The government must stop appeasing the financial industry and start scrutinising corporations and their shareholdersThe collapse of British Steel Limited, with the potential loss of at least 5,000 jobs, has once again exposed deep fault lines in the go…Read more
The near-collapse of BHS, Carillion and the bailed-out banks wasn’t spotted. The CMA’s remedy shows it is not fit for purposeWhat do BHS, Carillion, Conviviality, Quindell, Aero Inventory, the Co-op Bank, and London and Capital Finance have in common? …Read more
As MPs hear evidence on the collapse of Carillion, it’s time for auditors to be held to account
Since the collapse of the construction giant Carillion last month, the focus has been on its directors and senior employees, particularly those whose pay packets seemed proportional to the scale of the company’s failure. But today the focus will turn to its auditors at KPMG, as they give evidence to the Commons business select committee. And about time too. In the words of Rachel Reeves, its chair: “Carillion’s annual reports were worthless as a guide to the true financial health of the company.” Those reports were signed off by KPMG.
Accountancy is an industry in serious need of reform. The collapse of huge companies such as Carillion and BHS, the 2008 banking crash and rampant tax avoidance are all symptoms of a dysfunctional relationship between accountants and the state. With 350,000 professionally qualified accountants, the UK has the highest number per capita in the world: in fact, 12% of the global total, even though our share of the global economy is just 3.5%. Another 165,000 students are registered with UK professional bodies. What do we get for that? Certainly not freedom from frauds and fiddles, the production of meaningful company accounts, safe pension schemes, the absence of tax dodging or an abundance of good corporate governance.Read more
The EU’s targeting of low-income countries smacks of imperialism. There is so much the international community can do to tackle tax avoidance
At the heart of the intensifying debate about fairness and inequality is tax. Who can think without shuddering of the opportunity costs incurred by needy economies robbed of the tax to which they are entitled? In that context, and against the backdrop of exposure exercises such as the Paradise Papers, there was understandable enthusiasm for the European Union’s latest list of uncooperative tax havens. It arrived this week, amid much ballyhoo and talk of toughness. What a disappointment.Read more
The Paradise Papers have revealed the true extent of tax havens’ shady practices: only a radical reform of the law and HMRC will make wealthy elites accountable
The Paradise Papers once again show that secrecy, trusts, shell companies and a thriving tax-avoidance industry are undermining much-needed tax revenues in the UK and elsewhere. The revelations provide a glimpse of the moral bankruptcy of British governments which have done little to tackle tax avoidance at home or through crown dependencies and overseas territories such as Bermuda or the Cayman Islands.Read more
Major financial institutions are involved in routine tax avoidance. A report by the City of London Corporation and PwC raises more questions than it answers
It may be Christmas, and everyone is in the mood for comforting stories, but a new report ostensibly lauding the tax contribution of UK banks and insurance companies shouldn’t provide any. Issued by the City of London Corporation and PricewaterhouseCoopers (PwC) it claims that, against all the odds, the financial sector is making a heroic contribution to the UK public purse. Gosh, only if that were true.
From a sample of 50 financial services companies, including banks, building societies and insurance companies, it extrapolates that for the year to 31 March 2016 the financial sector made a contribution of £71.4bn to the public purse, or about 11.5% of the total UK tax receipts. Newspapers sympathetic to the finance industry have latched on to the headline figures, but the fine print of the report tells another story.Read more
The tax collection agency is no longer able to serve the public and enforce the law. But Labour can get it back on track
Her Majesty’s Revenue and Customs is no longer fit for purpose. A lack of resources and its closeness to big business mean it is unable to maximise tax revenues, provide a good service to taxpayers or adequately enforce tax laws – its fundamental requirements. Deep reforms are needed to make it fit for the 21st century.
A lack of resources has thwarted HMRC. In 2005 it had a budget of £4.4bn compared with £3.2bn in 2015-16. In 2004, it had a staff of 100,000, which declined to 60,000 by March this year, and there are plans to reduce staff to below 50,000, and possibly as low as 41,000, by the early 2020s. Local tax offices are being replaced by call centres, and IT systems have failed to deliver. Over 25% of calls from taxpayers go either unanswered or get a busy tone. Yet every £1 cut from its telephone services results in an estimated £4 in additional costs to taxpayers. This has fuelled dissatisfaction with the quality of service provided by HMRC.Read more
Big corporations are seen as the private fiefdoms of investors. We need to protect workers and taxpayers
UK company law has actively aided the demise of BHS. The retailer’s £1.3bn debt and the consequences for employee pensions are rightly the immediate focus of attention. But the downfall of BHS also tells us another story – about the failure of the UK’s shareholder-dominated corporate governance model. It reminds us once again that the interests of employees, suppliers, taxpayers and local communities are being sacrificed on the altar of shareholders.
A key reason for BHS’s problems is obvious – lack of cash, but this is largely self-inflicted. The seeds of BHS’s demise were sown between the years 2000 and 2015, a period that coincided with control and ownership of BHS by Philip Green. In 2010 Green was appointed an adviser to the government on bureaucratic waste, with a promise to save £6bn annually.Read more
Bankers in the UK have faced no prosecutions – despite their serial abuses, and the catastrophic consequences of their actions
So, HSBC is retaining its headquarters in London. Was there ever any danger that it would quit a cosy jurisdiction with feather-duster regulation and prosecutions as rare as hen’s teeth?
Banks have little to fear here, as UK regulators and prosecutors rarely take action.Read more