Special Feaure
Chas Roy-Chowdhury is head of taxation at ACCA. He has a degree in applied economics as well as being a member of ACCA.
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has worked in public practice from 1980 until 1991, when he joined ACCA's technical department. He qualified in 1986: “I consider it very important that the people I deal with externally are aware of my
ACCA membership, as it demonstrates that the organisation has faith in the credibility of its own qualification.”
Chas is president of the Taxation Committee of the small business grouping UEAPME and a member of the Indirect and Direct Tax Working Parties at Fédération des Experts Comptables Européens (FEE) - the umbrella body for European accountants. He is secretary to the ACCA taxation committee and is in regular contact with many government departments such as the UK HM Revenue & Customs and Excise through formal committees and ad hoc meetings. In addition, he is committed to putting across the message on key tax issues to the broader public and
opinion formers via the local, national and international media.
Q
Starbucks UK has racked up over £3bn in sales since 1998, but
shelled out just £8.6m in corporation taxes. Of course, they are not the only US business found to be avoiding tax recently; eBay has paid only £1.2m in tax in the UK, and Google has also been shown to have paid just £6m in tax.
Asda has also come under scrutiny over tax avoidance, after it was revealed that payments it has made to US parent Wal-Mart has cut its UK tax bill by £250m.
These companies paying small amounts of tax has shed light on perfectly legal tactics used by multinationals the world over; can you discuss tax avoidance in more detail?
Basically, the way it works is if you are
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investing heavily or building up your business, then you get something called ‘capital allowances’, which is a depreciation allowance for your investments and assets. That allowance is deductible against your profits, and could mean you end up with no tax liability. So, while you are growing and expanding the business, investing in equipment or buildings, you could in fact be generating losses and have no taxable profits because of the depreciation allowances. That is the same whether you are a multinational or UK company. That could be a reason why these companies are not paying so much corporation tax.
Amazon have set up three warehouses in the past twelve months (Asda/Wal-Mart have also been opening shops and investing in the UK), which is a big investment, and so organisations like that don’t have complex tax planning; it’s just simple corporation tax, where you pick the tax you are entitled to deduct the costs of capital expenditure in the
Chas Roy Chowdhury (ACCA Head of Tax)
Avoidance
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