Global giants branded immoral over tax as Osborne plans blitz

Starbucks, Google and Amazon are accused of “immorally” minimising their UK tax bills in a damning report by MPs today as a major initiative is announced by Ministers to clamp down on tax avoidance and evasion.

The public accounts committee criticised the companies for the “unconvincing and, in some cases, evasive” evidence they gave on why their corporation tax payments are so low.

MPs warned there are many multinationals exploiting tax laws to move offshore profits generated in the UK and called on the Government to “get a grip”.

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It accused HM Revenue and Customs of looking “way too lenient” over the way it deals with big name firms who are “getting away with” paying little or no corporation tax.

Chancellor George Osborne is today unveiling a £154m blitz on tax avoidance and evasion in response to public anger over the tax affairs of big name companies and wealthy individuals, which is expected to reap an extra £2 billion in revenue each year.

Margaret Hodge, who chairs the public accounts committee, said: “Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here.

“This is outrageous and an insult to British businesses and individuals who pay their fair share.

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“The evidence we took from large corporations was unconvincing and, in some cases, evasive. The inescapable conclusion is that multinationals are using structures and exploiting current tax legislation to move offshore profits that are clearly generated from economic activity in the 
UK.”

Starbucks told MPs it had made a loss for 14 of the 15 years it has operated in the UK, making just a small profit in 2006.

In its report, the committee said it found that claim “difficult to believe” and said it was “inconsistent” with claims the company was making about its success to shareholders.

MPs rounded on Amazon’s representative saying they were left frustrated because he was “evasive and unprepared to answer legitimate questions”.

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While the company had a UK operation involving 15,000 staff it pays little corporation tax in the UK. It said the company’s UK website reported a turnover of £207m for 2011 but its tax expense was just £1.8m.

The report said Google accepted profits should be taxed in the countries where they are generated but “undermined its own argument” because it remits its non-US profits, including from the UK, to Bermuda, which has an advantageous tax regime.

“All three companies accepted that profits should be taxed in the countries where the economic activity, that drives those profits, takes place and that, alongside their duty to their shareholders, they had obligations to the society, from which they derive their profits, which included paying tax.

“However, we were not convinced that their actions, in 
using the letter of tax laws both nationally and internationally to immorally minimise their tax obligations, are defensible,” the report said.

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Mrs Hodge called for companies that abused the system to be “named and shamed” for failing to meeting tax obligations and urged the Government to toughen up legislation. She added: “HMRC should be challenging this but its response so far to these big businesses and their aggressive tax planning has lacked determination and looks way too lenient.”

Mr Osborne will order Revenue officials to target high earners who aggressively avoid or evade tax. Extra staff will also speed up work challenging multinationals’ transfer pricing arrangements to stop global companies using legal loopholes to shift profits out of the U K.

Mr Osborne said: “The Government is clear that while most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law.”

The Chancellor is also poised to confirm a deal with Switzerland that will raise more than £5bn in previously uncollected taxes from Swiss bank accounts over the next six years.