Let’s clear a few things up!
On one hand we’ve got tax evasion which is illegally not pay tax while on the other hand you have tax avoidance which is the perfectly legal practice of paying the bare minimum, usually involving a lot of clever scheming.
The current hype in the press of late is surrounding Google and Amazon and so on. Don’t worry, this blog isn’t going to judge whether their practice is legitimate or not. Instead we’ll start from the top and look at our tax system. Is it faulty? Yes. Should we be doing more to straighten it out, making the tax laws more sensible? Yes. And is the longer this tax saga goes on chasing away foreign investors? Yes.
Do any of the issues above relate to Google? No. So it seems that we are highlighting, albeit through the vilification of certain corporates, the gaps in our system.
If you look at the argument from Google’s side of the fence, they have done nothing wrong, they abide by our tax laws, and yes they have made the most out of the loopholes but that’s not illegal. Google is a pioneering company that provides a free service to billions and which has allowed thousands of UK business to profit from, surely its contribution as a whole should be taken into account and not just its tax contribution.
But rather than waiting for politicians to change the system and for the press to express the public outcry – there is a simple solution. If you don’t like the way certain businesses behave – don’t buy into them: there are other search engines and there are other coffee shops that you can use. What I am saying is you can’t have it both ways. Enjoy the way they do business as a customer but condemn them as tax payer (especially when they have complied with the law!)
At AIMS we help small businesses in tax planning and accounting. Yes we will look at ways of saving tax, but we also recognise the need to contribute to the UK economy, and after 20 years of being at the heart of the SME community, we recognise the economic importance that it plays.
Which side of the fence are you on? Do you think we need a significant tax overhaul or do you think that the Amazon’s and Google’s are in the wrong?