Taking the Michael - a sign of the times

[pzz76077]

Now in this case client CO has an extra 75k profit on its books. Which it neatly pays about 28k in CT.

Not sure that this is a realistic scenario in the current climate - more like it is 75k less client co has to borrow to finance the project. All the more reason that offshoring is so attractive IMO. Many Indian cos are also offing to finance the whole deal with no money up front options. Couple this with the 1000's of jobs that cost additional unemployment benefit and I see the revenue stream going to HMRC to be considerably less.

PZZ

[ASB]

Not sure that this is a realistic scenario in the current climate - more like it is 75k less client co has to borrow to finance the project. All the more reason that offshoring is so attractive IMO. Many Indian cos are also offing to finance the whole deal with no money up front options. Couple this with the 1000's of jobs that cost additional unemployment benefit and I see the revenue stream going to HMRC to be considerably less.

PZZ

True, but the fact remains that if the service is provided cheaper then there is more profit (or less loss), and you are also quite right to include the additional costs of UB etc. The overall figure is not a zero sum game. It's also the case that mutinationals can exploit thier operations to artificially increase their UK cost base in some circumstances and to move certain operations outside the UK so it just becomes a cost centre for neatly moving profits (though HMRC are of course looking very carefully at explotation of the transfer pricing rules where this does happen).

Overall, yes, the UK taxpayer does get shafted - but it might not be by as much as it would seem at first glance.