As my TUC colleague Nicola Smith pointed out on the Touchstone blog yesterday:
[The AutumnStatement] provides costings for the new employment rights for shares scheme— the costs of which are estimated by the Exchequer to be £80 million by 2017-18. But the OBR also note that:
There are a number of uncertainties about the costing….the cost is expected to rise towards £1 billion beyond the end of the forecast period….it is hard to predict how quickly the scope for tax planning will be exploited; again this could be quantitatively significant as a quarter of the cost already arises from tax planning.
Now when even the OBR is setting the alarm bells ringing about the potential cost of abuse on this issue we should all be worried. As Nicola continued:
If a quarter of the budgeted costs arise from tax planning that means this new measure has already introduced a loophole that will cost the Exchequer £20 million a year by 2017/18. But given the OBR suggest that the costs of the policy will rise to £1 billion shortly after this period (presumably in 2018/19) their analysis suggests that by this point avoidance will be costing the taxpayer £250 million a year — a quarter of a billion. This puts the £10 million that Starbucks have apparently today agreed to pay into sharp relief.
These costs are not a surprise, given the the Government have already set out how the tax avoidance opportunities could work. But considering that fewer than fiverespondents to the Government consultation on this issue are supportive of it, and that it's set to cost 40% more than the Chancellor's much touted tax repatriation from Switzerland will raise, should it not be dropped?
Definitely.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
have to say this is one of the most bizzare reliefs/exemptions I have ever seen. What is the point of it, the average worker will not want to be giving up employment rights for this surely?
Many of the average workers will be told by the Job Centre or their Work Programme Provider that if they don’t accept any and all work offered on this basis they’ll starve and freeze at least for the next three years. That’s the new sanctions regime for you. This is what goes on under the guise of ‘helping’ ‘malingerers’ and ‘shirkers’ back to work.
I agree with Anthony and, working for small businesspeople, I can tell you that the last thing they want is to be giving up ownership of their babies (sorry, businesses!).
I can count the number of EMI schemes I have set up on the fingers of one hand.
Anne Redston’s comment on the BBC website that “If the government is truly serious about plugging the leak in the bath, it has to stop creating new weaknesses in the system that are only too easy to exploit” is particularly apt.
Why do chancellors of all stripes engage in these flashy but ultimately pointless gestures? Where is tax simplification when you need it?!
Agree wholeheartedly
Interesting to see that starbucks have kindly volunteered to pay an extra 10m in corporation tax.
will this be enough call off the attack dogs?
Has anyone made an estimate of the amount of Corporation tax avoided, based upon Costa Tax paid and how much this 10 million is as a percentage?
Mind you the general press seems to take swiss tax deal and the government version of GAAP as positive moves!