Tuesday, 22 October 2013



UPDATE - STOP PRESS - GREENE KING -v- HMRC - The Guardian 2 DEC 13 (possibly the best newspaper in the world) reports this big tax case, where global tax planners Ernst & Young, billing 8% of tax-saved, in 2003 advised Greene King (2,300 pubs) to borrow money within the group - charging extortionate rates of interest in the UK with UK tax-relief - to be paid to their offshore selves somewhere that charges no tax. In paying the interest - the pubs, I suppose, are indulging in tax-evasion-capital-flight, draining the UK of much needed investment capital. WHO are the 3 judges? We hope they are not ex-Ernst & Young partners or other global planners embedded in government - who have a lot riding on this and similar double-bookkeeping fiddles. If it ain't an Arms-Length series of transactions - it ain't legal. IF the UK courts decide for the tax-collectors (which if they are honest folk, they must) - there will be hundreds of other big cases.

We do not need Chinese cash or any other “inward investment”. Barry North, Guardian Letters 18 Oct 13 “Who owns Britain” (below)  maps the circular trick where companies load themselves with “debt” and pay huge interest to kill UK taxable profits. He tacitly accepts the tax-industry-PR false mantra that such self-invoicing (via tax-havens) is legal. It is not legal in UK, USA or OECD tax law. HMRC can and do reject “artificial and fictitious” claims that are not: “1) At arms length, or 2) concocted to avoid tax, or 3) not wholly necessary for the business, or 4) not on normal commercial terms”.  This is UK law. Many UK and USA back-duty cases recover tax + penalties + compound interest + costs when tax collectors retrospectively deny such false claims, e.g. for 25 past years. Some tax evaders and advisers also go to prison. It is such false accounting, with the complicity of auditors and corrupt tax officers (ENRON, Parmalat, Tyco, Olympus) that siphons $1 trillion per year to tax-havens, now hiding $32 trillion, which the source nations could today tax and repatriate. The UK could and should rapidly recover $3 trillion (3 years Budget) and the USA $16 trillion (the entire US debt) of the assets gouged from our High Streets. GCHQ and the NSA have all the records of the false transactions and bank accounts. All realists accept that $32 trillion buys a lot of friends in high and low places – but surely the Guardian is as sick of the tax-criminal imposed global austerity as are 99.5% of UK citizens. Bang ‘em up! Repatriate our money and build a great future for our grandchildren – without borrowing “inward investment”.

Tax evasion capital flight is a capital crime:

Chris Huhne makes a strong argument for rounding up tax-evaders and putting them in prison alongside benefit cheats. (If prison deters crime, why don’t tax evaders go there? Guardian 14 Oct 13). However he underestimates the scale of tax-evasion-capital-flight and what the UK can repatriate, by 1,000 times; he talks of billions instead of trillions. Tax Minister David Gauke recently wrote to me to stress his determination to collect a few billion in evaded taxes over several years – equating to about half of one year’s London bankers’ bonuses.

Studies by the OECD, Paris and one by Wall Street economist James S Henry show there is $32 trillion (80 million global jobs) tax-unpaid money offshore. The global total grows by $1 trillion annually. The UK’s share of this vast hoard is about $3 trillion (8 million UK jobs) - $16 trillion has been siphoned from the US economy.  

The illegality is glaringly obvious from the term “tax-haven”, where tax-unpaid assets gouged from OECD economies are secreted, most via clumsy false accounting, and undeclared for years, which is against existing laws, and can thus all be legally seized using HMRC’s powers of Protective Assessment, Penalties and Compound Interest.  Such powers are applied to UK evasive plumbers, dentists and journalists – but not against VIPs and politicians. Thanks to the Guardian we now know that GCHQ knows exactly where the assets are. $3 trillion is 3 years the total UK Budget; will sweep aside all austerity measures; refill all UK banks; and create long term, intelligent, sustainable industries and jobs.

Should our so called business leaders be exempted from tax? When Sir Richard Branson’s private Caribbean Island Tax-Haven home, funded by UK consumers, is invaded by vicious pirates or by a hurricane – which police and armed forces will he beg for help?

Noel Hodson

A study by James S. Henry, former chief economist at McKinsey & Company, estimates that wealthy individuals have $21 trillion to $32 trillion in private financial wealth tucked away in offshore havens — roughly equivalent to the size of the U.S. and Japanese economies combined.

UK 2013 Budget - £612 billion ($930 billion) (39% of 2012 GDP)

18 Oct 2013 - Readers' Letters - Guardian
• The detrimental effects of the unnecessary and enormous borrowings by some companies deserve greater prominence than just the last sentence of an article about Thames Water (Ofwat to halt Thames Water 8% price rise, 17 October). It is not just the avoidance of tax but the increase in prices to pay the interest and to still provide a profit that are hurtful. It seems to me the acquisition of a UK company by private interests typically goes as follows. Using a large loan the private company or fund buys a UK company that has no substantial debt – for example a utility company or a football club – then causes the acquired company to take out a big loan, the proceeds of which are paid to the new owner as a dividend, or some such, thereby extinguishing the owner's original debt. The transfer most likely avoids tax in any country.
The UK company now labours under a large debt, restricting its ability to borrow for genuine business purposes and requiring higher prices for its goods or services in order to pay the interest, which may be set against profit for tax purposes. Not only does the loan carry a high rate of interest but, the new owner may even have a beneficial interest in the lending organisation.
Some private owners will state they have never done all of the above and, in any case, it is all within the law. So, it is shrieking out for the law to be changed so that this series of steps is thwarted.
Barry North

Cobham, Surrey 

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