Tackling corporate tax avoidance in a global economy: is a new approach needed? - Economic Affairs Committee Contents

CHAPTER 2: Corporation tax in the UK and its international dimension

The UK Corporation Tax


12.  Indignation over corporate tax avoidance reflects the view that corporations should pay their "fair share" of tax, and that full compliance by corporate taxpayers lightens the tax burden on individuals. Moore Stephens LLP expressed the contrasting, more usual, view that companies cannot actually bear tax burdens, but must pass them on to individuals: "Companies are artificial constructs, with no existence apart from the individuals who make up their shareholders, directors and workforce. They cannot ultimately bear the burden of taxation (or any other burden). The burden of the tax paid by the company is borne by shareholders in the form of reduced dividends, by employees in the form of reduced remuneration, by customers in the form of increased prices, or (if the company has enough leverage in the market) by suppliers in the form of reduced prices."[6] Malcolm Gammie QC agreed: "There is no such thing as a "fair share" for corporate tax, because companies do not bear the tax anyway."[7]

13.  There are however good reasons to tax corporations. One is to limit the scope for tax avoidance by individuals who might otherwise have a strong incentive to incorporate so as to escape personal income tax. Another is to draw revenue from non-resident shareholders in British companies. As Professor Kay and Mr Mervyn King (now Lord King of Lothbury) pointed out: "The easiest way of extracting tax revenue from British subsidiaries of foreign-owned companies and from shareholders of British companies who reside overseas is to have an independent corporate tax."[8]

14.  Corporation tax is a significant component of HMRC's portfolio of taxes and makes an important contribution to the UK's total tax revenue.


15.  A tax on company profits has existed continuously since 1937. Before 1965, profits were subject to income tax at the standard rate and to an additional "profits tax". The old system was replaced by Corporation Tax, introduced at a rate of 40% by the Finance Act 1965.

16.  Resident UK companies and unincorporated associations such as trade unions are liable to corporation tax. Partnerships, sole traders, charities and the local authorities are not. Building societies and insurance companies are subject to special rules.[9]


17.  In recent decades rates of corporation tax have steadily declined. During the 1980s the main rate fell from 52% to 35%, then during the 1990s from 35% to 30%. In 2008 the main rate came down to 28%, in 2011 to 26% and in 2012 to 24%. The Small Companies Rate (from 2011 the Small Profits Rate) also fell over the years, remaining lower than the main rate.[10] In 2013 the Chancellor of the Exchequer announced that the main rate would be cut to 21% in 2014 and to 20% in 2015. He also announced that small company and main rates would be merged at 20% to give a single UK rate of corporation tax in 2015.[11] The Chancellor of the Exchequer has said he aims to achieve "the largest reduction in the burden of corporation tax in our nation's history" so as to "compete with the world in our headline rate of corporation tax." He contrasted the UK's 20% rate (the lowest in the G20) with corporate tax rates in Germany (29%), France (33%) and the US (40%).[12]

18.  The Government has also introduced a "patent box" under which income originating from patents owned in the UK will be taxed at 10%. It has relaxed anti-avoidance rules for controlled foreign companies[13]  (the CFC rules) so that interest received in subsidiaries in low taxed countries from lending outside the UK will only be taxed at 5.75%, a rule that KPMG has stated "gives UK based multinationals an opportunity to significantly reduce their tax rate".[14]


19.  Aside from rates of tax, one significant main feature of the UK's corporation tax regime is the low (by international standards) rate of allowances for capital spending. A report by the Oxford University Centre for Business Taxation indicates that within all OECD and G20 countries, only one country—Chile—has less generous allowances than the UK.[15] The UK's corporation tax has a low rate but a broad base.

20.  A second feature is the relative generosity of tax deductions for debt interest. As the Government has stated: "OECD countries' tax systems generally recognise the distinction between debt and equity and give deductions for interest as a business expense … The Government remains committed to interest being relieved as a normal business expense irrespective of where the proceeds of the loans are put to use … The UK's current interest rules, which do not significantly restrict relief for interest, are considered by businesses as a competitive advantage."[16] Other comparable countries tend to have more severe restrictions on such relief.


21.  Table 1 shows that the UK's yield of corporation tax as a share of GDP has been fairly steady in recent years and comparable with—indeed, generally higher than—that in other comparable OECD countries, although it may be precarious because of avoidance:


Corporation Tax Revenues as % of GDP
Country 2005 20062007 2008 20092010 2011
France2.4 3.03.0 2.91.5 2.12.5
Germany1.8 2.22.2 1.91.3 1.51.7


3.23.7 3.13.4 2.73.0 2.7
United States2.8 3.02.6 1.81.7 2.52.4

Source: OECD Revenue Statistics

Mr Richard Woolhouse of the CBI told us that in the UK "the share of corporate tax receipts to GDP [had] held up pretty well despite falling headline rates".[17] This may be partly because allowances have tended to fall over time, thereby expanding the definition of the tax base. More importantly, profit has tended to increase as a share of GDP, so that lower rates have been applied to higher levels of profit.

22.  The yield from corporation tax in 2012-13 was significantly lower than the three main sources of revenue: income tax, national insurance and VAT, as Table 2 shows. Corporation tax contributed 8.7% of total revenue in 2012-13 —a little lower than the previous decade, when it was generally been between 9% and 10%.


Contribution by tax to total HMRC receipts 2012-3 (%)
Percentage of total HRMC Receipts, 2012-3
Income Tax32.2
National Insurance Contributions21.8
Corporation Tax8.7
Petroleum Revenue Tax0.4
Fuel duties5.7
Inheritance Tax0.7
Stamp Taxes1.9
Tobacco and Alcohol Duties4.2
Total HMRC receipts£468, 956m

Source: HMRC

23.  There is also evidence that most corporation tax revenue is raised from large companies: another Oxford University Centre for Business Taxation report indicates that 81% of UK corporation tax is paid by the top 1% of companies. Using data from the accounting records of 36,000 UK companies that were part of UK-owned multinationals and 30,000 UK companies that were part of foreign-owned multinationals, the report also indicates that between 1999 and 2009 these two groups made similar aggregate payments of UK corporation tax.[18]

24.  Representatives of corporate taxpayers and their advisers argue that the corporate sector's total tax contribution is greater than corporation tax, since companies also pay other taxes. Mr Richard Collier of PwC told us: "There are now 24 taxes that apply to businesses and in an eight-year period, the ratio of corporation tax to other taxes has gone from 1:1 to 1:2."[19] These figures come from research undertaken by PwC on the taxes borne by companies that are members of the Hundred Group.[20] The main other taxes assessed are employers' national insurance contributions, irrecoverable VAT and business rates. In total, PwC say that Hundred Group members contributed around £8 billion in corporation tax in 2012 and a further £16.8 billion in other taxes borne. If this ratio applied to all UK businesses, the proportion of total revenues paid by companies would be around 27%. As noted in paragraph 12 above, all of these taxes are ultimately passed on to individuals.

The International Dimension

25.  One key issue that faces the UK and other national governments over corporate taxation is how the profit of a multinational company should be allocated to individual countries for taxation. The existing framework is extraordinarily complex, and has many flaws.

26.  The original aim of the current system, first set out by the League of Nations in the 1920s, was to avoid double taxation of profits, where a company might be taxed on the same profits by two countries, so hampering growth and investment and damaging the world economy. Nowadays concerns are more about non-taxation, where companies exploit the provisions of the system that were originally intended to prevent double taxation or mismatches between countries in provisions, in order to allocate their profits to jurisdictions with a low tax rate or to avoid taxation altogether.

27.  The present international framework of corporate taxation is based primarily on two main elements: a network of bilateral double tax treaties; and the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.


28.  More than three thousand bilateral double tax treaties are in force, typically based on the OECD Model Tax Convention on Income and Capital. The OECD explains:

"International juridical double taxation—generally defined as the imposition of comparable taxes in two (or more) States on the same taxpayer in respect of the same subject matter and for identical periods— has harmful effects on the international exchange of goods and services and cross-border movements of capital, technology and persons. In recognition of the need to remove this obstacle to the development of economic relations between countries, the OECD Model Convention on Income and on Capital provides a means to settle on a uniform basis the most common problems that arise in the field of international juridical double taxation."[21]

29.  The UK claims to have the largest network of treaties, covering over 100 countries, which generally follow the OECD template. HMRC regards the purpose of double tax treaties as to:

  • "protect against the risk of double taxation where the same income is taxable in two states
  • provide certainty of treatment for cross-border trade
  • prevent tax discrimination against UK business interests abroad

Double Taxation Treaties are also drawn up to protect the UK Government's taxing rights and protect against attempts to avoid or evade UK liability. They also contain provisions for the exchange of information between the taxation authorities of states"[22]

30.  Double taxation treaties seek to set out which country can tax certain income. Broadly they aim to distinguish active business income from passive income such as dividends, royalties and interest. Treaties define what is an active business operation in a given source country (a "permanent establishment") and give that source country the main right to tax the profits of that operation. By contrast, passive income is primarily taxed in the country in which the recipient resides.


31.  The second main element of the international tax system, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, provides that transactions between national parts of a multinational company should be priced for tax purposes as though with independent third parties.[23] The OECD summarises its guidelines (which run to over 300 pages) as providing:

"guidance on the application of the "arm's length principle" … on the valuation, for tax purposes, of cross-border transactions between associated enterprises. In a global economy where multinational enterprises (MNEs) play a prominent role, governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdictions and that the tax base reported by MNEs in their respective countries reflect the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation that may result from a dispute between two countries on the determination of an arm's length remuneration for their cross-border transactions with associated enterprises."[24]

32.  These OECD Guidelines were first introduced into UK law in 1998. The relevant UK law is now s.164 of the Taxation (International and Other Provisions) Act 2010 (TIOPA). HMRC states this section "provides that the legislation is to be construed in a manner that best secures consistency with" the OECD Guidelines, and that "this provides a principle for interpreting the legislation, but does not permit the OECD Transfer Pricing Guidelines to override the legislation". Professor Picciotto considers s. 164 ".. undesirable and inappropriate. The root cause of the complexity is the unsuitability of the basic arm's length principle. However, if it had been left as a general principle, I believe that it could have been interpreted flexibly through case-law, and could have evolved into appropriate profit apportionment methodologies. Regrettably, the OECD officials have been allowed to go their own way, free from any parliamentary scrutiny, and develop the increasingly complex and inappropriate Guidelines."[25]


33.  For some years, the OECD has also taken the lead in attempting to combat harmful tax practices. In 1998, it published a report which called on OECD members to introduce legislation to eliminate preferential tax regimes, and which also set out to eliminate similar regimes in a small group of countries which it labelled as "tax havens". The ensuing process eventually led to the creation of the Global Forum on Transparency and Exchange of Information for Tax Purposes in 2009. The OECD states that "the Global Forum now has 120 members on equal footing and is the premier international body for ensuring the implementation of the internationally agreed standards of transparency and exchange of information in the tax area. Through an in-depth peer review process, the restructured Global Forum monitors that its members fully implement the standard of transparency and exchange of information they have committed to implement. It also works to establish a level playing field, even among countries that have not joined the Global Forum."


34.  A multinational company is not taxed as a single entity, but as a number of legally-distinct individual enterprises located in different countries. Taxation of profit is very broadly where economic activity takes place. But that means that tax differentials between countries can affect the location of real economic activity. A recent survey found that a one percentage point fall in the cross-border tax rate faced by a company would lead to a 2.5% rise in inbound foreign direct investment.[26]

35.  In addition, multinational companies have some discretion as to where to locate profit for tax purposes. We received evidence that, on average, a one percentage point increase in tax rate difference leads to a 0.8 per cent fall in average reported pre-tax profits, as profits are shifted to other countries. The authors estimate that around 25% of this effect comes through financial channels.[27]

36.  Stories in the British media about corporate avoidance often refer to multinationals with US headquarters, reported as exploiting hybrid entities under the US "check-the-box" rules. But multinationals with UK headquarters have used similar devices—for example, the Financial Times has recently set out some of the devices used by Cadbury before it was acquired by Kraft.[28] Nevertheless, multinational companies—whether based in the UK or elsewhere—that aggressively manipulate their affairs to reduce tax may gain a competitive advantage over other companies that do not, as some of those disadvantaged have emphasised. For example, the Managing Director of John Lewis plc, Andy Street, recently stated publicly that "You have got less money to invest if you're giving 27% of your profits to the exchequer than, clearly, if you're domiciled in a tax haven and you've got much more. So they will out-invest and ultimately out-trade us."[29]  

37.  The present international corporation tax system offers great scope for multinational companies to shift their profits between countries to reduce their tax liabilities and creates an uneven playing field.


38.  The Government is committed to an internationally competitive low corporation tax rate, in order to promote inward investment and economic growth in the UK. It is also committed to ensuring taxpayers pay the tax that is due. Combating corporate tax avoidance, especially by multinationals, is already high on the political agenda. The Prime Minister said in January: "We want to use the G8 to drive a more serious debate on tax evasion and tax avoidance. This is an issue whose time has come. After years of abuse people across the planet are rightly calling for more action and most importantly there is gathering political will to actually do something about it."[30] The G8 summit in June agreed several anti-avoidance initiatives, including support for the OECD's work to tackle base erosion and profit shifting, work to create a common template for multinationals to report to tax authorities where they make their profits and pay their taxes across the world and agreement to publish national Action Plans to make information on who really owns and profits from companies and trusts available to tax collection and law enforcement agencies, for example through central registries of company beneficial ownership.[31] G20 Finance Ministers and Central Bank Governors also fully endorsed on 20 July 2013 the OECD's Action Plan for Base Erosion and Profit Shifting (BEPS) published on 19 July.


39.  Over the last decade, HRMC has been instrumental in introducing several specific anti-avoidance measures in the UK. These include a requirement on tax advisers to give notice of new avoidance schemes: Disclosure of Tax Avoidance Schemes (DOTAS), in 2004, which we heard has "… been effective across the board,"[32] the introduction of measures to restrict cross-border arbitrage in 2005, and a General Anti-Abuse Rule (GAAR) in the Finance Act 2013.

40.  Before examining these measures, it is useful to be clearer what is meant by "tax avoidance" Professor Judith Freedman and Dr John Vella distinguished three types of activity:

"A. Ineffective avoidance, which can be combated under existing laws provided the activity is discovered and action is taken.

B. Effective avoidance, which reduces tax payable due to use of a defect in the legislation or other failure in the way that the legislation is written, that cannot be corrected by purposive interpretation.

C. Using legislation or the international tax system to one's advantage; although these cases have been described as avoidance, they do not involve the type of exploitation of defects in the implementation and presentation of legislation that come under category B." [33]

41.  The DOTAS rules require promoters of certain types of tax avoidance schemes, or in some cases users of the schemes, to disclose them to HMRC. The DOTAS regime has two objectives. Primarily, it is intended to ensure that HMRC becomes aware of potential avoidance schemes as early as possible. It is also intended to act as a deterrent to more egregious schemes. These rules are therefore primarily targeted at schemes falling into category A (paragraph 40 above), although they may also help to shift some schemes from category A to category B. HMRC claim DOTAS as a successful part of their multi-pronged strategy for dealing with tax avoidance. In 2011, Mr Dave Hartnett, then Permanent Secretary for Tax, described DOTAS as "our key and crucial tool for dealing with avoidance".[34] Most of the professional firms and the tax directors of large companies agreed that DOTAS had proved important, and that the number of disclosures in which they had been involved was now small.[35]

42.  Professor Freedman and Dr Vella point out however that the evidence in support of DOTAS is largely anecdotal; statistical evidence is limited. They argue: "HMRC's claims that this is highly successful have to be set against the frequency with which DOTAS is being amended to make it more robust against avoidance, which suggests some concern as to its scope and operation. Further information is required to make a more meaningful assessment." [36]

43.  Other witnesses pointed to the new GAAR as being an important new weapon in the armoury against tax avoidance. Under GAAR, when a tax arrangement is deemed "abusive" then HMRC can increase the amount charged to the taxpayer.[37] For example, Mr Frank Haskew of the ICAEW stated that the GAAR "is a decisive break with the past with regard to aggressive tax avoidance schemes, and that is clearly stated in the introduction to the guidance. People need to read that because it is a watershed."[38] Mr Haskew reminded us that the GAAR was not designed to deal with exploitation of arbitrage opportunities in the international tax system: "The introduction also makes clear that the GAAR is aimed at abusive tax avoidance schemes but will not catch everything."[39] The GAAR may address categories A and B set out in paragraph 40 above, but not C.

44.  The anti-arbitrage provisions introduced in 2005, and now included in the Taxation (International and Other Provisions) Act 2010, are intended to combat tax arbitrage that exploits inconsistencies between provisions in different countries on, for example, the concept of residence or the definition of debt.

45.  The 2005 anti-arbitrage provisions have been described as "probably the single most sustained legislative attack on international tax arbitrage that has been seen in this country".[40] The rules primarily work by disallowing deduction which are not matched by a taxable receipt or where there is another deduction allowed for the same item of expenditure. When introduced, they drew criticism from professional bodies such as ICAEW and CIOT for taking on the role of global policeman.

46.  In 2004, the UK also became one of the founder members, with Australia, Canada and the USA, of JITSIC (Joint International Tax Shelter Information Centre), which aims to deter promotion of an investment in abusive tax schemes, by sharing information, experience and best practices. Membership has since expanded to include China, France, Germany, Japan and Korea. In 2009, the then permanent secretary of the HRMC, Dave Hartnett, estimated that the sharing of information by JITSIC members had "saved or prevented the loss of more than £1 billion for the UK alone in four years."[41]

47.  HMRC maintain that new measures introduced over the last decade have had a significant impact on the tax avoidance industry in the UK. That view is broadly shared, although statistical evidence is limited. We welcome anti-avoidance measures such as Disclosure of Tax Avoidance Schemes (DOTAS), the anti-arbitrage rules and the General Anti-Abuse Rule (GAAR). The GAAR in particular has a relatively narrow focus. As we recommended in our recent report, "…every effort should be made to communicate, particularly to the press and the public, why the GAAR is not an appropriate mechanism to address all problems with the tax system."[42] We welcome HMRC's revised guidance which makes the intended scope of the GAAR clearer. [43]


48.  Witnesses from major companies generally took the view that, although there was scope for improvement, corporation tax was an effective tax fairly applied and that use of tax avoidance schemes was in decline. Ms Helen Jones, senior Vice President, Global Tax, GSK, said "… corporation tax is not a voluntary tax"[44] …"the UK system is certainly now a very good one."[45] Mr Paul Morton, Head of Group Tax, Reed Elsevier, said "… the introduction of the [DOTAS] scheme has had a positive impact on reducing the number of avoidance schemes implemented".[46] Mr John Bartlett, Group Head of Tax, BP, said "… the fundamentals of the system are not broken … "[47] "… we are on the right path at the moment with corporation tax."[48] Mr Bartlett denied that foreign-based multinationals enjoyed any tax advantage over home-based rivals in the UK: "… the rules here apply equally to domestic and overseas companies and my belief is that HMRC applies them fairly. BP does not harbour any view that overseas companies are getting any unfair advantage."[49] Mr Richard Woolhouse of the CBI said
"… having achieved a very attractive package in terms of attracting mobile activity to the UK, to start unpicking that now would be very damaging. We need to bed it down and we need stability around that system."[50]


49.  We referred in Chapter 1 to the complexity of the UK tax system, which has fostered demand for professional tax advisers. Mr Bartlett said they were
"… advising us on how to do compliance in a more efficient way … "[51] We heard evidence from tax practitioners in law and accountancy and from tax specialists in the three main accountancy professional bodies. Like the large corporate taxpayers, they regard UK corporate taxation as broadly fit for purpose: Mr Steve Edge of Slaughter & May said "On the corporation tax regime, we have landed in a good general place where the system is attractive to people who want to bring investment into the UK."[52] Mr Chris Sanger of Ernst &Young said "We need to be careful not to undermine the sustainability of corporation tax because it is a tax that is here to stay."[53] Ms Elspeth Orcharton of the Institute of Chartered Accountants of Scotland (ICAS) said there was "a need for the rules to be brought up to date rather than be reinvented".[54] Mr Frank Haskew said: "Over the past ten years the incidence of tax avoidance has reduced."[55]

50.  Mr Haskew emphasised that tax accountants operated ethically and responsibly according to a pan-professional Code of Conduct, now being updated.[56] Section 7 of the Code addresses tax avoidance, but is largely limited to a consideration of the difference between avoidance and evasion, and to identifying what is meant by "artificial arrangements". It does not contain any suggestion that ethical behaviour by a tax adviser would require foregoing advising on aggressive or abusive tax avoidance.

51.  The ICAEW offers advice to its members that appears to go well beyond the Code of Conduct. It states, for example, that "Although tax avoidance may be legal, whether something is within the law isn't the only thing that matters. You are under a duty to take into consideration the public interest and at all times to comply with ICAEW's Code of Ethics. This includes the requirements to uphold the reputation of the profession and do nothing to bring it into disrepute. You should act with considerable care when you advise clients in this area, particularly where tax avoidance schemes are involved. Beware of the potential reputational damage to the profession and the likelihood of problems developing further down the line. The boundary between legal tax avoidance and illegal tax evasion is not always clear and there's a danger that what starts out as legal tax avoidance may slip into illegal tax evasion."[57]

52.  Mr Haskew said however that aggressive avoidance schemes were often promoted by a small number of boutique firms not regulated by any professional body.[58] In the absence of any formal professional or registration of tax advisers "Even a turf accountant can provide tax advice" in the words of Mr Chas Roy-Chowdhury.[59]


53.  Corporate taxpayers' and their advisers' broadly favourable view of the corporation tax regime in the UK looks self-serving. Critics took a very different view. They see a framework open to manipulation by multinationals to reduce their tax payments. Mr Richard Murphy of Tax Research LLP said: "The global taxation system is not working … .if the state cannot charge tax on these companies, it has lost its power …we are seeing … a crisis of the taxation system."[60] Mr Richard Brooks said: "The long-term solution has to be … far more openness … and the release of the tax authorities and the Treasury from the embrace of the large corporations, which are effectively driving the law."[61]


54.  While we were hearing the evidence of witnesses from business and its professional advisers that corporation tax in the UK is basically sound and fair, with broad compliance raising substantial revenue, and fewer tax avoidance schemes, there continued unabated a stream of allegations in the media about large, prosperous companies with substantial business in the UK which nevertheless paid little or no corporation tax, primarily by exploiting the international tax system. As well as the usual foreign-based multinational suspects, such as Google, Amazon and Starbucks, they include British-based firms like Thames Water, Vodafone (which Mr Richard Brooks also cited to us)[62] and Cadbury (pre-takeover by Kraft). We do not know the full facts of these cases nor how typical they may be, because all firms' dealings with HMRC (and with their tax advisers) are confidential. The reasons for low tax liabilities in these and other cases are therefore difficult to determine. But whatever the merits of individual cases, in the absence of convincing rebuttal public outrage and distrust of the tax system continues to be fuelled by stories of large-scale corporate tax avoidance.

55.  Business tax payers and their advisers share an interest in fostering the view that a complex but none-too-onerous corporation tax regime is for the best. But while companies are required to comply with tax laws in the UK and elsewhere, ways are open, especially for multinationals, to shift profits between countries so as reduce their overall tax liabilities, and to make UK corporation tax to a considerable extent voluntary for multinationals. This severely undermines public trust in the tax system, is clearly inequitable and threatens a serious loss of much-needed tax revenue.

6   Moore Stephens LLP. Back

7   Q11. Back

8   J.A. Kay and M.A. King, The British Tax System, Fifth Edition, 1990, p 174. Back

9   See K Bain, Corporation tax, p2 at http://homepages.uel.ac.uk/K.Bain/company.pdf.  Back

10   HM Revenue & Customs, Corporation Tax Statistics, October 2012, p16. Back

11   HC Deb, 20 March 2013, cols 939-40. Back

12   IbidBack

13   HMRC defines a controlled foreign company as follows: "A foreign company is a CFC if it is: resident outside the UK; controlled by UK persons; and subject to a lower level of tax". See http://www.hmrc.gov.uk/international/cfc.htm . Back

14   KPMG, Finance Company Regime, August 2012. Back

15   See Katarzyna Bilicka and Michael Devereux, CBT Corporate Tax Ranking 2012, Oxford University Centre for Business Taxation Report, 2012. Back

16   HM Treasury & HMRC, Corporate Tax Reform: Delivering a More Competitive System, November 2010, p 14. Back

17   Q35. Back

18   Michael Devereux and Simon Loretz, Corporation Tax in the United Kingdom, Oxford University Centre for Business Taxation Report, 2011. Back

19   Q58. Back

20   PwC, Total Tax Contribution: Surveying The Hundred Group, January 2013. Back

21   OECD, http://www.oecd.org/tax/treaties/oecdmtcavailableproducts.htm Back

22   HMRC, http://www.hmrc.gov.uk/taxtreaties/dta.htm Back

23   Transfer pricing. The existing rules for determining prices at which within-group transactions are priced depend on assessments of the functions and risks of each party within the group. Holding more risk in one company, for example, is supposed to signify that a higher rate of return would be expected in that company. Yet shifting risk, as well as ownership of intangible assets, may be relatively easy, which means that the group can make its profits appear in low-taxed jurisdictions. Back

24   OECD, http://www.oecd.org/ctp/transfer-pricing/transfer-pricing-guidelines.htm Back

25   Sol Picciotto, supplementary note. Back

26   Lars Feld and Jost Heckemeyer, "FDI and taxation: a meta-study", Journal of Economic Surveys, 25.2, 233-272, April 2011. Back

27   Heckemeyer and Overesch.  Back

28   Jonathan Ford, Sally Gainsbury and Vanessa Houlder, "Cadbury: The great tax fudge", Financial Times, June 21, 2013. Back

29   David Batty, John Lewis chief calls on government to tax multinational companies properly, The Guardian, 15 November 2012. Back

30   Prime Minister, Speech to World Economic Forum, Davos, 24 January 2013. Back

31   G8 2013 Lough Erne, Leaders' Communique, 18 June 2013.  Back

32   Q15. Back

33   Professor Judith Freedman and Dr John Vella Back

34   Economic Affairs Committee, The Finance Bill 2011, (4th Report, Session 2010-12, HL Paper 158), p. 33.  Back

35   Q65, Q97. Back

36   Judith Freedman and John Vella. Back

37   HMRC's GAAR Guidance, page 6. Back

38   Q37. Back

39   Q37. Back

40   Mark Boyle, Cross-border tax arbitrage-policy choices and political motivations, British Tax Review, 2005, 5, 527-543. Back

41   http://www.ion.icaew.com/TaxFaculty/16978  Back

42   House of Lords Select Committee on Economic Affairs, First Report of Session 2012-13, The Draft Finance Bill 2013, 13 March 2013. Back

43   HMRC Guidance Note, 15 April 2013. Back

44   Q18. Back

45   Q29. Back

46   Q25. Back

47   Q18. Back

48   Q32. Back

49   Q29. Back

50   Q41. Back

51   Q25. Back

52   Q80. Back

53   Q50. Back

54   Q42. Back

55   Q39. Back

56   Q45. The Code is at http://www.icaew.com/en/members/regulations-standards-and-guidance/tax/professional-conduct-in-relation-to-taxation?utm=widget#ICAEW4 Back

57   ICAEW Help Sheet, Aggressive tax avoidance schemes-what you need to bear in mind, July 2012. Back

58   Q34. Back

59   Q34. Back

60   Q66 Back

61   Q66 Back

62   Q74. Back

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