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on 7 August 2013
Former tax inspector Richard Brooks has written a superb book on how successive governments have turned Britain into a tax haven. The City of London provides unrivalled tax-avoidance services.

In 1979, Thatcher's first act was to abolish exchange controls on capital. Brooks points out, "By limiting offshore movements of funds, exchange controls had prevented companies simply moving large amounts of capital into the world's tax havens where it could turn a quick tax-free buck."

In the late 1990s, the Labour government removed the tax on dividends. In 2000 it cut capital gains tax from 40 per cent to 10. It exempted from tax those profits returned to the UK from overseas subsidiaries. Tax reduction is central to most private equity buyouts, like Boots.

Gordon Brown told the 1996 Labour Party Conference, "A Labour Chancellor will not permit tax reliefs to millionaires in tax havens." There is now an estimated $2.7 trillion hiding in tax havens. In 2002 Brown extended the 10 per cent top rate capital gains tax to gains made after just two years not ten.

He promised the 2005 CBI conference `not just a light touch, but a limited touch ... [to] the regulation of financial services and indeed to the administration of tax'. One of Brown's advisers was Sir Ronald Cohen, founder of the Apax private equity group. Chris Sanger, a partner at Deloitte which boasts of its `global, integrated and innovative Audit, Tax, Consulting and Corporate Finance services', spent four years as special adviser to Brown on tax. The Labour government foolishly merged the Inland Revenue with Customs and Excise.

In 2007, Darling agreed an 18 per cent capital gains tax rate; the top income tax rate is 50 per cent. The coalition has since lifted the rate to 28 per cent, supposedly to carry out the LibDem promise to tax capital gains `at rates similar or close to those applied to income'.

PricewaterhouseCoopers, which boasts that it is `comfortable talking about business taxes, either in the UK or overseas', briefed the Labour `opposition' team on the 2011 and 2012 Finance Bills.

When the ConDem government proposed exempting from tax companies' foreign branches only if they were in countries with normal tax rates, business said it wanted its tax haven branches exempt too, so in 2011 this was exactly what they got. The government even allows tax breaks for the costs of funding these offshore set-ups.

Vodafone's 2010 deal with the top UK tax inspector David Hartnett (who now works for Deloitte), cost the taxpayer at least £6 billion. Hartnett also excused Goldman Sachs an interest charge of £20 million, which even he later admitted was a `mistake'. One senior official admitted, "We used to have a priority to collect tax, now we have a priority to have a good relationship." Just after that deal, Brown brought Vodafone's deputy tax director on to the Treasury's `monetary assets working group'. So a firm that was avoiding vast amounts of tax could shape the rules on tax avoidance. `Loopholes' are not unintended.

Google generated £11.8 billion of revenue from the UK between 2006 and 2011, and somehow paid just £16 million in corporation tax. In 2010, Microsoft employed 2,800 British staff and reported profits of £76 million in Britain; its tax charge was just £20 million. Its Irish company employed 700 staff, who apparently made £1.2 billion profits, on which it paid £130 million tax. So its Irish staff were, apparently, 75 times more productive than their British colleagues.

Barclays, aided by Slaughter & May and PricewaterhouseCoopers, set up more than 300 tax haven subsidiary companies.

Share schemes for bonuses are more valuable to non-dom sports players, who can leave them offshore and not suffer even the 25 per cent tax Brits had to pay. So the same wage for a foreign player costs a football club far less than it does a British one. So talented British youngsters struggle to reach the top level, as does the national team.

Colin Pritchard and Mark Wallace concluded in 2011, "In cost-effective terms, i.e. economic input versus clinical output, the USA healthcare system was one of the least cost-effective in reducing mortality rates whereas the UK was one of the most cost-effective over the period."

Benefit frauds, which cost £1 billion a year, were prosecuted 9,000 times in 2009-10. Evasions of direct taxes, estimated at £5.5 billion a year, are prosecuted about 30 times a year. Britain's 54 billionaires, mostly non-doms, paid in 2005 tax of £15 million on combined fortunes of £126 billion.

The EU embraces tax havens - Britain, Ireland, the Netherlands and Luxemburg. The European Court of Justice endorses tax dodging. The British tax agreement with Switzerland enshrines tax haven secrecy and decriminalises offshore tax fraud.

In 2010, business secretary Vince Cable promised to rein in overseas takeovers that erode our industrial base, but nothing came of this promise. The non-dom tax break in private equity hands acts as a kind of reverse protectionism favouring overseas control.

Osborne cut corporation tax rates to 21 per cent. He announced a tax exemption for companies' tax haven branches, and axed many offshore tax-avoidance `controlled foreign companies' laws. This would cut the largest companies' tax bills by about £7 billion over four years. It was paid for in part by cutting the tax allowances for investment in new plant and machinery.

By 2012, more than 200 Private Finance Initiative companies were partly owned offshore, more than 100 of them majority-owned in tax havens, and 70 of them running health care projects. 168 state schools are at least partly owned offshore. The government feeds these PFI firms contracts that will cost public service budgets more than £250 billion, and allows them to use public services as tax avoidance schemes.

Tax avoidance worsens all our economic problems: it adds to the concentration of capital, by forcing small and medium firms out of business or into mergers; it increases debts, and adds to the exploitation of poor countries. Developing countries lose possibly $280 billion a year in tax avoidance and evasion, when total worldwide aid per year is $100 billion.

We're all in it together, subsidising private equity firms and hedge funds. Britain is a corporate tax haven, aiding corporations and criminals alike, indeed it is increasingly hard to tell the difference. The author concludes that we should scrap archaic non-dom status and have a tax system based on residence alone.
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on 30 April 2013
"They" being the big 4 accountancy firms, multi-national businesses (like Amazon), big-earning individuals and complicit politicians. The ordinary citizen pays his/her taxes and gets clobbered by HMRC for any transgressions, but if you are a large corporation, like Vodafone, then the head of HMRC will personally sort out any difficulties you have and ensure your liability is as low as possible.

This book is one of the most dispiriting I've read in a long time: the depth of avarice among the filthy rich, the collusion of government and the capitulation of HMRC, all of which are documented by Brooks in enormous detail left me fascinated, horrified and angry. These are individuals and corporations, celebrities, footballers, "captains" of industry, masters of the financial universe, of whom most already have more money than they can spend and yet they want more and will go to great lengths to pay as little tax as they can. The amount of brain power diverted into these schemes which benefit only the top few percent of the population could be put to much better use. Brooks is unrelenting in his exposure of the schemes and the people behind them and the crass stupidity of government together with the appalling behaviour of the former head of HMRC who should have been sacked years ago. It's particularly galling that government and HMRC should be working for the benefit of all citizens and not just the "new few". (see Ferdinand Mount)

This tax robbery, where the rest of us end up paying more than we should, far more than we pay for benefits cheats, is part of a greater social movement initiated by the Reagan/Thatcher revolution and continued by their spiritual successors Blair and Brown. It's philosophy can be summed up in one word: Greed. Whether it was privatisation or tax breaks their new world order appealed to the lowest of human instincts. Hence, the rich, it seemed, needed ever greater amounts of money to get out of bed to do a day's work, while the poorest needed to be made poorer to turn up at the factory or office.

In this the rich were aided and abetted by naive and incompetent politicians, particularly by Chancellors of the Exchequer and Treasury ministers, who, together with their new friends in the corporate sector redrafted taxation legislation and turned the UK into a tax haven for the wealthy. At the same time, the HMRC initiated a new approach to the taxation of corporate and high net wealth individual tax dodgers and instead of pursuing them relentlessly took a more conciliatory approach which bordered on abject surrender. The government assisted them in this new customer-focussed strategy by slashing thousands of HMRC jobs devoted to investigations.

Does all this matter? Of course it does: not only is the great inequality in wealth in the UK, which increased inexorably under the Thatcher government, which at least was up front about favouring the rich but also under Blair/Brown which was supposedly a socialist government, a social obscenity, but it is also harmful for all sectors of society, as shown in the Spirit Level.

There seems to be no evidence of social benefits flowing from greater wealth inequality nor of greater commercial effectiveness by paying CEO's and others huge salaries and allowing them to shelter most of their mega-millions from the tax man - i.e. the rest of society.

Brooks offers some solutions, including international cooperation, but perhaps what we need most is a massive simplification of the tax system and the introduction of simpler and unavoidable taxes. Ultimately, this is in the hands of politicians, and for as long as they go on to dip their snouts in the trough then things wont change. We need a new system of governance, for at the moment politicians are part of the problem, not part of the solution. Taxation and social equity are too important to be left to politicians alone.
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on 21 May 2013
I couldn't put this book down even though the further I read the more steam was coming out of my ears. To read that HMRC was doing "deals" with the likes of Vodafone et al to minimise or eliminate their obligations to tax whilst it seems the rest of us have to pay our taxes and get on with it, was difficult to bear at times. The reality is that the "big boys" simply threaten to leave the country if they are forced to part with tax with the implication being that they will fire everyone on their payroll, and hence leave the Government with an unemployment issue. In fact, ,as we all know, they won't do anything of the sort. I have no doubt that the status quo will remain and the authorities will continue to turn a blind eye. An excellent book, very well researched and written.
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on 7 March 2013
This is a book about corporate tax avoidance and how HMRC lets big companies and wealthy individuals get away with it. Surely it would therefore be rather ironic to buy it from Amazon who are not exactly innocent in such matters. Also, I am pleased to report, you can get it cheaper from the book people (dot co dot uk).
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on 9 August 2013
I just don't have the quality & quantity of words to describe how good it is. It should be made compulsory for all current and future politicians to read it, and make it a setwork book at colleges and universities. We can see from the book why and how the filthy rich corporations (banks included) and individuals get away with tax fraud that the rest of us have to pay for.

I will add a copy of what I wrote to the local newspaper (The Orcadian) to help describe its contents:

"Dear Editor,

I came to read the book called "The Great Tax Robbery: How Britain Became a Tax Haven for Fat Cats and Big Business", and found myself wondering why it is that we have failed to hold our government to account. What has happened to society, that it finds collecting Tesco points far more important than looking at the unjustifiably low tax Tesco is paying? And yet the public has to make up the shortfall on tax collection from such large corporations. Tesco is only one many large corporations with its snout in the tax-evasion trough, yet it will take a newspaper to court for publishing details inaccurately of its pigging out.

While most of us are obliged to pay tax exactly as decreed, "our" government fails stupendously in applying the rules for collection equitably, resulting in inequitably higher taxation for the rest of us (middle income classes and below), besides wasting and misappropriating huge amounts of our tax money (such as publicly unauthorised donations to other countries; charity beginning elsewhere, not at home). Even legal enforcements have become skewed in favour of big business, thereby corrupting the legal system.

Even up until 2008, tax inspectors were awarded higher levels of promotion for loyalty to senior management, not ability. Senior management, in turn, wanted the tax inspectors not to delve too deeply into the accounting of the big corporations who were grooming the senior managers to conform to lower tax requirements wanted by the corporations. All this takes place with the softly-softly approach to big business from political parties being fed with donations from big businesses wanting government to give them concessions.

Even as recent as August 2011, to quote from The Great Tax Robbery, page 201: "(in the week) that PM David Cameron promised Britain's rioting feral underclass `we will track you down, we will find you and we will punish you', and magistrates jailed a youth for stealing £3 worth of water, it was with a special kind of upper-class insensitivity that the Prime Minister's fellow Bullingdonian* George Osborne granted immunity from prosecution to the feral financial classes who were looting the economy of billions." [* A word derived from "Bullingdon", an exclusive dining club at Oxford.]

Today's government philosophy is to be (big) business-friendly in its tax collection, but it does so without heeding the observation made by Adam Smith some 235 years earlier, which is:

"The proposal of any new law or regulation of commerce that comes from this order (of businesses), ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but most suspicious intention. It (businesses) comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, deceived and oppressed it." [Ibid. Page 194]

So I ask the rhetorical question, what is new about modern business since the time of Adam Smith? Besides the obvious answer, what I see as new is that modern technology is simply speeding up the takings - from public to business - and economists are being groomed worldwide in higher education to see big business as "manna from heaven", and are advising governments worldwide in this regard. It is now wrongly believed that "small" is not beautiful.

In Britain, the most experienced tax collectors have gradually left their employment, to be replaced with inexperienced inspectors who were the equivalent of M·o·D pen-pushers, with no experience in combat, being appointed as generals, marshals and admirals. They don't stand a chance against the army of highly experienced corporate accountants and lawyers forcing them to make tax avoidance concessions. The Head of Revenue until recently, Dave Hartnet, had become autocratic, as well as choosing to surround himself with yes-men, which further isolated him from understanding what was happening in the latest developments of corporate tax evasion. (Ibid. Paraphrased from various passages)

It is ironic that some thirty years ago, the then Treasury chief secretary, Peter Rees, remarked that "the rules for controlling foreign companies (in such matters as tax collection) will make it more attractive for their businesses to take a profit in Britain than overseas. These measures will be good for business, good for enterprises, and good for jobs." Today's government has the opposite mindset, deregulating control to attract foreign companies, yet this is why many of today's big businesses are taking their jobs elsewhere: to evade taxation as allowed by current deregulation rules. (An irony, thanks again to Margaret Thatcher's ghost, and explained in great detail in The Great Tax Robbery)

There is also the fallacious argument that corporations like Tesco are able to sell things to us cheaply because of the low taxes they pay. I retort by saying that if Tesco paid their full taxes, we, the public could be paying less tax, making it still affordable to buy the things that Tesco might then have to sell at higher prices (after tax). Besides which, the playing field would be more level for all competitors in the same business as Tesco, allowing us to support smaller local businesses (who could also be paying less tax because the big corporations will have paid their full, equitable tax). Take note, Orkney, this applies to you as well.

It would need a brave, new government to make right the wrong. Has anyone seen such potential?

Yours truly,

E_ S_"
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on 4 January 2015
If you think that paying tax is an intrusion into your personal liberty then this book will be a small comfort. If you think everyone should pay a fair share of government expenditure for the common good, then you will find the content an outrage.
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on 23 January 2015
Written by a former tax inspector, this book is an informative and unanswerable account of the various practices by which large corporations ands wealthy individuals avoid paying a just amount of tax. Both major parties are responsible for the current position but there seems to be little likelihood of the current situation being rectified, even though the vast majority of the population will feel that wrongdoing is taking place.

There could be a couple of difficulties any action would face. If large poltical donations were ended, then public money would be required to fill the gap. If the tax authorities ended the avoidance methods employed by many top footballers, would fans happily see the star names go elsewhere? Unless international action is taken there are no easy answers.

A book that should be read by politicians in a position to put things right and all the rest of the see how we are being shafted by the greedy and wealthy people at the top.
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on 31 March 2013
While the coalition and their fellow travellers in the media hark on about structural deficits, the necessity of reforming (read: destroying) the already emaciated welfare state, and how over-taxing those poor souls earning £150K+ a year will bring ruin to the country, former tax inspector for Her Majesties Revenues & Customs (HMRC) and current Private Eye reporter Richard Brooks has been looking into the issue of taxation, in particular the levels of tax dodging by big, usually transnational business and obscenely rich individuals. The results of his investigations, informed by years of experience in Government, are collated together in "The Great Tax Robbery" and make extremely disturbing reading.

The opening chapter "Welcome to Tax Dodge City" with its series of graphs makes clear the dimensions of the problem, such as that during dozen years leading up to 2011 corporate profits have went up by over 50% but corporation tax receipts have been flat (and at a rate well below the headline rate of corporation tax). Over the same period the amount of corporation tax paid by small companies has increased from 15% of the total to 35% to the benefit of big (largely transnational) business. It also details the complete lack of correlation between tax rates and economic growth over time (in the UK) and across the OECD: in short the oft repeated canard that taxation will bring the economy to a grinding halt is to put it politely horses#!t.

The book goes on to explore how big business and wealthy individuals go about dodging taxation and looks into the four major accountancy firms which promote and arrange tax dodging (at the same time as profiting from government contracts); how the Public Private Partnerships, heartily embraced by the Blair/Brown government, have become a tax dodgers wet dream; the cosy relationship that grew up between HMRC and large business during the Blair era; how transfer pricing works; the links between the City of London and politicians from all parties, for instance 6 of the top 10 Tory donors make/made their money in the City; the fraudulent nature of coalition claims to be cracking down on tax dodging when in fact the exact opposite is happening; how the current tax regime warp the economy and privilege large corporations and the obscenely wealthy over smaller generally local businesses and ordinary working people.

One of the most disturbing revelations is the fact that individuals from companies that are clearly dodging taxes are being placed in positions to influence, if not write, new tax law and regulations. In a half way civilised society the facts revealed within would be a major and on-going scandal, instead we have occasional reporting that gives little idea of the whole picture. But what else can be expected from a media industry which is a member of the tax dodging fraternity itself?

Brooks puts the facts before the reader in a straightforward readable prose that is often dryly amusing, and has done well to describe the methods used by tax dodgers such as transfer pricing in a way that is comprehensible to the general reader. He also draws on a rich range of real world examples to illustrate his arguments. Overall this is a book I can hardly praise enough, one that deserves as wide a readership as possible and is indispensable to anyone interested in social justice or even just basic sense of decency. 110% Recommended.

An excellent companion volume to this book would be Nicholas Shasxson's Treasure Islands: Tax Havens and the Men who Stole the World.
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on 4 February 2015
This should be on the national curriculum. It's too late for us oldies but future generations should be properly educated and prepared to deal with how boundlessly arrogant and infinitely greedy the new hyper elite have proven themselves to be. This book and others of similar quality could help. And they are going to need all they can get in order to tackle the most psychotically self serving elite in history.
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on 27 October 2013
I have a broad understanding of accounts and tax policy and can generally see why things work the way they do. But this book explains how and where a number of the sensible policy frameworks, such as deductibility of interest payments on corporate loans, can be completely abused by routing those loans from a different part of the same corporate structure, via a tax haven, so the interest payment can be deducted from profits in one jurisdiction (UK) and routed with little or no tax on to the holding company as earnings. This may be a hard problem to solve, but solved it must be, or the whole basis of corporate taxation in global business will start to collapse, and no domestic (tax-paying) business will survive against competitors set up as subsidiaries of cleverly-structures overseas parents. That cannot benefit any country in the long run.
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