Recently in Tax Law Category

A former employee of Google, the internet search giant, has sparked controversy after revealing the details of a complex accounting scheme that allows the multi-billion-dollar company to pay tiny amounts of tax in the UK, reports the BBC.

Barney Jones worked at Google for four years from 2002 to 2006. Last week he revealed that he has been collaborating with UK tax authorities to explain to them how Google gets around paying UK tax.

According to Mr Jones, Google UK used its European HQ in Dublin to conclude many of the deals struck with UK customers, allowing it to invoice from outside the UK to draw revenue across to Ireland, where the rate of corporation tax is much lower.

The UK has angered its European counterparts by instigating a legal challenge against a new tax on financial transactions, despite the fact that UK transa ctions are exempt, reports The Daily Telegraph.

The UK Government has launched legal action against the European Commission at the European Court of Justice in protest of a proposed Financial Transaction Tax that has been agreed by 11 EU nations, including Germany, France, Italy and Spain.

The UK has negotiated a position outside of the Financial Transaction Tax. However, the rules will mean that any trade in financial instruments denominated in Euros, or any trade involving a bank from within the 11 signatory nations, will be subject to the tax, meaning that some transactions in London and elsewhere around the world will be affected.

The Prime Minister used a key speech in India to tell journalists that the Government had no intention to introduce new laws to curb tax avoidance.

Instead, Cameron said it was for businesses to answer a 'moral question' about paying the tax they owe.

The Prime Minister David Cameron has used a key address during his trade mission to India to tell journalists that the UK will not introduce laws to ban tax avoidance.

The UK's highest court has ruled that the tax advice given by accountants is not protected by privilege and therefore must be revealed if requested.

The ruling by the Supreme Court came in a case concerning insurance company Prudential and Her Majesty's Revenue and Customs (HMRC).

Prudential's lawyers had argued that the legal details of a tax avoidance scheme they operated were protected by legal privilege and that they were therefore under no duty to disclose them.

The ongoing row into the amounts of tax paid by leading corporations continues, as it has emerged that Microsoft pays no tax on almost £1.7bn in online revenues, reports The Daily Telegraph.

The revenues are thought to be generated in the UK on products including the new Windows 8 operating system and other software downloads.

However, Microsoft channel the online payments through Ireland and Luxembourg, where corporation tax rates are lower.

Tax avoidance is the news of the moment and online auction site eBay has become the latest in a string of major corporations exposed for paying too little tax.

Last week coffee chain Starbucks was in the news for reportedly paying just £8.6m in tax on revenues of some £3bn since 1998.

Prior to this story, Google, Amazon, Vodafone and others have been in the news charged with paying too little tax at a time when the exchequer is struggling to raise funds.

The fastest man that has ever lived, Usain Bolt, may have lit up the London Olympics with commanding gold-medal-winning performances in the 100m, 200m and men's 4x100m relay, but UK athletics audiences will not be seeing him running here again anytime soon, reports The Telegraph.

The Jamaican sprinter has ruled out a return to the UK to run competitively again until the UK Government reviews its taxation laws.

At present UK tax law means that performers such as Bolt are taxed on global earnings including sponsorship deals and endorsements as well as any appearance fee at the highest rate of 50% every time he competes in Britain.

American internet giant Google is facing calls to pay appropriate tax after it was revealed that the company used legal tax-avoidance measures to pay just £6m in tax last year, on a turnover of some £395m.

Now the news of Google's tax avoidance has sparked a petition which attracted some 40,000 signatories in just a few days.

Google uses a variety of complex measures to avoid paying tax to the UK Exchequer. All the mechanisms and techniques are entirely legal and are consistent with UK tax law.

HM Revenue and Customs has announced that it will investigate hundreds of recruitment firms suspected of running tax avoidance schemes, reports the Daily Telegraph.

The Revenue has promised to crack down on recruitment agencies that are thought to be using expenses schemes for temporary staff.

The schemes are thought to cost the UK taxpayer close to £400m each year.

The tax-avoidance campaign group UK Uncut has won permission from the High Court to pursue a judicial review of a so-called 'sweetheart' deal between Her Majesty's Revenue and Customs and the world's largest investment bank, Goldman Sachs.

Sweetheart deals are struck between organisations and involve offering favourable terms in the interests of longer-term cooperation.

However, the current economic climate, with unemployment high, cuts on public spending and rising taxes has prompted some to look more closely at the deals struck between the Inland Revenue and big businesses.

The Government has announced a consultation into new laws aimed at preventing tax avoidance; however, they will be less comprehensive than those enacted by other countries.

The consultation follows an independent review led by Graham Aaronson QC.

Tax avoidance measures have become a focus for governments who have faced criticism that they have enacted harsh austerity measures without tackling the issue of legal non-payment of tax by companies.

Barclays Bank was yesterday told by HM Treasury that it must pay some £500m in tax which it has attempted to avoid paying by using two controversial tax-dodging schemes.

The two schemes involve different mechanisms to avoid tax. In the first, the bank buys back its own debt and avoids paying tax on the balance. In the second, the bank generates tax credits against Authorised Investment Funds when tax was not paid in the first place.

Barclays claim that they believe that both the schemes are consistent with similar schemes run by other high street banks; however, Barclays have been singled out by the Government and 'named and shamed'.

Large retail companies that have operations based in the Channel Islands will no longer benefit from relief from VAT on products costing less than £15, meaning they will not be able to sell cheaply on the mainland in future.

Internet retailers such as Amazon, Play.com, Moonpig , HMV and Tesco have distribution warehouses in the Channel Islands. This enables them to take advantage of the tax relief and sell their products far more cheaply than smaller competitors.

However, since the number of companies distributing goods from the Channel Islands increased "dramatically", the relief now costs the Government around £140 million a year.

The Supreme Court yesterday ruled that international businessman Robert Gaines-Cooper will have to repay taxes dating back to 1976, when he tried to escape UK taxes by relocating to the Seychelles.

HM Revenue & Customs argued that Mr Gaines-Cooper did not lose his UK residency because he had not left "permanently or indefinitely" and had maintained social and domestic ties with the country such as a house in Henley-on-Thames. He had also returned regularly between 1993 and 2003 for events such as Royal Ascot and for shooting parties.

However, Mr Gaines-Cooper countered that he had stayed away from the UK for the number of days specified in the HMRC's residence guidance booklet IR20.

A Yorkshire ex-policeman has admitted his involvement in a £300 million VAT fraud, believed to be the biggest case of its kind in UK history.

Nigel Cranswick, formerly of the South Yorkshire Police, had set up a company called Ideas 2 Go (I2G) of which he was the director. It purported to trade in mobile phones and software from a small office in a Sheffield business park.

Mr Cranswick claimed that his company traded £2 billion worth of goods in the eight months it was in business. However, the trades had all been fabricated in order to generate paperwork that recorded the fake deals and the VAT they incurred.