A small Welsh town has gone to extreme measures as a way of protesting tax loopholes used by multinational giants to avoid paying UK tax.
Local businesses in Crickhowell have employed the same accountancy practices as some of the world’s biggest firms such as Starbucks and Google, in order to move the entire town “offshore”.
The town’s family-run shops have submitted their own DIY tax plan to HMRC – copying the offshore arrangements used by global names which pay little to no corporation tax. The traders have been advised by experts and were followed by a film crew to document the events. It has been filmed for a BBC Two documentary The Town that Went Offshore.
The programme looks into creative accountancy and how it can be used to legally pay little tax, while exploring whether a small town can employ the same measures.
The Welsh town wants the tax avoidance plan to be replicated by other small places around the UK, in order to force the Treausry into bringing about legislation to crack down on loopholes which have allowed firms like Amazon to pay £11.9m of tax (on £5.3bn of UK internet sales) and Caffè Nero to record sales worth £1.2bn while not paying corporation tax in the UK since 2008.
The tax rebellion has been led by the town’s local coffee and book shops, optician and bakery as well as the salmon smokery.
Crickhowell is an area dominated by local, independent businesses – some of which have been passed down three generations. It’s not the first time the group of traders have banded together either – they recently teamed up to see off a planning application from a large supermarket chain.
Steve, the owner of a Crickhowell coffee shop, said: “I have always paid every penny of tax I owe and I don’t object to that. What I object to is paying my full tax when my big name competitors are doing the damnedest to dodge theirs.”
Jo, who runs the local smokery said until now such “complicated offshore tricks” were only open to big companies “who can afford the lawyers’ fees”.
“But we’ve put our heads together and worked out a way to mimic these big tax dodgers. It’s jolly clever,” she added.
The issue of low tax payments has been a subject of much public ire in the UK. Research from YouGov, commissioned by energy firm SSE and the Institute of Chartered Accountants in Scotland said 80 per cent of consumers felt small businesses paid appropriate tax but their larger counterparts didn’t.
The survey from June, found only six per cent of people would trust a firm to provide accurate information on whether they are paying the right amount of tax, while just ten per cent thought it was acceptable for companies to move their base of operations abroad in order to avoid paying UK corporation tax.
Image: George Tod
Sign up to our newsletter to get the latest from Business Advice.