2021 Budget Predictions
Discussion
Jockman said:
Groat said:
Sidicks this argument you are drawing the chap into is off topic.
Stop it.
Jeez. You’re right. All the hallmarks are there. Stop it.
This one's 'packaged' a bit differently though. Plus I think the mods are letting this one run. It's already had a few skirmishes so (hopefully) it probably won't last too long.
CraigyMc said:
Not "is" payable. "Should be" payable. See how the former is how it is now, and the latter is how it should be?
Multinationals offshoring profit to avoid taxes cannot continue indefinitely.
A good start would be the publication of the actual economic activity Amazon carries out in the UK. It exists. HMRC may already have it, confidentially.
You have to apply the rules evenly. You cannot just tax turnover as plenty of businesses don't make profit over periods of time. You'd actually be prompting more into the same hole, just to get at one or two organisations.Multinationals offshoring profit to avoid taxes cannot continue indefinitely.
A good start would be the publication of the actual economic activity Amazon carries out in the UK. It exists. HMRC may already have it, confidentially.
End of the day, companies don't pay tax. Employees, shareholders and customers do. If we can get our heads around that sort of concept, and if we must attempt to spank more tax out of the system then it would be far, far more effective and simpler to tax those things at source.
Of course there is also a view that tax income is heavily correlated with GDP. Hence the only real way to increase overall tax income for the nation is to increase GDP. Anything else is just shuffling around who you think is paying the tax at any one time. But that's often a much easier vote winner, and significantly easier to do, than doing things to increase GDP.
Taxing the real taxpayers might actually be a means of encouraging business to set up and grow here...so if we were all honest with ourselves/understood who pays the tax, it could all become a virtuous circle
Jockman said:
Good but confusing post. No mention of employer NI saving but on the whole the advantage of ltd status has indeed been eroded as you say.
The £40k SIPP contribution doesn’t get added to your income. It is an employer contribution.
There are quite a few things not covered, but the principle is correct.The £40k SIPP contribution doesn’t get added to your income. It is an employer contribution.
Osbourne covered it the right way, IMO, by increasing dividend taxes. Applied across the board and notionally "fair". The government's continued push on things like IR35, however, will have significant unintended consequences IMO and I suspect will likely net them less tax.
Murph7355 said:
CraigyMc said:
Not "is" payable. "Should be" payable. See how the former is how it is now, and the latter is how it should be?
Multinationals offshoring profit to avoid taxes cannot continue indefinitely.
A good start would be the publication of the actual economic activity Amazon carries out in the UK. It exists. HMRC may already have it, confidentially.
You have to apply the rules evenly. You cannot just tax turnover as plenty of businesses don't make profit over periods of time. You'd actually be prompting more into the same hole, just to get at one or two organisations.Multinationals offshoring profit to avoid taxes cannot continue indefinitely.
A good start would be the publication of the actual economic activity Amazon carries out in the UK. It exists. HMRC may already have it, confidentially.
End of the day, companies don't pay tax. Employees, shareholders and customers do. If we can get our heads around that sort of concept, and if we must attempt to spank more tax out of the system then it would be far, far more effective and simpler to tax those things at source.
Of course there is also a view that tax income is heavily correlated with GDP. Hence the only real way to increase overall tax income for the nation is to increase GDP. Anything else is just shuffling around who you think is paying the tax at any one time. But that's often a much easier vote winner, and significantly easier to do, than doing things to increase GDP.
Taxing the real taxpayers might actually be a means of encouraging business to set up and grow here...so if we were all honest with ourselves/understood who pays the tax, it could all become a virtuous circle
Big wholesaler companies would become dominant because selling to a small retailer would add another turnover tax charge. Also everything would be cheaper from abroad because there wouldn't be multiple levels of turnover tax applied.
We already have a consumption tax on the supply of goods and services (VAT). Its applied at all stages, but rather then a turnover tax, it's a tax on value. This makes sense as the tax doesn't compound with each transaction.
Murph7355 said:
The government's continued push on things like IR35, however, will have significant unintended consequences IMO and I suspect will likely net them less tax.
That is another kick in the balls for me. Some of my clients are now having to go through auditing processes before they instruct my company, despite being as far from within IR35 as possible. 98elise said:
Turnover tax makes no sense at all. Every transaction in the supply chain compounds the tax and makes the end retailer massively uncompetitive.
Big wholesaler companies would become dominant because selling to a small retailer would add another turnover tax charge. Also everything would be cheaper from abroad because there wouldn't be multiple levels of turnover tax applied.
We already have a consumption tax on the supply of goods and services (VAT). Its applied at all stages, but rather then a turnover tax, it's a tax on value. This makes sense as the tax doesn't compound with each transaction.
I am not suggesting a turnover tax.Big wholesaler companies would become dominant because selling to a small retailer would add another turnover tax charge. Also everything would be cheaper from abroad because there wouldn't be multiple levels of turnover tax applied.
We already have a consumption tax on the supply of goods and services (VAT). Its applied at all stages, but rather then a turnover tax, it's a tax on value. This makes sense as the tax doesn't compound with each transaction.
I'm suggesting taxing the profits of amazon UK, by assessing them correctly.
Around 7% of amazon's business is in the UK. Globally they declared a net income of $21.3bn.
They don't publicise their actual UK P&L, but if you applied their profits evenly across the globe, you would expect to see about $1.5bn in profit for the full year from UK activities.
By that measure they ought to be paying around $283m in corporation tax here, not £6m.
CraigyMc said:
I am not suggesting a turnover tax.
I'm suggesting taxing the profits of amazon UK, by assessing them correctly.
Around 7% of amazon's business is in the UK. Globally they declared a net income of $21.3bn.
They don't publicise their actual UK P&L, but if you applied their profits evenly across the globe, you would expect to see about $1.5bn in profit for the full year from UK activities.
By that measure they ought to be paying around $283m in corporation tax here, not £6m.
You would also expect a fall in tax paid elsewhere. An that is the nub of this amazon pays tax where it banks the profit end of. If you want to change that perhaps ask why its in C and not the UK. As many have said only 2 people really pay tax employees and consumers the rest is all a product of the second group. Growijg GDP is the key not tax, never has it been shown the state can provide the best solution and never will it. The state is a safety net or a guide its not the board of directors as much as our governments like to think they are. Google, Tesla, Amazon, Facebook, Dyson, all large billion dollar companies none of which were started or even thought of by the state. I'm suggesting taxing the profits of amazon UK, by assessing them correctly.
Around 7% of amazon's business is in the UK. Globally they declared a net income of $21.3bn.
They don't publicise their actual UK P&L, but if you applied their profits evenly across the globe, you would expect to see about $1.5bn in profit for the full year from UK activities.
By that measure they ought to be paying around $283m in corporation tax here, not £6m.
Gecko1978 said:
CraigyMc said:
I am not suggesting a turnover tax.
I'm suggesting taxing the profits of amazon UK, by assessing them correctly.
Around 7% of amazon's business is in the UK. Globally they declared a net income of $21.3bn.
They don't publicise their actual UK P&L, but if you applied their profits evenly across the globe, you would expect to see about $1.5bn in profit for the full year from UK activities.
By that measure they ought to be paying around $283m in corporation tax here, not £6m.
You would also expect a fall in tax paid elsewhere. An that is the nub of this amazon pays tax where it banks the profit end of. If you want to change that perhaps ask why its in C and not the UK. As many have said only 2 people really pay tax employees and consumers the rest is all a product of the second group. Growijg GDP is the key not tax, never has it been shown the state can provide the best solution and never will it. The state is a safety net or a guide its not the board of directors as much as our governments like to think they are. Google, Tesla, Amazon, Facebook, Dyson, all large billion dollar companies none of which were started or even thought of by the state. I'm suggesting taxing the profits of amazon UK, by assessing them correctly.
Around 7% of amazon's business is in the UK. Globally they declared a net income of $21.3bn.
They don't publicise their actual UK P&L, but if you applied their profits evenly across the globe, you would expect to see about $1.5bn in profit for the full year from UK activities.
By that measure they ought to be paying around $283m in corporation tax here, not £6m.
Profits should be taxed where they occur, not "where the business wants to move them to for tax reasons".
Luxembourg has a listed corporation tax rate of 17%, but it does individual deals with these companies down below 1%. Effectively, they pay virtually no corporation tax.
"Why is it C?" -- it's easy money for Luxembourg and other similar locations.
CraigyMc said:
Profits should be taxed where they occur, not "where the business wants to move them to for tax reasons".
Stop and think about what you are suggesting.......Now every small business who sells to individuals spread across 20 countries around the world needs to pay the tax on a share of the profit in each of those countries where it made a sale.
How is this supposed to work in practice in a global economy?
fat80b said:
CraigyMc said:
Profits should be taxed where they occur, not "where the business wants to move them to for tax reasons".
Stop and think about what you are suggesting.......Now every small business who sells to individuals spread across 20 countries around the world needs to pay the tax on a share of the profit in each of those countries where it made a sale.
How is this supposed to work in practice in a global economy?
Murph7355 said:
There are quite a few things not covered, but the principle is correct.
Osbourne covered it the right way, IMO, by increasing dividend taxes. Applied across the board and notionally "fair". The government's continued push on things like IR35, however, will have significant unintended consequences IMO and I suspect will likely net them less tax.
I still don’t understand this argument. In the case of IR35, the government wants all disguised employees to behave as employees and pay the same amount of tax. Sure your one man band company (your employer) will end up paying ERS NI but so does everyone else’s. You can argue you’ll get paid a lower “day rate” as an employee so will end up paying less tax but all that’s happening is somebody else is paying it into the Treasury instead. There’s just less of it going into your pocket.Osbourne covered it the right way, IMO, by increasing dividend taxes. Applied across the board and notionally "fair". The government's continued push on things like IR35, however, will have significant unintended consequences IMO and I suspect will likely net them less tax.
fat80b said:
CraigyMc said:
Profits should be taxed where they occur, not "where the business wants to move them to for tax reasons".
Stop and think about what you are suggesting.......Now every small business who sells to individuals spread across 20 countries around the world needs to pay the tax on a share of the profit in each of those countries where it made a sale.
How is this supposed to work in practice in a global economy?
Maybe everyone should do this. Is that what you would recommend? It works both ways.
Functionally, only the largest companies are doing it because of the overheads of setting it up.
98elise said:
Murph7355 said:
CraigyMc said:
Not "is" payable. "Should be" payable. See how the former is how it is now, and the latter is how it should be?
Multinationals offshoring profit to avoid taxes cannot continue indefinitely.
A good start would be the publication of the actual economic activity Amazon carries out in the UK. It exists. HMRC may already have it, confidentially.
You have to apply the rules evenly. You cannot just tax turnover as plenty of businesses don't make profit over periods of time. You'd actually be prompting more into the same hole, just to get at one or two organisations.Multinationals offshoring profit to avoid taxes cannot continue indefinitely.
A good start would be the publication of the actual economic activity Amazon carries out in the UK. It exists. HMRC may already have it, confidentially.
End of the day, companies don't pay tax. Employees, shareholders and customers do. If we can get our heads around that sort of concept, and if we must attempt to spank more tax out of the system then it would be far, far more effective and simpler to tax those things at source.
Of course there is also a view that tax income is heavily correlated with GDP. Hence the only real way to increase overall tax income for the nation is to increase GDP. Anything else is just shuffling around who you think is paying the tax at any one time. But that's often a much easier vote winner, and significantly easier to do, than doing things to increase GDP.
Taxing the real taxpayers might actually be a means of encouraging business to set up and grow here...so if we were all honest with ourselves/understood who pays the tax, it could all become a virtuous circle
Big wholesaler companies would become dominant because selling to a small retailer would add another turnover tax charge. Also everything would be cheaper from abroad because there wouldn't be multiple levels of turnover tax applied.
We already have a consumption tax on the supply of goods and services (VAT). Its applied at all stages, but rather then a turnover tax, it's a tax on value. This makes sense as the tax doesn't compound with each transaction.
CraigyMc said:
Following your logic, they should all set up shadow companies in tax havens so they can benefit from the same treatment as the large companies that have already done this.
Maybe everyone should do this. Is that what you would recommend? It works both ways.
Functionally, only the largest companies are doing it because of the overheads of setting it up.
Sure but that's not really the point - the point is that when bleating about amazon and their structure / arrangements, there is no simple fix such as 'tax the profits' that can be shown to work in a better way (either for the individual buying the goods and services, for the small business, or for the large co). In fact, the effects of doing so are going to be worse than the current implementation both on a macro level and for smaller businesses / you and me.Maybe everyone should do this. Is that what you would recommend? It works both ways.
Functionally, only the largest companies are doing it because of the overheads of setting it up.
What we actually need to do is to move the discussion to what we actually want to achieve here rather than the emotional rhetoric.
- Is the goal to punish big tech to make the general population feel better?
- Is it to minimise product cost to the UK public (keep inflation low)?
- Is it to maximise tax take?
- Is it to attract big tech to operate on our shores increasing employment and therefore other tax take?
- Is it to minimise red tape for small & mid size business to make them globally competitive?
- or something else.
Edited by fat80b on Tuesday 16th February 10:57
CraigyMc said:
For Amazon, it's in Luxembourg simply because the law allows this to happen. The law is an ass and canb be changed.
Profits should be taxed where they occur, not "where the business wants to move them to for tax reasons".
Luxembourg has a listed corporation tax rate of 17%, but it does individual deals with these companies down below 1%. Effectively, they pay virtually no corporation tax.
"Why is it C?" -- it's easy money for Luxembourg and other similar locations.
Ever hear tell of a strange phenomenon known as "unintended consequences"?Profits should be taxed where they occur, not "where the business wants to move them to for tax reasons".
Luxembourg has a listed corporation tax rate of 17%, but it does individual deals with these companies down below 1%. Effectively, they pay virtually no corporation tax.
"Why is it C?" -- it's easy money for Luxembourg and other similar locations.
Previous said:
I'd like to see an online sales levy. Yes, its be the consumer who pays, but isn't that ultimately the case for any tax?
Perhaps a rebate for the above for uk based bricks and mortar.... but that won't happen.
Probably the only way to get amazon and the like paying anywhere near reasonable amounts.
Reduction in higher rate pension relief: I hope they don't do this, if they do they've lost my vote next time around on this alone.
The latter i saw being discussed on a number of news sites, so almost certainly a leak and gauge the reaction approach.
Stamp duty cut extended
Help to buy expansion in some way?
The only reason online companies are being targetted, such as Amazon, is because big retailers on the high street are seeing their own profits suffer. Tesco, for example, is calling for a windfall tax on Amazon. Fair enough, but can't Tesco also have a windfall tax? Given that they sell cards and clothes while many other independent shops haven't had the luxury. So their businesses are unsustainable, meaning they'll likely have to shut up shop. But Tesco won't.Perhaps a rebate for the above for uk based bricks and mortar.... but that won't happen.
Probably the only way to get amazon and the like paying anywhere near reasonable amounts.
Reduction in higher rate pension relief: I hope they don't do this, if they do they've lost my vote next time around on this alone.
The latter i saw being discussed on a number of news sites, so almost certainly a leak and gauge the reaction approach.
Stamp duty cut extended
Help to buy expansion in some way?
In an ideal world, retail companies that were able to open as normal during this pandemic would've likely seen an increase in turnover, should be taxed and other companies that weren't so lucky should be given a tax break. That includes online stores. But that's not going to happen, as it's far too much of a good idea to happen. Plus I dare say there would be lobbyists working against the idea.
However, really, why do people use Amazon? They use it not because of the price (because for quite a fair few things, Amazon aren't the cheapest), it's because of the convenience. People know they can order something Monday evening, and have it on their doorstep Tuesday morning. They pay £70 a year for Prime, and because of that they don't "pay" for postage.
Brick and mortar stores like Tesco, like JD Sports, like John Lewis, could do this if they wanted to. But they either don't want to spend the money, or spend it in the wrong places, and can't compete. So the easiest thing for them to do is cry about online stores ruining the high street when the very same companies did the same to independents for decades prior.
wormus said:
Murph7355 said:
There are quite a few things not covered, but the principle is correct.
Osbourne covered it the right way, IMO, by increasing dividend taxes. Applied across the board and notionally "fair". The government's continued push on things like IR35, however, will have significant unintended consequences IMO and I suspect will likely net them less tax.
I still don’t understand this argument. In the case of IR35, the government wants all disguised employees to behave as employees and pay the same amount of tax. Sure your one man band company (your employer) will end up paying ERS NI but so does everyone else’s. You can argue you’ll get paid a lower “day rate” as an employee so will end up paying less tax but all that’s happening is somebody else is paying it into the Treasury instead. There’s just less of it going into your pocket.Osbourne covered it the right way, IMO, by increasing dividend taxes. Applied across the board and notionally "fair". The government's continued push on things like IR35, however, will have significant unintended consequences IMO and I suspect will likely net them less tax.
As noted, the differential in the differing ways people get paid is largely very small these days. Larger companies start from smaller ones. Taxation needs to be geared to encourage this (IMO), amongst other things, even if chunks of companies never actually become bigger.
The definition of "disguised" employment is very poor away from the obvious extremes (IR35 was original pitched as the Friday-Monday regulation, where people couldn't be an FTE for a company on a Friday and then be a Ltd company doing the same work for the same "customer" on a Monday). But rather than address this properly, the govt use heavy handed techniques to encourage/force people down a particular path.
This has already bitten their own workforce to a degree, and to the extent that the rules are now being applied more pragmatically. I suspect the same will eventually apply in the private sector a few years after this April. At which point it's a big shrug of the shoulders in the most part. Will tax receipts increase during this settling in period? IMO no. Not a chance. They will more than likely drop (unless one purely looks at tax one dimensionally).
That then begs the question "what is the purpose of these rules?". Is it to yield more income? (It should be). Or is it to appease some current notion of "fair"? (A fool's errand where taxation is concerned).
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