business, including corporation tax, business rates and employers’ national insurance, amounted to £163bn.’
The CBI’s director-general John Cridland argued last April that ‘business does and always will pay its way’. Cridland was speaking at the launch of a campaign to bring an ‘informed voice’ to the business tax debate.
A few days earlier the government said in Commons written answer that it would not be publishing ‘anonymised data’ on the corporation tax paid by FTSE 100 companies. It was responding to a question tabled by George Mudie, a Labour MP and a member of the Commons treasury committee.
Greater transparency ‘would discourage aggressive avoidance and boost confidence in the system’
Concerns that disclosures of UK corporation tax bills could be misinterpreted do not amount to a strong argument against transparency, according to The Times.
In a leading article the paper noted that Labour MP Chuka Umunna, the shadow business secretary, called for reporting rules to be changed to ‘make it clearer’ how much each company pays in UK corporation tax.
‘The idea would be to highlight the huge contribution most companies make and to prevent a few high-profile cases of aggressive tax avoidance from tarnishing the reputation of business as a whole,’ the paper said.
‘[Umunna’s] concern is well-founded. There is evidence that the publicity surrounding some controversial tax cases has further undermined confidence in business.’
It added: ‘At present, companies are required only to disclose global figures for tax payments. What the public wants to know is how much tax individual companies pay in Britain. The recent controversy over Starbucks, Amazon and Google focused on how they structure themselves so that they shift tax otherwise payable on activities in the UK to countries with lower tax rates.’
The Times reported that Umunna thought voters were ‘increasingly disillusioned with multinationals and large conglomerates that pay little tax’. He believed that businesses should declare what tax they pay in their annual reports, but also wanted HMRC to publish ‘details of all companies’ tax contributions’.
Umunna said: ‘It is entirely reasonable for a society that provides custom, talent and infrastructure to expect them to make a decent contribution back by paying tax. You can’t have a situation where if you are a large company you can negotiate a deal with HMRC, but if you are a small company they will get you for every last penny. There has to be equal treatment and there isn’t a level playing field at the moment.’
He added: ‘We shouldn’t name and shame but name everyone and celebrate those who do contribute.’
David Davis, the Conservative MP and former shadow home secretary, said last year that there was ‘no commercial confidentiality argument’ against requiring public limited companies to publish accounts of their tax affairs as well as financial reports and accounts.
However, some experts argue that the complexity of the system, governed by national tax laws and international treaties, means that better scrutiny by trained tax professionals – rather than campaigners and the national press – is what is required to restore confidence.
Anonymised figures
The Times leader said: ‘Labour also suggests that HMRC should publish an annual figure for how much business as a whole pays in UK tax. The CBI estimates that for 2010/11 total taxes paid by business, including corporation tax, business rates and employers’ national insurance, amounted to £163bn.’
The CBI’s director-general John Cridland argued last April that ‘business does and always will pay its way’. Cridland was speaking at the launch of a campaign to bring an ‘informed voice’ to the business tax debate.
A few days earlier the government said in Commons written answer that it would not be publishing ‘anonymised data’ on the corporation tax paid by FTSE 100 companies. It was responding to a question tabled by George Mudie, a Labour MP and a member of the Commons treasury committee.
