Britain's Prime Minister, tax avoidance, and linguistic bifurcation

We recently blogged a landmark speech by Britain's Prime Minister David Cameron which we applauded strongly - at least for the content of what was said. We thought we would leave that blog with a positive message, basically, but we ended on this note:

We'll leave comments about forked tongues for later. 

Well, to save us time, here is Tax Research with a good exploration of this policy of doing one thing, then saying another.

This is the man who has declared of large companies avoiding tax:

"It’s simply not fair and not right what some of them are doing by saying, I’ve got lots of sales here in the UK but I’m going to pay a sort of royalty fee to another company that I own in another country that has some special tax dispensation."

Spot on David. It’s not right. And the “it’s legal so it’s OK” defence does not work: you’re also right on that.

The trouble is that over then time you’ve been in office you’ve:

1)  Cut the large company corproation tax rate from 28% to 21%, although without any apparent gain for the UK.

2)  Introduced a new law that gives companies a 5.25% tax rate on their treasury function profits but only if they will move them out of the UK and to a tax haven;

3)  Encouraged the new patent box rules that might cost the UK £1 billion in lost tax revenue.

4)  Changed controlled foreign company rules that mean that 95% of all tax haven subsidiaries of UK companies will now be beyond scrutiny, so encouraging UK companies to shift their profits out of the UK.

5)  Introduced a territorial tax base for the UK that means all profits earned out of the UK are now beyond the reach of the UK tax authorities – encouraging offshoring and the shifting of assets out of the UK.

To put it another way – all the things Cameron criticises companies for doing are being explicitly encouraged by this government.