Shell Oil Makes £14 Billion in Profits; British Corporations Avoid £25 Billion in Taxes

February 4th, 2008 - by admin

Terry Macalister / The Guardian & Ben Russell / The Guardian – 2008-02-04 01:49:59 2008/feb/01/royaldutchshell.oil

Union Leaders Brand Shell’s
Record £14 Billion Profits Obscene

Terry Macalister / The GuardianPosted in accordance with Title a7, US Code, for noncommercial, educational purposes.

Wealthy ‘Avoid £13 Billion
Of Tax every Year’

Ben Russell, Political Correspondent / The Guardian

LONDON (1 February 2008) — Tax avoidance by large companies and wealthy individuals costs the Government £25bn a year, the equivalent of £1,000 for every working person in Britain, according to research published today.

The wealthy avoid tax worth £13bn while the country’s largest firms escape tax worth £12bn, according to the study commissioned by the Trades Union Congress. The report concluded that Britain’s top 50 companies pay corporation tax at 22.5 per cent, far below the official rate of 30 per cent, by using a range of measures to manage the amount of tax due.

Richard Murphy, a tax specialist, estimated that the real tax paid by corporations was falling by 0.5 per cent year – indicating that major firms are becoming more and more effective at avoiding tax. Mr Murphy’s report, based on studying hundreds of company reports and trawling through data from HM Revenue and Customs, said that wealthy people saved £3.2bn in tax by turning conventional income into investment income, which is taxed at a lower rate, or by shifting income to family members on lower tax bands. Another £3.8bn in tax was lost by moving transactions out of the country.

Union leaders stressed that tax-avoidance measures were wholly legal, but urged ministers to close loopholes to make real tax payments reflect headline tax rates.

The report, published the day after the oil giant Shell announced record profits of £13.9bn, comes after the Institute of Fiscal Studies warned that the Chancellor, Alistair Darling, needed to raise taxes by £8bn to control public sector debt. The TUC called for a new minimum tax rate for all those earning more than £100,000 a year to limit the scope for tax planning by the wealthy, and said that all capital gains on assets held for less than a year should be charged ordinary income tax.

Union leaders also called for a new anti-avoidance principle in tax rules, to make it easier to curb corporate tax planning. Brendan Barber, the TUC’s general-secretary, said: “There is mounting concern at the growing gap between the super-rich and the rest of society but, so far, there have been few practical proposals to do anything about it.

“Our strong view is that the proceeds should be used to properly fund public services. We recognise the argument at this difficult economic time for boosting the income of low and middle Britain through tax cuts. This is not the politics of envy but the economics of fairness.

“It is all about getting the rich and powerful to understand they must play by the rules, not look for ways round them. Most people think we have a progressive tax system, but it has now been hollowed out by so many loopholes and allowances that too much tax is now voluntary for the rich.”

The Confederation of British Industry said businesses were within their rights to manage their taxes. Ian McCafferty, chief economic adviser, said: “Businesses paid £130bn in tax last year and have seen this bill rise sharply since 2003 to help pay for public services.

“Legitimate tax planning – undertaken by companies that operate globally – should not be confused with so-called ‘tax avoidance’. “Outdated ‘tax the rich’ proposals simply risk harming successful companies who create jobs and wealth for people in this country, as well as driving successful individuals overseas.”

As Deadline Looms,
Revenue Site Crashes

The beleaguered bosses of HM Revenue & Customs suffered another embarrassment yesterday when their online tax returns service crashed hours before the deadline for filing the forms.

The Revenue was forced to offer a 24-hour extension. Tax returns have to be filed by 31 January, with an automatic £100 fine for those who miss the deadline: last year some 940,000 taxpayers were hit by the penalty.

A Revenue spokesman said: “HMRC takes any disruption of service very seriously and to reflect this no one who files electronically or by paper by midnight Friday 1 February will face a penalty.”

The Revenue’s online tax services have suffered a series of breakdowns, with problems affecting the pay-as-you-earn system. The department is also still reeling from the loss of computer discs containing millions of families’ child benefit details.

Angela Beech, senior tax partner at the accountancy firm Blick Rothenberg, said: “It is becoming clear that the Revenue is not geared up to properly deal with the challenges it faces.”

Posted in accordance with Title a7, US Code, for noncommercial, educational purposes.