Re: Three cheers for the Chancellor : Tue Nov 06, 2012 5:44 pm  

Big Graeme wrote:

Yes, the UK operation is not a franchise or separate company but a wholly owned subsidiary.
All they are doing is moving money around to evade tax.

So, in the example of Starbucks, you don't feel the US brand brings any value or helps the UK operation in any way at all?

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 5:48 pm  

Mintball wrote:

I could be entirely wrong, but I don't have the impression that what seems to be a currently rather fashionable approach to corporate tax was the same as recently as a generation or two ago.

In much the same way as the relationship between customer and company has changed from one where the former could fairly expect to be honestly treated by the latter, to one where service has ceased to be something to be valued and the customer is simply there to be milked as much as possible.

As we have seen from several posters relating their own experiences of changing attitudes in companies over the same sort of time span.

Look into "flags of convenience" to see how far back tax avoidance has been going for international businesses.

I have quite the opposite view of the customer care experience. I would say there is more variety in it, and the likes of Easyjet quite openly basing their business on the price value they can give by not prioritising customer care.
Either way, I wouldn't say I had seen much in the way of dishonesty, which would be quite different from "milking" a customer.

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 6:05 pm  

Richie wrote:

So, in the example of Starbucks, you don't feel the US brand brings any value or helps the UK operation in any way at all?

I'm getting the strong feeling you are on the wind-up now. You can't surely be doing anything there but a bit of devil's advocacy?

Can you?

I'm sure Starbucks' name does help Starbucks make money in the UK as they do everywhere else. But if Starbucks pays money to Starbucks - as they are perfectly free to do - that should NOT be tax deductible. Royalties my arrse. The "royalties" are a neat legal convenience.

Do you think if royalties paid to a parent company were first taxed at 50% Starbucks UK would be paying any royalties to the parent company? If not, why not? I mean, that would surely just be Starbucks UK's problem, nothing at all to do with the parent company, right?

As far as I am concerned, the nature of the royalties is that it is unearned income going to a foreign corporation, and as it arises from business transacted in the UK, tax should be deducted and only the net sum paid across. That tax should be at the same rate as the corporation tax that would apply to the money if no royalties were paid, so whether royalties change hands or not would be tax neutral.

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 6:47 pm  

Ferocious Aardvark wrote:

I'm getting the strong feeling you are on the wind-up now. You can't surely be doing anything there but a bit of devil's advocacy?

Can you?

I'm sure Starbucks' name does help Starbucks make money in the UK as they do everywhere else. But if Starbucks pays money to Starbucks - as they are perfectly free to do - that should NOT be tax deductible. Royalties my arrse. The "royalties" are a neat legal convenience.

Do you think if royalties paid to a parent company were first taxed at 50% Starbucks UK would be paying any royalties to the parent company? If not, why not? I mean, that would surely just be Starbucks UK's problem, nothing at all to do with the parent company, right?

As far as I am concerned, the nature of the royalties is that it is unearned income going to a foreign corporation, and as it arises from business transacted in the UK, tax should be deducted and only the net sum paid across. That tax should be at the same rate as the corporation tax that would apply to the money if no royalties were paid, so whether royalties change hands or not would be tax neutral.

If Starbucks UK pays they royalty you agree they are entitled to do so to Starbucks US, then it's a cost incurred by Starbucks UK. Why wouldn't that be considered a valid cost to Starbucks UK in the same way as any other cost?

The US parent company, as you admit, generates value in terms of the profile of the name, why do you then want to class payment for that as "unearned" income?

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 8:15 pm  

Richie wrote:

So, in the example of Starbucks, you don't feel the US brand brings any value or helps the UK operation in any way at all?

And they get the profits of the UK arm, after tax.
It's a tax evasion scam, moving money around to avoid taxation of profits.

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 8:44 pm  

Big Graeme wrote:

And they get the profits of the UK arm, after tax.
It's a tax evasion scam, moving money around to avoid taxation of profits.

So, in the example of Starbucks, you don't feel the US brand brings any value or helps the UK operation in any way at all?

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 8:51 pm  

Richie wrote:

So, in the example of Starbucks, you don't feel the US brand brings any value or helps the UK operation in any way at all?

And it leverages that to make profits in the UK and enables any operation to be up, running and making profit faster. It gets a return by making said profits.

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 8:56 pm  

Big Graeme wrote:

And it leverages that to make profits in the UK and enables any operation to be up, running and making profit faster. It gets a return by making said profits.

So, in the example of Starbucks, you don't feel the US brand brings any value or helps the UK operation in any way at all?

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 9:15 pm  

Richie wrote:

So, in the example of Starbucks, you don't feel the US brand brings any value or helps the UK operation in any way at all?

I have already answered that.
It gets the post tax profits in return.

Re: Three cheers for the Chancellor : Tue Nov 06, 2012 9:22 pm  

Big Graeme wrote:

I have already answered that.
It gets the post tax profits in return.

You seemed evasive Your inwillingness to just give a straight answer became amusing

So if the parent companies branding is of value to the subsiduary, isn't it valid for the parent company to apply a charge on the subsiduary for that?
Granted, you have proposed an alternative which has validity, but isn't it also valid the parent company applies a charge on the subsiduary?