David Allen Green

A critical and liberal look at law and policy

The daftness of UKUncut

The protests are against the wrong targets.

By David Allen Green Published 19 February 2011 12:43

Today, lots of well-meaning people will stand in the rain and drizzle to protest against a profitable bank. This is the UKUncut campaign, which in essence is a general attempt to get corporations to pay tax that they are not legally obliged to pay. It is, at base, a campaign for voluntary tax payments.

However, this campaign is misconceived to the very point of daftness. Companies have to comply with the relevant tax regime: they really have no choice. Companies have to pay all tax that is lawfully due. Lawfully due tax cannot be avoided, regardless of ingenuity or greed. Accordingly, if certain companies are not paying enough tax, then the only solution is to improve tax legislation and properly resource its implementation by HMRC.

Tax avoidance and minimisation can be addressed by better tax legislation and policy. It really is that simple.

The HMRC is under-resourced, especially compared with the access multinationals have to expert legal and accountancy advice. The UKUncut protesters should campaign for more funding for HMRC and improved tax legislation. If they should be protesting anywhere on a miserable day like today, it should be outside the Treasury.

But the irony in all this is that from 1997 to 2010, it was a Labour government that did nothing to take on the tax-avoidance industry. So perhaps the protesters should be outside Labour headquarters, too, or the front doors of Gordon Brown and Ed Balls. It would make far better sense.

More from David Allen Green

85 comments

Sat, 2011-02-19 23:17 — elder pegasus (not verified)

Angela - of course not, it would just be nice if there were showing more signs of doing so, rather than considering adding to it.

Sat, 2011-02-19 23:22 — cwhitrow

You are missing the point. I took part in the UK Uncut action at Barclays in London today, so I know what this campaign is about. It is definitely NOT about trying to persuade big business to volunteer to pay more tax: that would indeed be naive in the extreme.

You are right to say that we need to change tax laws, close loopholes and have more inspectors, but these things will not happen if we simply moan to the government and it is most unlikely that anyone would even take notice if we stood shouting with placards outside HMRC or the Treasury.

We have succeeded in drawing public attention to a vital issue by aiming our broadsides at the most vulnerable point in the fortress of the plutocracy which rules this country. It is a matter of media strategy rather than policy prescription.

Big business behaves in ways which are quite legal but morally indefensible. Watch them squirming as they try to claim that they pay £2 bn in tax, when in fact it is their employees that pay their taxes, not them.

Game, set and match - to the people!

Sun, 2011-02-20 00:08 — Marina Pepper (not verified)

The blame game is a red herring.

Our political and financial institutions are rotten to the core, evidenced by failure to invest in collection of what's owed. http://arctheunion.wordpress.com/

This hardly bodes well for the political will to close loopholes.

Which is where #ukuncut comes in.

Many groups have found #ukuncut actions useful to organise and network around. Individuals, choking on their muesli, threw down their copy of the Saturday Guardian, today, and headed to their nearest Barclays to join us.

However we got to the frontline, we got there in 50 towns. The breadth of the creativity erupting in communities who, quite frankly are suffering from the greed induced near meltdown of the banking system, is truely inspiring.

This does not mean for a minute #ukuncut could start dictating policy.#ukuncut is a platform for dissent, launching us all into the unknown. Uk unknown indeed. That's the most exciting thing. We've all woken up to the fact that another world has to be possible. Otherwise we're fucked.

We will be rid of this maggoty mess - if we must we'll smash the barrel.

You can follow @marinapepper on twitter

I am not #ukuncut but I value #ukuncut- and so might you if you weren't shooting the messenger for the sake of cheap controversy.

Sun, 2011-02-20 00:38 — MattWBP (not verified)

"It's legal" is the dying argument of those who don't have ethics.

Without UKUncut, there probably wouldn't be any media focus on the issue at all. Politics aside - this needs fixing, something which won't happen without some attention.

Sun, 2011-02-20 01:23 — David Colquhoun1

I really think that you have got the wrong end of the stick this time.

The protest is surely against unfair laws that make it (just) legal to behave as these companies do. But what can activists do? it would not make much of a splash it they sat down outside the treasury or outside the HMRC offices. Like any protest it has to get into the news to work.

You might as well say that the 1023 campaign is daft because (shamefully) it is legal for Boots to sell misleadingly labelled homeopathic pills. See my point?

(Actually I;m not convinced that Boots behaviour is legal, but since Trading Standards refuse to enforce the law, they get away with it.)

Tue, 2011-02-22 13:05 — @ukcuts (not verified)

I walker,

No I'm saying there are more pressing fights right now than this issue.

I have.posted the above and invited uk uncut stalwarts to answer, yet they've deserted the thread at liberal conspiracy & pickled politics, and their tax guru Richard Murphy openly blocks anyone from commenting differing views to his on his blog.

Perhaps you care to answer instead?

Instead, as with scientology, the orchestrators leave the defence to the followers. People who don't know more about this subject than they are told by uk uncut & its organisers/leaders.

If you don't find it shocking thy won't engage and respond to questions like mine, then I strand by my comments that the.protests won't achieve anything, and are simply students running amock closing stores because they can.

Mon, 2011-02-21 12:50 — Reginald-Fah-fah

I think we should start listening to Ed Balls. He the only shadow minister that speaks as he finds and what he really believes in.

Miliband should let Ed Balls that control of the shadow government. Ed Balls plan has more chance of working asgaint the Tories!

Sun, 2011-02-20 02:28 — Robbie Mack (not verified)

This article really doesn't seem very well thought out to me. The UKUncut actions work very well in raising popular awareness of these issues and happen in public (and symbolic) areas for a reason. These actions to help spread information on the alternatives to the public sector cuts that are going to hit everybody. If the protests were outside the treasury how much press coverage do you think they would get? And protesting outside Labour headquarters is a completely ridiculous idea. We want change from the current regime, not to complain about a previous one. Also, nobody from UKUncut that I have spoken to has been a favour of the last Labour Government.

Sun, 2011-02-20 02:51 — Robbie Mack (not verified)

Furthermore, there are plenty of reasons to target the companies as well as the government. The banks have reckless and selfish policies with our money. They invest in dangerous gambles, knowing they will be bailed out with public money if all goes wrong. Meanwhile they are paying themselves obscenely large sums of money in both salaries and bonuses.
These aren't the only reasons to target banks that are involved in immoral acts across the world. With £7.3 billion worth of shares in arms manufacturing companies, Barclays bank are one the largest arms-trade investors in the world.
We do need to target particular companies and draw attention to what they're doing as they do have the power to change their own policies.

Mon, 2011-02-28 20:45 — Wrensense (not verified)

At the end of the day HMRC work for the country not the government.This is obviously a two way thing, Dont want to pay, enforce! For far too long this and other departments have allowed themselves to be dictated to by politicians as to how they operate. Perhaps we need independent control answerable to the public and not the government, if they can no longer be trusted! perhaps also UKUNCUT need to target both.
As ever it serves no purpose to "point the finger" Solution not blame IS the answer.

Mon, 2011-02-21 13:40 — Bill Major (not verified)

targets are well chosen and raise the issue in a way that standing outside the Revenue's offices will not. It is easy to divert attention away by telling people to stay at home because "it is all pointless." Sometimes things change very quickly.

Sun, 2011-02-20 09:14 — Chris Richards (not verified)

I think it is somewhat naive to think that Barclays will change their policy on tax due to a few protests. Those with long memories will remember the boycott on Barclays due to their support of the apartheid regime in South Africa. It made no real difference from what I could see (having been one of those who protested outside their branches at the time). Green is right - legislation is the only answer

Sun, 2011-02-20 12:50 — robert golby (not verified)

Why don't you just pat me on the head and tell me to toddle off home and you will sort it all out for me

Sun, 2011-02-20 13:05 — robert golby (not verified)

Hey! Just had a thought how about this. The HMRC makes the compaines pay an up front tax bill on on the HRMC estamated profit for that company. Then after the cash is paid the compaines can put in an appeal to regain any over payment. This system would solve the problems of Barclays for instance not being able to show transparency and honesty in their dealings

Sun, 2011-02-20 13:12 — robert golby (not verified)

“Sadbutmadlad“. If we take your theory to its logical conclusion then we should say that all companies should be exempt from any tax at all.

Sun, 2011-02-20 13:31 — Tony Lloyd (not verified)

Behind UKUncut is the idea that companies and rich individuals (“the targets”) are avoiding tax that they should be paying.
Whilst we all agree that the targets should be paying the tax that they are legally obliged to pay we all agree that, for the most part, they are and that the authorities are at least trying to stamp out clearly criminal behaviour.
So UKUncut is based on the claim that there is an amount that the targets should pay despite not being legally obliged to pay.
Unfortunately UKUncut does not go on to give details of what the targets should pay.
Some concentrate not on a “correct” amount of tax, but on behaviours surrounding tax. Guy Chapman (above) say the targets” devote substantial resources to avoiding (and in some cases evading) tax liability”. Whilst this seems to be more specific it’s just as problematic. The targets have to devote substantial resources to calculate their tax liability. The targets do not hire people to calculate their taxes and then special people to do special calculations that end up with a smaller tax liability. What is the difference between hiring an accountant to calculate how much tax you legally should pay and no more and hiring an accountant to calculate how much tax you ethically should pay but no more? The only differences in both intention and end result depend on this “correct” amount of tax, an amount for which there are no guidelines for calculation.
This leaves the targets in an impossible position. They are being told, on pain of having branches closed down, to adhere to a set of standards that are secret, arbitrary and variable. Determining how much tax Vodaphone should pay in the UK is difficult enough. HMRC don’t know, Vodaphone don’t know, that’s why they had an argument about it. That’s why Vodaphone provided £2bn for it in the accounts: “it might be nothing, it might be £2bn. Let’s play safe and set aside the £2bn just in case”.
But UKUncut not only claim to know but act as if it is so obvious that both HMRC and Vodaphone could not have disagreed with UKUncut’s assessment.
If you expect people and organisations to behave in a certain way you should tell them clearly enough for them to be able to follow your instructions. UKUncut’s tacit law is “don’t do anything that will make me get angry when reading the morning newspaper”. This is Daily Mail-reader morality.

Sun, 2011-02-20 13:51 — sigh (not verified)

What uk uncut don't grasp is the average working person isn't interested in tax avoidance. All they are worried about is their job and cuts to services.

Even if these companies paid this so called avoided tax, it wouldn't make the cuts as painfree as these students claim.

Yes I say students. As essentially they're the ones protesting as average working people won't ever relate to such anarchist tactics to get media attention.

It hasn't worked so far, and won't work if the focus is part time weekend protesters running riot closing stores they have beef with. Average Joe can't differentiate between an honest tax argument, and someone that once got a huge mobile bill or bank charge fulfilling a vendetta against that brand.

If uk uncut are serious about fighting cuts, we'd have 24/7 protests like is going on in Wisconsin, or middle east. If you believed in the cause, you'd not be fitting in your protests between lectures and social activities.

When you can protest properly everyday people and unions might start taking notice and join you in force. Until then you're just something to laugh at.

Sun, 2011-02-20 14:25 — neoni

This article is awful. I have been involved in several UKUncut actions, and it has always been clear that protesting the corporations that abuse loopholes is a symbolic way of highlighting that the loopholes are there. Without UKUncut, tax avoidance - this week's frontpage article! - wouldn't be an issue at all.
As I said, this article is awful. It's also ignorant and bias, but mostly just awful.

Sun, 2011-02-20 14:59 — sigh (not verified)

Neoni

You and every ukuncutter should understand the tac avoidance stance comes from Richard J Murphy a hypocritical accountant who won't allow comments on his blog unless they are in 100% agreement with him.

How can you hang on every word of someone who last week said Barclays did nothing wrong and yesterday was on the BBC and blogged the exact opposite? And says guardian was tax efficient when they use camens to dodge tax?

This Blogger highlights his hypocrisy timworstall.com/category/ragging-on-ritchie/

Wed, 2011-02-23 21:39 — straus (not verified)

All these cries for more tax inspectors - so typical of the authoritarian tendencies of the hard left.

Sun, 2011-02-20 15:13 — ajcebuk (not verified)

Leaving the dubious information in the article aside, you should be more responsible when titling your articles which go on a frequently visited website, read by many, who may be influenced by seeing the name of the article on a link alone without reading the full article and realising how unfounded it is.

While opening up the debate is certainly a worthy intention, using such analytically meaningless yet colloquially slanderous language as "daft" is a vacuous personal attack on an organisation which are instigating more change than yourself sat in your armchair getting paid to write counterproductive factionalist attacks on the people in the proverbial front line.

If you are half the reporter you claim to be, you will, on reflection, be automatically ashamed at this display of a thorough lack of professionalism.

Sun, 2011-02-20 16:21 — sigh (not verified)

Ajcebuk name one change ukuncut have been successful on achieving? Besides a little media time sweet FA.

Middle east & Wisconsin protesters much more successful.

Sun, 2011-02-20 16:25 — Clem the Gem

Rank idiocy from Mr Green and those opposing UKuncut. It is simply people demanding that the rich pay their share - and taking things into their own hands. After all, for the last 32 years we have relied on politicians who have fawned all over the super-rich like harlots.
http://clemthegem.wordpress.co.uk

Sun, 2011-02-20 16:28 — Clem the Gem

David Allen Green's liberalism seems to be that of Gradgrind in "Hard Times". Hope he doesn't open a "Free" School anytime soon...

Mon, 2011-02-21 17:10 — @ukcuts (not verified)

Ok let’s flip this a bit. Say the protests have an affect in tightening law that’s acceptable to the protesters and uk uncut claim victory.

How long will these changes take to implement into law?
Would they pass commons and lords votes to even become law?
Do protesters accept that any historical claimed avoidance can’t then be chased after, only going forward.
Do the protesters stop at announcement or implementation of new laws?
What do they do then with the movement? Is it nul & void then ?

You’d be looking at some 18 months min, and any changes in law if they did happen would be severely watered down under pressure from business leaders and party backers.

In that time cuts will have truly bitten hard and the opportunity to fight the cuts will have long passed. Loads will have lost jobs and services they rely on.

It’s a valid debate on laws being held at entirely the most inappropriate point in time.

Sun, 2011-02-20 17:45 — GollyGaloshes (not verified)

I'm mystified by Neoni's use of the phrase 'abusing loopholes' - how is it possible to abuse a loophole? That's like saying 'abuse a green traffic signal' or 'abuse a right-of-way' or 'abuse a sign saying walk this way please'

Sun, 2011-02-20 18:05 — Rolo Tamasi

Can anyone tell me what loopholes UKuncut have identified for closure?

Has there been any analysis of the methods and impacts of these closure proposals?

Sat, 2011-02-19 12:51 — Mr Northice (not verified)

It was also the Labour government that sold, among others, the HMRC building to a company registered offshore. The tax collectors now pay rent to a company that, allegedly, avoids tax. HMRC needs more investment, certainly, but could we also have our building back please?

Sat, 2011-02-19 12:51 — Josh Cockburn (not verified)

An article, unusually, misconceived to the point of daftness. Firstly, because UKUncut was initially set up in response to HMRC (or George Osborne) deciding to write off 4-5bn worth of tax that Vodafone was lawfully due to pay.

More generally though, companies will seek to minimise their tax obligations, and will always be ahead of any attempt by HMRC or the government to close those loopholes, -unless- a situation can be created where it is politically impossible, or financially counter-productive for them to do so. That is the situation towards which UKUncut is working towards.

Sat, 2011-02-19 12:52 — reddeviljp

Yada, yada, yada.
Let's not forget that if it wasn't for the activists involved in UKUncut then there would be no spotlight on tax avoidance/evasion.They have shifted a focus onto the light touch employed by HMRC and let's face it, Cameron won't be beefing up weak tax collection offices will he? How will Phillip Green fiddle further his huge profits? Get real.

Sat, 2011-02-19 12:57 — Peter Anderson (not verified)

I thought they had done great job of highlighting the lies in the weaselly 'we're all this together' phrase trotted by the Government who have instigated damaging cuts to those least able to absorb them while letting the City off lightly.
Now I think they need to focus more on fighting the cuts themselves including the planned cuts to HMRC. I know they do that but most of the focus seems to go to the 'tax cheat' protests. Perhaps that will change once the unions start their actions.

Sat, 2011-02-19 12:57 — Guy Chapman (not verified)

Up to a point, Lord Copper. Yes, companies have to comply with the tax regime. If they don't then HMRC will... let them off, as they did with Vodafone. The tax evaded by Vodafone would have paid for the totality of the NHS cuts currently being promoted.

Use of non-domiciled status is also distinctly problematic. Is it really plausible that Philip Green's taxable income is effectively zero? Really? The poor bloody infantry don't get this option of buying their way out of taxation by purchasing secondary residences in Monaco.

UK Uncut may be daft at the edges but the core principle is sound. Companies devote substantial resources to avoiding (and in some cases evading) tax liability, and we, the UK taxpayers, have to make up the gap. That is a point worth making. It's about ethical behaviour as much as lawful or unlawful behaviour.

Sun, 2011-02-20 19:35 — FA

This is a good article.

UKUncut are basically stupid.

Josh Cockburn is talking complete nonsense. The idea that Voadfone owed tax was nothing more than a urban myth promulgated by Private Eye based on a misunderstanding of the law.

Sat, 2011-02-19 13:03 — Christie Malry (not verified)

Josh

HMRC settled with Vodafone because they feared that UK tax law might be deemed to be illegal under EU rules. If it were determined that it was illegal, HMRC would get nothing, and other companies would launch their own claims. Better to take a bit than risk losing the lot.

It's simply untrue, and a bit naive, to claim it was a politically motivated handout.

Sat, 2011-02-19 13:06 — Josh Cockburn (not verified)

Christie, I'm not sure I did claim that. In any case, backing off from Vodafone doesn't prevent other companies from launching their own claims, so it would seem to presage a strategy of having to settle for approx 20% of due money in each case to avoid a court case.

Sun, 2011-02-20 19:39 — EdWelthorpe (not verified)

This has been gone over dozens of times. These protests ARE aimed at the government, but via the organisations they will actually listen to, rather than a placard waving in Trafalgar Square.

Sat, 2011-02-19 13:09 — Natacha Kennedy (not verified)

This really is one of the worst arguments I have ever heard on corporate tax avoidance. If these companies avoid UK tax then people should know about it. That way they can decide whether they wish to do business with them or not. The UKuncut protest also brings to the fore the UK tax loohole system which allows them to do this.
It also highlights a government which appears to be doing everything in its power to assist these tax dodgers. We need a simple system which says, if you do business in the UK you pay UK tax. That is the responsibility of all of us to enforce through our government.

Sun, 2011-02-20 19:42 — Freeman2

What amuses me most of all is when companies' lackeys claim that the NI and income tax paid by their employees is somehow the companies' contribution to the public welfare. Do they really think we're that stupid? I'm afraid they're so used to dealing with politicians and civil servants that they do.

Sat, 2011-02-19 13:12 — Danny Moules (not verified)

It's about public awareness. Standing outside a council office doesn't have nearly the same public awareness impact as a press honeypot protest outside a high street retailer.

It isn't HMRC that are going to respond to the protests any more than the banks... it's the people who see the footage who will react and the best way to get the point across to them is by tailoring the activities to generate the maximum media response.

Whether the public are then galvanized against the banks or HMRC directly is irrelevant, they ultimately have the same goal.

Sat, 2011-02-19 13:12 — Dan Aschroft (not verified)

So in 2009 when Barclays made £11.6bn in profits, and only paid £113m in corporation tax because most of it was routed offshore, that's okay then? (source: http://news.sky.com/skynews/Home/Business/Barclays-Bank-Paid-Just-113m-I...)

It's not one set of tax laws for people/companies that can afford them and one for people who can't is it? Oh. It is.

Sun, 2011-02-20 19:44 — Freeman2

GollyGaloshes writes, 'I'm mystified by Neoni's use of the phrase 'abusing loopholes' - how is it possible to abuse a loophole?'

It's a bit like a man taking advantage of a woman when he's got her drunk.

Sat, 2011-02-19 13:21 — SadButMadLad (not verified)

#UKUncut really are stupid.

They are campaigning for a company to pay more tax. So to pay that increase in tax the company will raise it prices. So who pays for the tax in the end - the public.

If they are saying that the company has to make less profit and keep its prices level then that means its investors make less profit. And who generally are the major investors - pension companies. So who pays for the tax in the end - the public.

Why don't UKUncut just pay the tax themselves and be done it with all the standing in the drizzle.

Sat, 2011-02-19 13:23 — sarah (not verified)

in order to enforce tax law, HMRC needs more resource.

http://arctheunion.wordpress.com

Sat, 2011-02-19 13:24 — @adambanksdotcom (not verified)

I can't speak for UKUncut's intentions, but the campaign makes sense to me as an attempt to change tax policy. I'm not sure anyone expects picketing Barclays to make Barclays stand up and offer to pay more tax than it has to. Rather, the idea is surely to change the climate.

If avoiding tax by absolutely any and every means available (often pushing the boundaries of what the law is interpreted to permit) is an unmitigated good for companies, they will do so. If it brings tangible damage to reputation - remember, the value of a brand is a significant asset - they may take a different view.

Further, big business may be less inclined to lobby government for a looser tax regime if taking advantage of it will provoke further public disapprobation.

Business and policy decisions are often presented these days as being merely technical. In reality, the mood of the times is hugely influential.

Progressive Tax Blog - progtaxblog.org.uk's picture

Sat, 2011-02-19 13:26 — Progressive Tax Blog - progtaxblog.org.uk (not verified)

I agree with the sentiment that we need to impove tax legislation rather than ask for voluntary tax payments.

However, it is a bit misleading to say the Labour government did nothing to tacke tax avoidance by large groups. The period from 1997 to 2010 witnessed one of the greatest increases in anti-avoidance legislation, including:

2001 - Reform of double tax relief rules (to prevent companies mixing low tax with high tax dividend paid to the UK)
2005 - Tax arbitrage rules (to prevent double dip structures)
2005/6 - Capitals gains anti avoidance to prevent loss buying etc
2009 - Transfers of income streams, disguised interest, new repo rules etc (all designed to tax in substance lending transactions)

I could go on...

The biggest issue (as we describe on our blog) as that EU law now makes it very difficult for the UK to collect tax from EU tax planning structures.

Sat, 2011-02-19 13:26 — CBrenchley (not verified)

If the UKuncut protests aren't a result of tribally motivated politics, why did they not happen under the Labour Government at the height of the financial crisis? Where are the protests outside the offices of the Guardian newspaper?
DAG does seem to be great at poking people in just the right place to get them really riled, and once again has found the weakspot in a group of self righteous muppets who are stirred to indignation in the comments section. Bravo sir! Keep it up!

Sat, 2011-02-19 13:26 — Jonathan (not verified)

Just because something is legal doesn't mean these companies have to do it. Even if all their dodgy strategies are legal (and some of them probably aren't), it's still perfectly legitimate to protest to tell them to not use them, just as it would be legitimate to protest against them doing else legal but immoral. Are you seriously claiming that for Barclays to avoid almost all of its tax is morally justifiable?

Sat, 2011-02-19 13:27 — Livers (not verified)

Lets do nothing and accept the status quo.

Its ok for the Bankers to argue that they will leave the City taking vital revenues if they are regulated and then pay chicken feed when they stay.

UKUncut shouldn't waste their time protesting about this and placing a spotlight on it.

Yeesh.

Sat, 2011-02-19 13:27 — John Willman (not verified)

This blog is spot on. Businesses route transactions through offshore financial centres because they are tax neutral (ie they don't have to waste time reconciling different tax systems). But when the profits are paid out, that is when the tax should be collected where the shareholders live. The UK appears to be bad at doing that.

The Guardian story has a lying headline. Barclays pays much more than 1% tax - 25% as the story later reveals. The headline contrasts UK corporation tax paid (£113m) with global revenues (£11.6bn), which are mostly earned outside the UK. Worthy of the Mail and other propaganda sheets.