Big biz, expensive beancounters write UK tax law, says senior MP Corporate giants and accountancy firms hold too much sway over UK's tax law, according to the chairwoman of an influential parliamentary panel. Labour MP Margaret Hodge, who heads up the Public Accounts Select Committee, said the Tory-led coalition government "only talks to those who have a self interest in reducing their tax …
"Didn't the Hodge family's company pay 0.01% tax last year on £2bn revenue?"
Did you read that in the Daily Mail or the Telegraph? Either way it's wrong and the Telegraph admitted it.
http://www.taxjournal.com/tj/articles/telegraph-apologises-margaret-hodge-over-stemcor%E2%80%99s-tax-affairs-13122012
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Calamity Brown made it far to complex... it needs to be destroyed and replaced with a system SO simple that there are NO loopholes available...
Flat rate income tax, flat rate internet VAT based on where the purchaser is located not where the hypothetical box office of the multinational corp is "located", NO sneaky paying royalties, IP fees to the offshore based unit to minimise the actual profits of a specific operation in a country (Starbucks, Microsoft, you know you're guilty). Very simplified allowances to be offset against profits/income before applying the flat rate income tax...
Labour MP Margaret Hodge, who heads up the Public Accounts Select Committee, said the Tory-led coalition government "only talks to those who have a self interest in reducing their tax contribution" when writing new rules.
..... what with our expectations that they wouldn't do exactly the same as the Labour government they replaced.
" the changes include tax breaks for companies that patent their products"
... is more incentives for big companies to file large volumes of largely-vacuous patents.
Too many patents are just a total waste of time to search (and prohibitively expensive to contest) for small companies or individuals trying to develop some true innovation.
The bar is set higher for the patent box than you might think - patents filed in countries that have vacuous patent regimes do not qualify for the regime (e.g. the US is excluded) - there is a short list of qualifying jurisdictions where there is a requirement to demonstrate innovation.
The large tax and accountancy firms need to be involved in the drafting of new law because they're the only people who fully understand it and all the implications. This is also in line with HMRC's strategy of reaching out to 'stakeholders' and consulting extensively on new law. It leads to a better quality of law overall.
Finally, the finance company exemptions that Margaret Hodge refers to in the new CFC rules are a direct consequence of the government's stated desire to give the UK a competitive tax regime internationally so she is just ill informed - it's not a 'mistake' that this exemption is available. It was designed to encouraged groups to base themselves in the UK as a holding location and, in my limited experience, has worked very well - I know of several global groups that have increased their UK activity (and profits, therefore tax) as a result.
>The large tax and accountancy firms need to be involved in the drafting of new law because they're
> the only people who fully understand it and all the implications.
Isn't that the problem? If the tax laws are so complicated that only the big firms can understand them, then they're also so complicated that they naturally include handy loopholes for the big firms' clients to exploit.
Only the little companies pay tax....
I don't know about the UK but in the States private firms & lobby groups write the laws then they are "sponsored" by a member or group of Congressmen who rarely understand the law they are pushing.
That being said it isn't hard to understand why the legal system is so screwed up. None of the legal representatives understand it...
'Why isn't 'intellectual property' taxed like other property - for instance like business rates?'
In a sense, it is. At least, the income from ownership of intellectual property is taxed just like any other income.
When the owner licences a patent or grants a right to copy, the income from that is taxed in the same way as income from the rental of property is taxed. So profits from the ownership of copyrights or a patents is dealt with in a broadly similar way to profits from the ownership of bricks and mortar property.
Business rates are charged to the occupant, not necessarily the owner of the property. And at least in theory they are charged for the provision of services, not just as a tax on occupation. The equivalent would be to tax users for paying licensing fees.
'Corporate giants and accountancy firms hold too much sway over UK's tax law, according to the chairwoman of an influential parliamentary panel.'.
'Well, durrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr..........', said a significant segment of the educated population, notably among them The Register's commentards...
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