Re: Can someone help me ...
Let me take a crack at it ...
The main flaw in your argument is that fiscal authorities cannot assume anything. That's why as a company you have to keep tons of receipts, invoices, contracts etc. All that paperwork should be the base of what you report to the Tax man.
The way the tech giants do it is that they make sales of GBP 100,000 in the UK and report expenses of GBP 99,000, leaving peanuts for the UK taxman. When you dig deeper into the GBP 99,000 you will probably see that GBP 45,000 are actually expenses paid to other group companies: royalties, R&D, training, support services.
So you could be tempted to say, just ignore the GBP 45,000 exchanged between group companies and tax the difference, but that would be unfair if those services were actually performed because if someone in Google spent 10,000 man-hours developing code for all of Google subsidiaries to use and sell stuff based on that code, then Google subsidiaries should pay up for the development time.
In essence, how does the tax man know what is the real value of those cross-charges and working in such a structure myself I can honestly tell you we don't know either. Some gross-fromage just puts a number down and we run with it.
Thus, returning to the main problem: what's a fair tax amount? And because the world tends to operate on the "innocent until proven guilty" assumption - the tax guys cannot ask for more payments unless they have solid proof that the company actually cheated.
Makes more sense now?
Biting the hand that feeds IT
