Shadow chancellor John McDonnell has announced at the Labour Party conference his intention to enlist the support of institutional investors in launching a ‘shareholder campaign’ to demand that companies sign up to the ‘Fair Tax Mark’.
Shadow chancellor John McDonnell has announced at the Labour Party conference his intention to enlist the support of institutional investors in launching a ‘shareholder campaign’ to demand that companies sign up to the ‘Fair Tax Mark’.
The Fair Tax Mark is a certification scheme launched in 2014 by Fair Tax Mark Ltd, a not-for-profit organisation whose income is derived from licensing of accreditation standards and also grant funding from several other organisations. The scheme ‘seeks to encourage and recognise organisations that pay the right amount of corporation tax at the right time and in the right place’.
Paul Monaghan, chief executive of the Fair Tax Mark, said: ‘We welcome the Labour party’s intervention and their aim to accelerate change in this crucial area’.
Less convinced was Dan Neidle, partner at Clifford Chance, who tweeted: ‘It is a bit odd for a (prospective) government to be pushing a private certification scheme’.
Another commitment the shadow chancellor made at the conference was to introduce legislation encouraging employee ownership through ‘inclusive ownership funds’, into which large companies would be required to transfer 10% of their share capital over a period of 10 years. The funds would make dividend payments to shareholders of ‘up to £500 a year’. Any remainder of the dividend income of the fund would then be given up to the Treasury, in the form of a ‘social dividend’.
However, the Financial Times suggests that the £500 figure looks low in proportion to the actual level of dividends paid by the largest UK companies, which would make the requirement to pay over the residue to the Treasury ‘look like a tax plan’.
Writing in this week’s Tax Journal, Thomas Dalby, tax director at Gabelle, comments that the ‘social dividend’ fund could be seen as the main beneficiary of the plan. Based on the limited detail so far available, Dalby has concerns that the measure could lead to ‘market-distorting behaviours’.
The current government considered introducing a new employee shareholding vehicle for unquoted companies in 2014, on the recommendation of the OTS. Following consultation, the government decided not to proceed for reasons that included complexity and insufficient demand.
Shadow chancellor John McDonnell has announced at the Labour Party conference his intention to enlist the support of institutional investors in launching a ‘shareholder campaign’ to demand that companies sign up to the ‘Fair Tax Mark’.
Shadow chancellor John McDonnell has announced at the Labour Party conference his intention to enlist the support of institutional investors in launching a ‘shareholder campaign’ to demand that companies sign up to the ‘Fair Tax Mark’.
The Fair Tax Mark is a certification scheme launched in 2014 by Fair Tax Mark Ltd, a not-for-profit organisation whose income is derived from licensing of accreditation standards and also grant funding from several other organisations. The scheme ‘seeks to encourage and recognise organisations that pay the right amount of corporation tax at the right time and in the right place’.
Paul Monaghan, chief executive of the Fair Tax Mark, said: ‘We welcome the Labour party’s intervention and their aim to accelerate change in this crucial area’.
Less convinced was Dan Neidle, partner at Clifford Chance, who tweeted: ‘It is a bit odd for a (prospective) government to be pushing a private certification scheme’.
Another commitment the shadow chancellor made at the conference was to introduce legislation encouraging employee ownership through ‘inclusive ownership funds’, into which large companies would be required to transfer 10% of their share capital over a period of 10 years. The funds would make dividend payments to shareholders of ‘up to £500 a year’. Any remainder of the dividend income of the fund would then be given up to the Treasury, in the form of a ‘social dividend’.
However, the Financial Times suggests that the £500 figure looks low in proportion to the actual level of dividends paid by the largest UK companies, which would make the requirement to pay over the residue to the Treasury ‘look like a tax plan’.
Writing in this week’s Tax Journal, Thomas Dalby, tax director at Gabelle, comments that the ‘social dividend’ fund could be seen as the main beneficiary of the plan. Based on the limited detail so far available, Dalby has concerns that the measure could lead to ‘market-distorting behaviours’.
The current government considered introducing a new employee shareholding vehicle for unquoted companies in 2014, on the recommendation of the OTS. Following consultation, the government decided not to proceed for reasons that included complexity and insufficient demand.
