Year-End & Cash Flow

Corbynomics creator criticises Crickhowell plan to move whole town offshore

Rebecca Smith | 13 November 2015 | 9 years ago

Local traders in the Welsh town have teamed up to protest tax loopholes used by big firms
Local traders in the Welsh town have teamed up to protest tax loopholes used by big firms
The independent traders from the Welsh town of Crickhowell have been criticised for being irresponsible? by Corbynomics creator Richard Murphy, astheir bid to move the whole town offshore hit the headlines.

The businesses grouped together to protest the way multinational corporations have been able to make use of offshore loopholes to pay little to no corporation tax, with their efforts including a DIY tax plan being documented by a BBC crew.

Economist Murphy however, who has been credited with being the creator of corbynomics?, said the campaign was unwise. This is an irresponsible stunt which actually places those involved at risk of an unforeseen tax bill and penalties from HMRC? he said.

Murphy’s plan to collect an estimated 120bn lost each year because of tax avoidance, evasion and uncollected tax debt, was used by Labour leader Jeremy Corbyn throughout his leadership campaign.

The lack of a level playing field meant multinational companies are able to operate in a way which small individual businesses cannot, Murphy warned. It is reckless and counterproductive. We don’t want a lowest common denominator race to the bottom with more people refusing to pay tax. There are better ways of ensuring that multinational companies pay more tax.

Murphy added that he hoped the BBC had indemnified everyone involved because they could face an unforeseen tax bill at the end of it. The results of the campaign are being filmed for a BBC Two documentarythe Town That Went Offshore.

Economist and tax adviser Richard Murphy
Economist and tax expertrichard Murphy
Crickhowell traders however, hope the protest will draw attention to the plight of small firms, and force the Treasury to bring about measures that will actually ensure a level playing field between large companies and small businesses.

The town has received numerous messages across social media, with campaigners in other towns saying they plan to follow suit.

HMRC said the Crickhowell traders had met with the director general of business tax, James Harra, in order to discuss the chancellor’s latest crackdown on loopholes.

Those that shift their profits overseas to avoid paying tax in the UK will be subject to a 25 per cent diverted profits tax, dubbed the Google tax, outlinedin George Osborne’s March Budget. It is designed to avoid affecting SMEs, and firms with an annual turnover of 10m or more, must tell HMRC if they feel their structure could make them liable for the new tax.

At the time Osborne said: Let the message go out: this country’s tolerance for those who will not pay their fair share of taxes has come to an end.

He added that tax loopholes that enabled firms to take account of foreign branches when reclaiming VAT on their overheads would also be closed.

A spokesman for HMRC said the plans submitted by the traders would be carefully looked over. We will take a look at the Crickhowell plan and will make sure the correct amount of tax is being paid, he said.

Image:jonathan Billinger?

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