A new paper released today shows that many of UK Uncut’s claims are fundamentally flawed and contradictory.
In UK Uncut Unravelled the IEA examines the claims made against some of UK Uncut’s main targets and finds that they often misrepresent the facts and completely misunderstand the way that tax law operates – both within the UK and abroad.
UK Uncut misrepresenting the facts
- Vodafone has been attacked over a supposedly unpaid tax bill of £6bn, based on profits of its German subsidiaries. However, it is not – and never can be – a principle of tax law that a company should pay both UK tax and German tax on the activities of the German parts of the business. The amount under discussion is therefore much less than the £6bn suggested, and HMRC and Vodafone have come to a compromise owing to the discrepancies that exist between UK and EU law.
- Boots has also been attacked without justification. A Swiss company, it pays UK tax on its UK profits. However, the company financed its operations through borrowing, and, as a cost of doing business, the interest paid was perfectly legally written off against profits before tax. It should also be noted that those who lent money will have paid tax on the interest they received.
Philip Green and Arcadia
- Philip Green and the Arcadia Group are possibly the most high-profile targets, Philip Green standing accused of avoiding tax by paying a dividend from a company he controls to his wife who, in turn, does not pay UK tax. This allegation is wrong in three respects.
- His wife owns Arcadia through a holding company that she also owns and her husband manages the company.
- Secondly, Arcadia pays corporation tax but any dividends must be paid to the owner – Tina Green. It is only further, higher rate, tax that is not being paid on the dividends.
- Thirdly, the UK tax system now taxes husbands and wives separately. The implications of UK Uncut’s suggestion that Philip Green’s tax status should determine the tax that Tina Green pays would be to send our tax system back to the dark ages.
- Barclays, the final target, has also applied a completely reasonable principle of tax law. Barclays reduced its corporatio