Death and Taxes

A lot has been written in the media lately about various corporations and how much tax they pay and it’s been winding me up like you wouldn’t believe!

Benjamin Franklin said “In this world nothing can be said to be certain, except death and taxes” and that still seems to be entirely true today. Even more true is that we all want to avoid both of those as much as possible!

Let’s examine the situation. Amazon and Google (to name two of the most high profile corporate cases) have been accused of not paying enough tax by the British Government. Apple in the US has had similar accusations levelled at it.

This has gone on so much that the UK Government have summoned a number of these companies to testify before a Commons select committee about the situation.

As far as I can see – the truth is painfully simple. The companies haven’t done anything wrong at all. They have used the fair and legal measures available to them to minimise the amount of tax they pay and every company should do the same. If companies didn’t try to avoid taxes then the accountants inside those companies wouldn’t be doing their jobs correctly. On top of which, the companies have a responsibility to the shareholders to maximise the amount of profit which means minimising tax.

Google’s CEO, Eric Schmidt said that he was “perplexed” by the situation (rightly so in my view). He said "What we are doing is legal. I'm rather perplexed by this debate, which has been going in the UK for some time, because I view taxes as not optional. I view that you should pay the taxes that are legally required. It's not a debate. You pay the taxes. If the British system changes the tax laws, then we will comply. If the taxes go up, we will pay more, if they go down, we will pay less. That is a political decision for the democracy that is the United Kingdom."

And that sums it up for me. They are paying all of the taxes that they are legally required to pay and they are using the perfectly legal measures to avoid paying more tax than they have to. Should taxes be based on how moral you feel? I don’t think so. They should be based on what the law says and if the Government think that companies aren’t paying enough tax then change the law.

My company does everything it can to minimise the tax we pay and I have no shame in saying that. The thing that the media seem to have forgotten is that these businesses pay a huge amount of other taxes. From VAT on sales, rates for business premises, PAYE and Employers NI on salaries of the thousands of people they give jobs to – the list goes on and on.

Legally avoiding a bit of corporation tax – not a crime – nothing to see – move along!