View Full Version : MP's now going after IT companies supplying public sector

13th February 2013, 10:16
Sorry that this is just text - is from the FT this morning - if you are registered you can follow link IT groups’ tax accounts face scrutiny - FT.com (http://www.ft.com/cms/s/0/836848ee-6ec6-11e2-8189-00144feab49a.html#axzz2Ka15Qfcs)

MPs are preparing to scrutinise the tax affairs of IT companies that supply the public sector, ahead of a government crackdown on avoidance by contractors that receive billions of pounds of taxpayers’ money.
The public accounts committee has confirmed that it is considering calling in some of the IT sector’s biggest companies, as a Financial Times investigation into nine government suppliers shows they use a range of methods to keep taxes low, including recording UK sales in low-tax jurisdictions.

The PAC inquiry would be part of a wider probe into how much tax is paid by Whitehall’s larger contractors, as political scrutiny mounts of the tax affairs of multinational corporations. Danny Alexander, the Treasury chief secretary, has been exploring whether the government can bar companies from winning lucrative state contracts if it deems do not pay enough tax.
Mr Alexander is expected to make an announcement in the coming days about how the government could force more disclosure from firms bidding for contracts, including their tax compliance history and use of avoidance mechanisms.
The FT research found that Microsoft, the global software group, and Dell, the computer company, are directing hundreds of millions of pounds worth of UK sales through Ireland to minimise their tax burden. Symantec is able to count online sales as outside the UK, since its website is run out of Ireland. Symantec’s UK arm paid no net corporation tax over the past four years, according to accounts filed at Companies House.
A study of the UK accounts of the nine suppliers for the five years to 2011 showed that the IT companies had made UK sales totalling £62bn but paid only £527m in corporation tax.
The most significant explanation as to why they are not paying more is their low profit margins: the companies made only £3.16bn in pre-tax profits, a margin of just 5 per cent.
The companies concerned have all stressed that these methods are entirely legitimate in accordance with UK tax laws. However, the level of sales being routed through lower tax jurisdictions such as Ireland is politically sensitive.
“If the margins are anything like that low, then why are they even doing business in the UK, given how much higher their global operating margins are?” said Conservative MP, Charlie Elphicke, who has raised concerns in parliament. “To me it is unacceptable, unethical and irresponsible.”
Margaret Hodge, who chairs the PAC, told the Financial Times: “We are definitely going to look at government procurement. While I welcome the PM’s commitment to using the leadership of the G8 to pursue the issue, he can still take short-term action to protect the UK taxpayer. That includes refusing to give business, funded by taxpayers, to people who refuse to contribute properly.”

13th February 2013, 11:00
What's odd about the FT is that, for some reason, if you Google the headline you always seem to be able to get direct access. For example, Google "IT groups' tax accounts face scrutiny" and follow the link to FT....