By Brid-Aine Parnell, From The Register

You thought only Google dodges UK taxes? So do all the Brit firms

Big British-based tech firms like Autonomy and BSkyB have subsidiaries in onshore and offshore tax havens, and avoid paying taxes in much the same way as has been highlighted in the case of US firms Google and Amazon.

Research shows that most of Blighty’s top companies have offshoots in tax havens, according to charity ActionAid. Just two corporations listed in the UK’s FTSE 100 had no subsidiaries at all in areas that could help with tax avoidance.

While banks like Barclays, HSBC and RBS are seen as the worst offenders, companies like Vodafone and Sage from the tech and telco sector also have branches in havens like the Cayman Islands and the Bahamas.

The research uses a wider definition of tax haven than usual, including countries like Ireland and the US state of Delaware, which have both come under pressure for their low taxes and easygoing regulatory environment.

Broadcaster BSkyB has ten per cent of its 110 offshoots in tax havens, according to ActionAid’s data, including a branch in Ireland and two in Delaware, as well as two companies in the Netherlands Antilles and one in the British Virgin Islands.

A Sky spokesperson, however, told The Register that the companies identified in the research “have either been wound up, are in the process of being wound up, or are subject to UK taxation”.

“Sky directly contributes more than £1 billion a year in tax – 40 per cent more than the average FTSE 100 company. We’re very proud of the significant – and growing – contribution we make to the British economy,” insisted the broadcaster.

ActionAid said the Vodafone Group has nearly a quarter of its 387 subsidiary companies in tax havens, including 11 firms in Delaware and another 11 in Ireland. HP-owned Autonomy and the Sage Group have 15 and 41 branches respectively in tax shelters. Sage has an astonishing 19 subsidiaries based in Ireland and ten in Delaware, while Autonomy has seven companies in Delaware and an offshoot on the British Virgin Islands.

A HP spokesman told The Reg: “We believe that HP has been fair and compliant in the reporting of income, profits, and payment of all corporate income taxes to the governments in the markets where we operate. HP adheres to the highest ethical standards and maintains a culture of cooperation with all regulatory authorities.”

Scrutiny stepped up on corporate giants’ tax paperwork

Simply having subsidiaries in tax-lite countries doesn’t mean companies are up to anything shady and tax haven structures are generally not actually illegal at all, but corporations have increasingly come under scrutiny for their tax practices in the wake of the global financial crisis.

Austerity-suffering Joe Public has been none too keen on the idea that companies are paying less than their “fair share” – although no one seems to know exactly what that fair share should be – and politicians have been quick to appease the masses with at least the appearance of doing something.

In Blighty, the Public Accounts Committee has been taking evidence from multinationals like Google, Amazon and Starbucks over their tax bills and looking into the big accounting firms that help them manage their taxes as well, like Ernst & Young.

Both UK prime minister David Cameron and chancellor of the exchequer George Osborne have also promised that tax avoidance and evasion will be at the top of the agenda during the country’s presidencies of the G7 and G8 this year.

At a G7 finance ministers’ and central bank governors’ meeting on Saturday, Osborne said that everyone “agreed on the importance of collective action to tackle tax avoidance and evasion”.

“We discussed the development of a new multi-lateral global standard on the automatic exchange of information based on Foreign Account Tax Compliance Act (FATCA), and action to improve the transparency of legal structures,” he said in a speech.

“What I would say about this initiative is this: it’s incredibly important that companies and individuals pay the tax that is due, and this is important not just for Britain and British taxpayers but also important for many developing nations as well.”

ActionAid’s tax justice policy adviser Mike Lewis said that the UK in particular needed to do more to address the problem of tax havens.

“Four years after G20 leaders promised an end to tax havens, tax haven structures are near-universal amongst the UK’s biggest multinationals,” he said.

“Now, with David Cameron promising action on tax havens at this year’s G8, the problem is on the UK’s doorstep. The UK is responsible for one in five of the world’s tax havens – that’s more than any other country.

“Poor countries lose an estimated three times more money to tax havens than they receive in aid each year – money needed to build roads, fund schools and finance developing countries’ own fight against hunger and poverty,” he added. ®

For more on this story go to:

http://www.theregister.co.uk/2013/05/14/uk_firm_subsidiaries_tax_havens/