Our Chancellor is talking yet again about international tax avoidance. He is quite right to stop multinational organisations from moving their profits to other countries. Officially known as the “Diverted profits tax”, multinational companies shift most of their profits abroad thus avoiding all or as little UK tax as they possibly can. Companies like Google made headlines when they were found to be collecting nearly all of their profits in Ireland. They were accused of using complex and artificial methods to avoid paying tax hence this tax now being known as the “Google tax”.
Most small business in the UK are run by hardworking business people and entrepreneurs who focus their energies on running and developing their business. They haven’t the resources or the army of lawyers and consultants to create these costly schemes. So our thinking is very much in line with George Osborne – reduce tax rates to a low level to remove all motivation to move your money outside of the UK. Most of our clients have no issue with the concept of a sensible and fair tax system, but equally most of our clients complain if the big multinationals have additional advantages by being able to divert profits – ultimately this means that the tax burden is then shifted to all the honest and hardworking small business owners which is simply not fair!
This will be an interesting year for tax avoidance schemes and I’m sure there will be a few surprises from the Budget also.
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AIMS Accountants for Business are the largest independent association of professionally qualified accountants in the UK specialising in accountancy for small, local and independent businesses. AIMS are no ordinary accountants and we are more than just number crunchers!