Europe is ‘obliged to take care of taxpayer money’ says MEP
Tax consultant Bob Lyddon estimates the UK Government can make huge gains by aggressively targeting regulations which apply to companies which base their European headquarters in Ireland and Luxembourg – cash which he pointed out would go some way towards balancing the books after the economic slump triggered by the coronavirus pandemic. Mr Lyddon, who has set his ideas out in a blog published on the brexit-watch.org website, told Express.co.uk: “Brexit gives us the freedom to close these ‘schemes’ off but it requires positive action to so: it won’t just happen.
We’ve been pillaged and it must stop
“My piece was meant to wake him up, not to give him any comfort that the problem had solved itself.
“We’ve been pillaged and it must stop and now we can start to push back on this. It’s time to take the gloves off.”
Mr Lyddon, the founder of Lyddon Consulting Services Ltd, said roughly 100 companies were thus able to to avoid making hefty payments making use of the EU’s Freedom of Incorporation rules.
We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
These permit companies to set up in any member state, subject itself to the member state’s tax regime, and then trade with all the other member states from there.
The basic intention of such regulations was to enable an Irish or Luxembourgish company to make all its sales from there into the UK, assuming they were genuine sales – ie goods manufactured in Ireland or Luxembourg or services performed in Ireland or Luxembourg.
Mr Lyddon explained: “The fiction is that the main value-adding service is being performed in Ireland or Luxembourg when Facebook, for example, sells advertising space to UK companies where the sale is closed by Facebook’s UK subsidiary.
JUST IN: Brexit Live – Boris eyes £100bn trading coup as Truss parachuted in
“The UK subsidiary purports to be acting as an agent for the Irish company, for a commission. The fiction is that the sale itself merits a very low commission and all the value is added in Ireland.
“On that basis the cost-of-space paid by the UK customer is invoiced to them by the Irish company, and the Irish company pays on a small commission to the UK subsidiary.
“This creates a paper-trail that involves Ireland in the invoicing when it is scarcely if at all involved in the activity that gave rise to the invoice.”
Brussels’ Brexit mistake risks increasing Irish border tensions [INSIGHT]
Frexit campaigner rips apart ‘toxic’ Brussels over vaccine chaos [VIDEO]
India’s next! UK closes in on £100billion trade deal [ANALYSIS]
Mr Lyddon added: “The UK subsidiary is a break-even operation: no UK profit so no UK tax.
“The commissions paid by Ireland miraculously equate to the UK subsidiary’s running costs. What a coincidence!
“Of course it isn’t: it’s the result of manipulation.”
Mr Lyddon said Mr Sunak needs to set up a special unit within Her Majesty’s Revenue and Customs (HMRC) to look through what he called “these artificial business models” and reconstrue UK businesses.
He added: “What you do is recast the profit and loss accounts of UK subsidiaries of all these 150-odd companies and say ‘actually you have reported this, we are now looking through your arrangements and we have come to a much, much higher profit figure’.”
Consequently, instead of paying, for example, £100,000, a company would then be liable for £200million.
He said: “My calculations were just to do with Ireland and three significant industries which flow through that – IT, biotech and pharmaceuticals. And I worked out that the corporation tax shortfall was £10billion a year.
“And that’s not the whole of it because you have perhaps another 50 or 60 companies in Ireland, and then you have Amazon, eBay and PayPal which use Luxembourg so you may even get up to £15billion a year.”
Mr Lyddon said it was time for the UK to start punching its weight and asserting itself, stressing that big companies importance of the British market to huge multinational companies which he said he got away with paying minimal taxes for far too long.
He said: “We need to say if you want to access the fifth-biggest economy in the world you have to make a reasonable contribution to the running costs of the UK, as you would have to in Turkey, China, Japan, any of these other places. The UK is vital to Facebook for example.
“So we need to say if you want to continue ripping off France or Germany, or any other EU country that’s fine – but you’re not ripping us off any more.”
Source: Read Full Article