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R K

Next £22.4M Tax Avoidance Bill

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http://www.bbc.co.uk/news/business-32798693

High Street retailer Next has been hit with a £22.4m tax bill after a court found it diverted profits made in the UK offshore to avoid paying tax.

Next was found to have used a tax avoidance scheme called a rate-booster.

The court ruled Next diverted UK profits to foreign subsidiaries to claim tax relief on overseas profits.

Such schemes are a way in which firms avoid corporation tax on foreign profits that are then paid back to the UK parent firm.

Under rules designed to prevent double taxation of company profits, firms were able to claim credit for tax paid on money they made overseas.

But some companies were able to exploit the rules through the creation of artificial arrangements involving what HM Revenue & Customs (HMRC) referred to as "complex circular movements of money between companies in the same group, so they can claim there has been double taxation".

Known as rate-booster schemes, this enabled companies to avoid corporation tax by diverting profits made in the UK to foreign subsidiaries.

The foreign subsidiary then paid tax on those profits - often at a lower rate of corporation tax - before the profits were paid back to the UK parent company.

Finally, the UK parent company received credits from HMRC for the tax already paid by its subsidiary.

As a result, companies were able to claim far more tax had been paid on their overseas profits than was actually the case.

Lord Wolfson. Tory peer.

Scum

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http://www.bbc.co.uk/news/business-32798693

Lord Wolfson. Tory peer.

Scum

At least they're finally making an effort to prosecute - would be nice if they were issued with a hefty fine rather than just being ordered to pay the tax that was due in the first place - then perhaps tax avoidance would actually have a financial downside risk, rather than only having an upside risk.

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fines would stem the flow a bit

exposing the Board to criminal charges if a scheme is proven to be purely a tax dodge would be better, especially with custodial sentences

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Needs to be treated the same as benefit fraud if they want to stop it really.

That someone can go to prison for claiming £70 dole a week they're not entitled to but a company can evade 22 million in tax and face no criminal charges seems odd.

(Yes I know tax evasion isn't actually illegal, hence there being no criminal charges. They need to change that.)

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Needs to be treated the same as benefit fraud if they want to stop it really.

That someone can go to prison for claiming £70 dole a week they're not entitled to but a company can evade 22 million in tax and face no criminal charges seems odd.

(Yes I know tax evasion isn't actually illegal, hence there being no criminal charges. They need to change that.)

Evasion is illegal where avoidance is legal. Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes.

I am not condoning these artificial schemes and there is plenty of legislation already in place to deal with this type of arrangement. Pushing the criminal boundary this too far will mean that HMRC will be able to determine how much tax we pay without any right to take the benefit of using perfectly legal allowances or arrangements.

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At least they're finally making an effort to prosecute - would be nice if they were issued with a hefty fine rather than just being ordered to pay the tax that was due in the first place - then perhaps tax avoidance would actually have a financial downside risk, rather than only having an upside risk.

Indeed. Asymmetric incentive to rip off taxpayer, whilst being paid oodles donating, a tiny portion of loot to Tory party, becoming a Tory peer, enacting legislation & pretending to be a "wealth creator"

And we pretend greece is corrupt.

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There was a thread on that too.

This is about Lord Wolfson and his tax avoidance scheme at NEXT.

On-topic - Are you saying youre in favour of Wolfson ripping £22m off the taxpayer?

Edited by R K

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It seems like the the whole point of tax avoidance is to make HMRC aware of ways to legally avoid tax (to subsequently make it illegal). It is an offense not to disclose the details of the avoidance scheme and probably worse in terms of consequences than dodging tax. Therefore, however clever, it becomes known to HMRC the moment it starts working, and the hole gets plugged when there's a political will to do so.

I think it is generally a good system that does not work better because of political cronyism and HMRC being understaffed and underfunded. Ideally, each scheme should only work for two years before being legislated against.

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There was a thread on that too.

This is about Lord Wolfson and his tax avoidance scheme at NEXT.

On-topic - Are you saying youre in favour of Wolfson ripping £22m off the taxpayer?

Typical biased story. They have already paid the tax - the case was them trying to get a £22m rebate. They failed.

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Typical biased story. They have already paid the tax - the case was them trying to get a £22m rebate. They failed.

So Osbornes best friend forever Lord Wolfson didnt set up any tax avoidance scheme at NEXT? . The £22.4 million they had to pay which they attempted to avoid didnt really happen? Thats good to know. What a dreadful biased story.

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So Osbornes best friend forever Lord Wolfson didnt set up any tax avoidance scheme at NEXT? . The £22.4 million they had to pay which they attempted to avoid didnt really happen? Thats good to know. What a dreadful biased story.

"This case sought to reclaim tax which had already been paid by Next, tax that would not be payable under current legislation."

"The claim was for £22.4 million (of the £1,316 million of corporation tax that Next has paid over the last 10 years) and it should be taken in that context."

"As a result, there is no accounting consequence on NEXT from the Tribunal's findings, nor are there any cash sums owed to HMRC as a result."

So no, they didn't have to pay it - they already had. Try reading other sources than the Biased Broadcasting Company.

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fines would stem the flow a bit

exposing the Board to criminal charges if a scheme is proven to be purely a tax dodge would be better, especially with custodial sentences

Would be nice to see this happen, but there's been little or no appetite to prosecute the big guys since the Guinness trial in the 80s. Ernest Saunders, Ronson et al.

Depressing.

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"This case sought to reclaim tax which had already been paid by Next, tax that would not be payable under current legislation."

"The claim was for £22.4 million (of the £1,316 million of corporation tax that Next has paid over the last 10 years) and it should be taken in that context."

"As a result, there is no accounting consequence on NEXT from the Tribunal's findings, nor are there any cash sums owed to HMRC as a result."

So no, they didn't have to pay it - they already had. Try reading other sources than the Biased Broadcasting Company.

Is that you Michael Green?

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Wonder who invents these schemes and advises corporations to use them?

There was a senior tax advisor to HMRC a few years back who was - at the same time - holding seminars for businesses - at considerable cost - explaining how to avoid paying taxes.

Think it was on despatches.

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There was a senior tax advisor to HMRC a few years back who was - at the same time - holding seminars for businesses - at considerable cost - explaining how to avoid paying taxes.

Think it was on despatches.

HSBC didn't even bother sending people on the seminars, it just recruited a former Second Permanent Secretary for Tax at HMRC... the same person that is said to have negotiated the deal with HSBC that 'virtually guaranteed immunity from prosecution' over Swiss accounts held by UK taxpayers

In the words of the artist taxi driver, you could not make this sh1t up

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The thing everyone seems to miss....we shoudl ALL be paying MUCH LESS TAX.

My income is taxed at about 60-70% after obvious and hidden taxes.

It's a public sector scam and it's time it ended.

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The thing everyone seems to miss....we shoudl ALL be paying MUCH LESS TAX.

My income is taxed at about 60-70% after obvious and hidden taxes.

It's a public sector scam and it's time it ended.

Sort of.

But you pay more tax because those at the top avoid so much.

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Disagree. Those rich at the top who avoided paying tax did not create this mega worldwide debt bubble - Govt and deregulated Banks did. If all these "rich" paid up do you think the debt would be hugely reduced and taxes would be 'revised'? It's a drop in a bucket.

Govts are happy to finger point to deflect blame away.

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