Taxes - what taxes

[Mich the Tester]

Lots of modern companies don't need to be 'based' near their customers .To do brokerage you don't need customers in the UK or even an office in the UK; you need a phone, a laptop that connects to the internet and some good contacts. You could do the work anywhere, and some do; why would you base the company in the UK if you can pay less tax elsewhere? The countries that do well in the future will probably be the ones that can attract businesses with low rates of tax AND motivated people; the UK isn't one of them at the moment, in fact I don't think anywhere in western Europe is.

[DodgyAgent]

IR35 style punitive tax.

Let HMR&C have a "deemed" UK profit (random large number) and send these companies a tax bill, retrospective, guilty until proved innocent. Let's see how they like it up 'em.

I am not sure how IR35 stifles economic activity

[Mich the Tester]

I am not sure how IR35 stifles economic activity

It's just another lump of legislation that takes up time, along with a whole load more regulation and legislation that we don't need, and it costs money to employ the tax inspectors that work on it. I'd suggest the fear of it prevents some people investing earnings into growing their businesses too.

[AtW]

simply "stopping something" that will have considerable unintended consequences (or have you not thought of those?

What's the economic sense of using low tax offshore locations for anything other than reducing tax or hiding your assets in high secrecy zones?

What "considerable unintended consequences" would be if big companies were stopped using offshores to hide from tax?

US corp tax is 35%, and in UK it is almost 20% now - still too high but a LOT better than US.

[Mich the Tester]

What's the economic sense of using low tax offshore locations for anything other than reducing tax or hiding your assets in high secrecy zones?

What "considerable unintended consequences" would be if big companies were stopped using offshores to hide from tax?

US corp tax is 35%, and in UK it is almost 20% now - still too high but a LOT better than US.

Why compare to the US? The US is going down the same pan as the UK and the rest of Europe; overloaded with regulation, debt and a dependency culture. The competition will come from the BRICS and Africa in future.

[AtW]

why would you base the company in the UK if you can pay less tax elsewhere?

If those companies only cared about low tax they'd base fully in offshore and never set foot in high tax jurisdictions.

The reason they are here is because execs want to live in top city in the world, there is established pro-business court system, Govt is pretty safe even if socialists get elected, etc.

[AtW]

Why compare to the US?

I compare to US because a lot of big companies that dodge corp tax are technically US based - they keep their profits in foreign subsidiaries so they don't even end up paying US corp tax which is 35%.

But they can't lie to stock market in US as otherwise execs would go to jail, so they often say there stuff like effective corp tax rate is 2% on overseas profits

[Mich the Tester]

Govt is pretty safe even if socialists get elected, etc.

Erm, were you locked in the server room when the last Labour government damned nearly left Britain at the mercy of the IMF? And the one before that in the late 70s?

[DodgyAgent]

What's the economic sense of using low tax offshore locations for anything other than reducing tax or hiding your assets in high secrecy zones?

What "considerable unintended consequences" would be if big companies were stopped using offshores to hide from tax?

US corp tax is 35%, and in UK it is almost 20% now - still too high but a LOT better than US.

Companies will headquarter their businesses and incur their largest overheads in countries where they pay the lowest tax and impose the lowest restrictions on their activities. It is virtually impossible for National governments to control this behaviour.

Governments have no entitlement to anything unless it is properly enshrined in law. If you can come up with a proper and enforceable solution that separates the "grey areas" into black and white without causing collateral damage to legitimate business activities then I am sure there would be an OBE in it for you.

By the way do International tax authorities look at where the servers are located that drive your business when assessing your tax obligations?

[AtW]

Erm, were you locked in the server room when the last Labour government damned nearly left Britain at the mercy of the IMF? And the one before that in the late 70s?

That's ancient history now.

Same kind of timeframe as Wars of the Roses.