Whilst many students had been looking forward to November 9th as the day they would once again hit the streets of London in protest, heads of tax from all the big multinationals were looking forward to the date for a very different reason: the Tax Journal Conference 2011.
Billed as the ‘definitive event for the corporate tax community’, the conference featured sessions on ‘mitigating tax risk’, ‘tax optimisation’ and ‘addressing the 50% tax rate’ led by companies such as Tesco, Sky and Barclays, and speeches from senior civil servants.
What neither tax-dodging companies nor the conference organisers knew is that UK Uncut had a friend in the audience. These are some of the notes she took.
08:45 Registration and Coffee
Decent coffee, nice mini croissants. Most of the people here are grey men in grey suits.
09:15 Welcome from the editor of Tax Journal
09:20 Chairmen’s welcome and introduction
09:25 The Treasury perspective: a view from the UK’s finance ministry on the role of tax policy in supporting economic recovery Edward Troup, Director-General, Tax and Welfare, HM Treasury
Senior civil servant from the Treasury begins by asking whether there are any journalists in the audience. There is only one, from the FT, who he obviously knows already. Troup looks more at ease after finding this out.
Troup attacks ‘unbalanced’ and ‘unfair’ coverage of HMRC’s dodgy deals with top tax dodgers Goldman Sachs and Vodafone. Says criticism of Dave Hartnett is ‘particularly unfair’. Believes there is a ‘debate’ as to ‘how acceptable it is that businesses pay less tax’.
Ed thinks that ‘taxing anything leads to market inefficiency’ and that ‘any level of taxation imposes a distortion upon the markets’.
Praises (presumably pro-free-market) academic work as ‘very good, very rigorous’ but accepts it is ‘not very real world’. Says his task is to ‘make it relevant to the real world’.
Would prefer to cut corporation tax than other taxes as this would be ‘less distorting’. Also somehow believes that ‘fuel tax paid by business is more distorting than that paid by individuals’. Accepts that, unfortunately, there is always an element of ‘political acceptability’ in these decisions.
Says the Government will release a report of a general anti-tax-avoidance rule around the New Year.
Ed pauses. Looks serious and down to an executive from a big oil company on his right. Says he realises this has ‘been a difficult time for the oil industry’ following the windfall tax imposed on their (multibillion pound extractive) profits but is pleased they have been able to continue working together despite their ‘difficult relationship’.
Question time. An audience member praises Ed for ‘getting through half an hour without any banking bashing’. He smiles and responds that the Government have been ‘robust’ in their opposition to a Financial Transactions Tax (Robin Hood Tax).
Question on whether we should close the tax gap, and if so, how? Should we simplify the tax code? Introduce anti-avoidance legislation? Ed responds that David Gauke (Treasury Minister) will launch an initiative on tax transparency (inspired by the 6000+ signatures on Caroline Lucas’ petition, perhaps?)
09:55 Panel session: Managing tax optimisation expectations
The session will explore the expectations of the FD/CFO and the Board against their corporate governance obligations and public scrutiny
Tim Voak, Group Tax Director, Tesco plc
Tanya Richards, Directory of Tax & Treasury, BSkyB
Phil Jacobs, Head of Tax, Barclays Capital
Tanya says ‘UK Uncut have produced a map of tax havens’ which shows the ‘companies with operations in each location’. (Not sure what she’s referring to here, I’m not aware of any such map – seems that ‘UK Uncut’ is a byword for ‘tax justice movement’ in this community at times.) Her advice is for companies ‘not to engage’ with stories that come out in the press about tax dodging – ‘if you put your head about the parapet, it’s likely to get chopped off’.
An FT journalist asks a question to the Head of Tax at Barclays Capital. Points out that ‘Barclays were at the centre of a storm caused by UK Uncut’, asks how he felt Barclays dealt with the situation. Barclays guy replies that the ‘question was not unanticipated’ but that essentially the company is ‘willing to do anything that’s legal’.
10.40 Keynote address: Tax and the CFO Dr Nigel Wilsons, CFO, Legal & General Group plc
11.10 Morning refreshments
11.30 Breakout sessions on CFC & foreign profits and employment tax
13.35 Breakout sessions on VAT compliance and the Litgation Settlement Strategy
14.40 Breakout sessions on transfer pricing and property tax
15.25 Afternoon refreshments
15.40 The Coalition’s tax policies: lessons learned David Gauke MP, Exchequer Secretary to the Treasury
Gauke says [multinational tax dodgers] form the ‘backbone’ of the Government’s economic plans, are the ‘driving force’ and ‘crucial’ for growth. Their success is based not on ‘luck’ but ‘enterprise’ and ‘ambition’. A banking crisis has turned into a sovereign debt crisis and the present government inherited a ‘dire situation’. Cuts in public spending are ‘not ideological’ but a ‘fiscal necessity’. Accepts there is a question where the burden of deficit reduction should lie, spending or taxation.
The UK has ‘slipped’ from 10th to 20th in the table of countries with the lowest corporation tax rates and the Government is ‘committed’ to ‘reversing the decline’. Ambition is to create the most ‘competitive’ tax system in G20. ‘Higher taxes on profit simply lead to uncompetitiveness’. The Government will reduce corporation tax to 23% by 2014 and will do all it can to resist a Financial Transactions Tax, the burden of which ‘would be borne mostly by pensioners’. Gauke understands that ‘higher marginal income tax rates are damaging for the UK’ and assures the audience the 50p rate is ‘only temporary’.
Says that the idea that some ‘good’ businesses that produce social value should be taxed differently to ‘bad businesses’ is ‘distortionary’ and would ‘damage growth’. ‘Increased cooperation between government and big business is the only way to an effective tax system’.
Question: are you concerned over a backlash over HMRC’s policies of ‘engagement’ with multinationals? Gauke replies: HMRC approach is ‘very sensible’ and ‘effective at getting revenue’. The message he is getting from multinationals is that ‘HMRC compares very favourably’ with tax institutions in other countries (yeah, I bet!), and makes an effort to understand companies’ concerns. Criticism of ‘public servants doing best for their country’ (Hartnett) is ‘unfair’ and ‘unfounded’.
Question: Women have been hit particularly hard by spending cuts, why has the government allowed this? Gauke: done ‘as much as possible’ to protect ‘vulnerable groups’.
16.10 Tax risk management Heather Self, Director, McGrigors LLP
Shortly before the end of her speech, Heather talks about the ‘reputational risk’ involved in arranging complicated tax avoidance schemes. She shows a slide of the first UK Uncut action outside Vodafone.
16.55 HMRC’s relationship with the taxpayer Dave Hartnett, Permanent Sectretary for Tax, HM Revenue & Customs
A few minutes after starting, Dave’s speech is interrupted by ‘executives’ from Goldman Sachs and Vodafone:
Most people seem rather amused.
Hartnett criticises the people staging the intervention as ‘not understanding or not wanting to understand’ the nature of the dodgy tax deals. He finishes his speech with a defiant ‘They won’t get me’ — hmm, not so sure about that Dave.
17.30 Chairman’s conclusion
17.35 Close of conference and drinks reception