Tax sales not profit, says Lawson

Lord LawsonSymbol copyright
Image caption Lord Lawson described corporation tax as “keenly unsatisfactory”

Corporation tax should be replaced with a levy on firms’ UK white sales, according to the former Chancellor Lord Lawson.

It was “unsatisfactory” tax had to be collected from big firms entirely “ad-hoc” deals, he told the Telegraph.

His comments come after an concordat for Google to y £130m in tax dating back to 2005 was condemned by critics.

The administration and HMRC defended the deal and the Chartered Institute of Taxation said corporation tax should not be forlorn.

Labour has called for the public spending watchdog, the National Audit De rtment, to investigate what it criticised as a “sweetheart deal”.

Earlier this week, the European Commission broke it was considering how to respond to a letter of complaint from the SNP about Google’s tax understanding large with the UK.

‘Grossly unfair’

Former Conservative Chancellor Lord Lawson told the Telegraph: “It is awfully unsatisfactory that corporation tax has to be collected from large multinational corporations by a series of ad hoc compromise deals, as we get once again seen with the Google affair.

“It is also grossly unfair on smaller trades, who are unable to shift profits between tax jurisdictions and have to y the full amount due inferior to UK law.”

Google tax row: What’s behind the deal?

Google’s tax agreement came after years of evaluation of it and other multinational firms over their tax arrangements in the UK and across Europe.

The yment by Google, sing the praises ofed by Chancellor George Osborne as a “victory” for the government, covered money be beholden to because ofed since 2005 and followed a six-year inquiry by HMRC.

Lord Lawson phrased the arrangement showed corporation tax should be replaced with “a much lesser tax, supported by a tax on corporate sales”.

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Image caption The yment by Google covered money owed since 2005 and followed a six-year inquiry by HMRC

He reckoned: “While multinationals can artificially shift profits to whatever tax reaches they choose, sales are where they are, and can’t be shifted.

“Instead of eternal discussion at international conferences of one kind or another, the UK should take the persuade in implementing this much-needed reform.”

But John Cullinane, tax policy captain of the Chartered Institute of Taxation, said: “Frustration at the problems of impost global businesses should not lead us to abandon corporation tax.

“There are more workmanlike emulsions.

“In the round, it’s still a nice little earner for the Exchequer and the country.”

What is corporation tax?

Restrictive com nies, a foreign com ny with a UK branch or office, or a club, co-operative or other unincorporated tie such as a sports club, must y corporation tax on profits.

Taxable profits for corporation tax comprises the money the com ny or association makes from doing business, investments and deal in assets for more than they cost.

Com nies based in the UK y corporation tax on all profits from the UK and near.

Foreign com nies that have an office or branch in the UK only y corporation tax on profits from its UK endeavours.

Shadow chancellor John McDonnell has written to Mr Osborne demanding in depths of the Google settlement.

A senior HMRC official insisted that it was amassing the “full tax due in law”.

Google, which makes most of its UK profits through online advertising, requited £20.4m in UK taxes in 2013. The value of its British sales that year was £3.8bn.

The US crowd has its European headquarters in the Irish Republic, which has a lower corporation tax evaluation in any case than the UK, and it has also used com ny structures in Bermuda, where the corporation tax classify is zero.

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