Barclays paid a billion quid in tax – but not to us


3:04 pm - March 1st 2011

by John B    


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It’s become a well-reported trope over the course of a weekend that Barclays only paid GBP113m in UK corporation tax in 2009.

Various people of various ideologies have reacted to this disclosure, some by blockading Barclays branches, some by making fairly irrelevant points about tax losses.

But the truth, found in Barclay’s 2009 annual report – is a bit more complicated.

Before I start: I’m not a qualified tax accountant, but I’ve got a qualification in interpreting financial statements. I’ve checked all the assertions that I’ve made about tax treatments of different items with real tax accountants, who’ve confirmed that they believe my interpretation is correct, but I’m open to corrections from anyone who genuinely knows more about this than me and has an alternative explanation.

So where’s the beef?

The Notes To The Accounts line on tax (note 10, page 216) shows that Barclays incurred tax liabilities of GBP1,074m in 2009. That doesn’t mean the company paid GBP1,074m in tax – it means that, when looking at all the business that it did in 2009, it expects to end up paying GBP1,074m in tax for it when all the sums are done and all the cheques are written.

The table shows that the “fair UK” tax charge for Barclays, multiplying profit of £4,585m by 28%, would’ve been £1,284m. Various other items – tax miscalculated for other years, gains that aren’t liable for tax, and expenses that aren’t tax-deductible but which are offset against accounting profit – take this figure to £1,074m.

The offsets net off against each other – the difference between the first figure and the second figure comes down to “adjustment for prior years”, which means in normal-person-speak that Barclays overestimated how much tax it owed in the past. Aside from that figure, the numbers balance out.

But that isn’t the real tax paid, of course – it’s the money the company thinks it’ll have to pay. Hence why blogland has been rife with conjecture about how this £1,074m figure is so different from the £113m figure listed by the Guardian. Unfortunately, most of this conjecture is about as worthwhile as you’d expect conjecture to be.

We got the flow

We do, however, have the real data: page 208 features Barclays’ cash flow statement.

This is the basis of any company’s accounts – it’s about the actual cash-money that Barclays has actually paid to people or been paid by people over the year.

The cash flow statement says, clearly, that Barclays paid £1177m in tax in 2009. That’s real cheques and bank payments sent to real tax offices worldwide. And, before you ask – it doesn’t include PAYE and national insurance, or local equivalents in foreign countries.

The tax figure here is solely on tax paid that’s corporation tax attributable to the bank, not tax that’s collected by the bank on other people’s behalf.

As far as I understand it, and as far as the people I’ve spoken to understand it, there’s only one explanation for this that fits with the numbers in the annual report and the tax paid to HMRC as disclosed by the Guardian: Barclays paid £113m in tax to HMRC, and £1,064m in tax to other countries’ tax offices.

There is no other explanation for the divergence in the two figures (Barclays hasn’t denied the Guardian’s number).

Paid, just not to the UK

In other words, Barclays made a profit of £4.6bn from its total operations everywhere last year, and ended up paying cash-money tax of £1.2bn on them. That’s a small rounding error away from the Tax Research UK figure of what it ought to have paid if it were being fully ethical and awesome. It’s just that most of the money didn’t go to the UK taxman.

And since we’re liberals who believe in a fair go for everyone, and since Barclays makes most of its money in countries outside the UK, then so what? Their billion quid didn’t go to our taxman, but it paid for schools in Botswana and Ghana; it paid for healthcare in the US; it paid for essential services in the countries that Barclays operates in.

Which is a good thing: there’s no particular reason why, just because Barclays is headquartered in London, that the relatively (by world standards) well-off people of the UK should get the benefits of the tax on all the money that it makes.

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About the author
John Band is a journalist, editor and market analyst, depending on who's asking and how much they're paying. He's also been a content director at a publishing company and a strategy consultant. He is a regular contributor to Liberal Conspiracy and also blogs at Banditry.
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Reader comments


1. Luis Enrique

John,

is there a typo in “The cash flow statement says, clearly, that Barclays paid £177m in tax in 2009″? Do you mean £1177m?

2. Luis Enrique

oh – great post.

I am amazed – not in a good way – that a supposedly high quality newspaper would report this as Barclays “paid just £113m in UK corporation tax in 2009 … when it rang up a record £11.6bn of profits.” So now 300,000 Guardian readers think it paid about 1% tax when it paid close to 28%. That’s about as honest as Daily Mail reporting on immigrants. It’s amazing what you can get away with when you are misleading in a way that aligns with your readers prejudices.

3. astateofdenmark

Post!

Sorry, did this get posted here?

Excellent post. Looking forward to any attempts to rebut this.

Hang on a moment though…..and this is Tax Research UK commenting

a) we can ask why capital gains are tax free – and not just accept they are

b) We can ask why it seems the allocation of profit to the UK was so low

c) We can ask why the offset of losses here is so generous

d) And the offset of interest charges.

And much more.

And yes – we can ask if the tax was really paid – because the accounts don’t always add up in this respect – with their usually being significant downward reductions in estimates of liability in later years

Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.

Is that really happening? We don’t know. Don’t dismiss the claim that Barclays may be paying the wrong tax too easily – there’s a strong likelihood it is, and we’re losing as a result

Only data can solve this

Check my blog for country-by-country reporting stuff today

I always understood that corporation tax liability was deferred- profits made this year will be taxed in the next. So there is no real relationship between tax paid and profits made in the same year.

Also, if it is true that the UK exchequer gets a relatively small piece of the tax cake, why does the UK government bear the whole cost of underwriting the bank in case it fails? That makes even more of an argument to impose a surcharge in return for this benefit.

By the way, I understand the Guardian seems to organise its own tax affairs pretty………. creatively. Glass houses etc.

7. Luis Enrique

did readers with their computer speakers turn on hear a fanfare when comment 5 appeared?

Richard,

You can ask all those things you say – but unless you actually have an answer, I assume the original post, which not only marries all the figures up, but does it in a logical and coherent way, explains the situation.

In the meantime, you can campaign to have taxes paid differently, but Barclays does not appear to have done anything at all wrong (or even that dubious) from this – yes, it may have used offsets and tax deductables to reduce tax paid, but you do realise these are legislated for by government for particular reasons (generally to encourage investment rather than profit taking)?

Excellent post and well researched. I particularly welcome the internationalist flavour in the latter stages. How true that we should applaud the fact that a Brirish company working abroad helped finance the building of hospitals, schools and social care faciltities. Since when are we, as socialists, so insular that we restrict our belief of welfare to only our own country.

No, the facts are as stated above and we should ensure the information is distributed widely along with the explanation that these profits helped millions of people.

Just one eensy weensy point ….. Barclays made a total proft of £4.6bn from its total operations everywhere last year, and ended up paying cash-money tax of £1.2bn. Just think what £3.4bn profit could have done to help those on welfare benefits in this country, or those who are sick, if the banks were a fully nationalised state owned enterprise. Food for thought perhaps?

John B – are you the guy with tthat name who on another thread wished that that fire extinguisher had hit a policeman?

And when you say piad to “us”, don’t you live in Australia?

Tacitus,

I think history is pretty clear that a state-owned bank would not have made £4.6 billion profit in a comparable place – there may be arguments for nationalisation, but profit maximisation is not one of them.

And also, if we nationalised Barclays, wouldn’t Barclays subsidaries in other countries be nationalised there rather than belong to us? As a socialist (or in may case a free marketeer with liberatarian tendencies) I assume you agree that it is wrong for one country to appropriate the wealth of another?

PS – very sensible post though!!

The OP may have got a pointer from today’s business letters page in the Guardian, nevertheless an interesting analysis. Be worth waiting for the UKuncut view?

http://www.guardian.co.uk/business/2011/mar/01/how-barclays-pays-its-tax

Aye. John, this is an excellent post, and unless someone can point out a factual innaccuracy, I’m going to take it as accurate and a good analysis. Thank you.

Richard, this is very much your area, do company’s pay Capital Gains tax when they sell assets at a profit? Regardless, the current law is that profits made from a sale of assets aren’t subject to corporation tax, that money should go directly to shareholders or be reinvested I’d have though.

Whether the tax law in that area should be changed is not relevent to whether Barlcays are compliant with the current law, John’s analysis shows that they are and that they’re due to pay a lot of tax overseas where the bulk of their profits are made. Works for me.

I don’t think it’s entirely right to portray my contribution to the debate as “making fairly irrelevant points about tax losses.” Losses are but one part of my argument. The dig at Umunna aside (sorry, couldn’t resist), the other points are ones that you either do make or should have made. My article was concerned with the specific issue of whether it’s sensible to compare the tax paid to HMRC in respect of corporation tax in any particular year to the global profits for that year (it’s not) rather than your viewpoint, which is to look at where global consolidated profits might ultimately be taxed.

Re Richard’s point about whether we should ‘accept that capital gains are tax free” – that’s irrelevant. All that matters is whether, at the time Barclays disposed of its subsidiary, qualifying gains _were_ tax free. There are some cast iron reasons why it’s a dreadful idea to change tax law retrospectively, and Richard simply hasn’t made the case why they should be disapplied here.

Thanks for this, good to clear up the confusion

17. Richard J

Technical point: The Substantial Shareholdings Exemption applies only to trading subsidiaries of a trading group, which isn’t as straight-forward a definition as you might think. Whether Barclays as a whole, and in the specific details of the disposals, would be eligible for it is an interesting (read: expensive to resolve) question. As a real-life example, one household name multinational was unable to claim it because it had a very large (also trading) subsidiary it didn’t fully own.

As long as the British govt signs up to the tyrannical free trade doctrine of the IMF and the World Trade Association this will continue. As long as corporations can set up an office with a fax machine and an internet connection in some tiny piece of sand, and claim that is there head office then this will continue.

It is one of the reasons the Right wing like to push the free market doctrine at the same time that they also push the patriotic bullshit. National sovereignty is very good for the global elites because they can play one state off against the other. This insures a continuing race to the bottom on taxes and workers rights. As yet the sheeple have not worked this out and cling to the belief that it is all the fault of bodies like the EU. When what is actually needed is tax to trade fee. If Barclays or any other tin pot corporation wants to do bu8siness here it pays the entry fee. This of course would be illegal according to WTO rules which is precisely why the UK govt , with the backing of the corporate elites signed up to them.

Interesting perspective–one of the biggest left/right issues of the nineteenth century was the right wanting tariff barriers and restrictions on trade, with the left wanting free trade because it’d been shown, repeatedly, by some of the best brains in the world, that free trade benefits the poorest most.

Now some people want to define “free trade” as a right wing idea, and want to set rules up to stop people from employing people in the UK and take jobs and wealth elsewhere. I’m sure there’s a logic in that position, but I’m not sure it’s earth logic.

It’s also rather familiar to me. Oh, wait, I think the BNP manifesto had something similar in it. Hmm…

20. Richard W

Exactly correct, MatGB. Protectionism and tariffs help the vested interests of the politically well connected and elites and almost inevitably lead to war. Free trade is overwhelmingly good for the majority including the poorest. The Liberals fought the vested interests of the Tory elite throughout the 19th century for free trade. It should go without saying that the Tory landowners were not fighting on behalf of the interests of the poorest. Economic nationalism makes no sense on any level.

@cjcjc There is a John B who lives in Australia, I’ve known him for the past 15 – 20 years. There is also another John B who makes some similar some dissimilar comments and I think lives in France.

@ JB Rocking post, how in the seven hells did you manage to get it on here?

I’m sorry if this turns into a double post but the previous doesn’t seem to have appeared:

@ cjcjc: There is a John B in Australia that I have known for the last 15 – 20 years and I assume is this one. There is also another John B who I think lives in France? and makes some sane and some bonkers comments, (the variations being at random so far as I can tell).

@ JB Rocking post, how in the seven hells did you get it on here?

@22

http://www.johnband.org/blog/ shows him as Sydney, Australia

@5 Given that you want country by country reporting I presume you will be retracting your claims about Vodafone?

Country by country does not imply any tax system

It supports unitary taxation

That’s as far as it goes

But let’s also be clear – it does support justice

And that’s why it is so important – for the ordinary people of the world who lose out to people like – well Vodafone – who did pay well over £1 billion – remember

@5 & @25

a) so you want people selling houses or indeed anything liable for cap gains?
b) perhaps because very little was made here, and the majority was made abroad?
c) because the taxation laws are written that way. Do you have comparisons with other countries from their tax bodies own sites?
d) see C

you say Richard:
“Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.”
So why didnt The Guardian pay UK tax on a UK deal? Why do you say their use of Caymen based subsidiary for the deal is fine, then argue for something different for others?

Based on John’s article & your rules, Barclays paid the right amount of tax (after deductions of loses) in the UK for UK generated income. So where is the issue?

Even in you’re own blog you admit the banks wont be liable for tax for some time
http://www.taxresearch.org.uk/Blog/2011/02/14/why-the-banks-wont-be-paying-tax-this-year/

And can you please explain your comments in @25 in plain English? Are you saying Vodafone did or didnt do wrong for only being taxed on UK operations, and not earnings from Germany which were taxed in Germany.

UKuncut, a movement that dumb people everywhere can align with, aka the Morlocks, as someone who works a lot with numbers and data analysis I find it quite interesting to see how a large number of people are seemingly totally incapable of deriving correct information from data, possibly a fork in intellectual development?

Luis (1) – yes, thanks, fixed.

Richard – yes, we can ask these things. My conjecture would be that UK tax paid in cash is low for 2010 relative to overseas tax because the UK business made big losses in 2009 that were offset by profits made abroad, but I’d be mildly interested to see an actual breakdown or explanation from Barclays. But those aren’t the questions you were asking before – you were taking the largest possible figure for global profit, on a definition of ‘profit’ accepted by almost nobody, comparing it to the cash figure for UK tax paid, and using it to derive extremely misleading statistics.

cjcjc – yes, I live in Australia; however, I’m a British citizen who’s spent the vast majority of my life living in the UK (and the vast majority of my working life working and paying taxes in the UK). So “us” is legitimate.

Pagar – The short answer is, we don’t. The UK government guarantees Barclays’ liabilities to retail depositors who have accounts with Barclays UK. It doesn’t guarantee anything else – if Barclays went bust and you had a million quid on deposit with Barclays Spain or Ghana then you’d be reliant on the Spanish or Ghanaian deposit compensation schemes.

Max – No, I wrote the piece last week and haven’t updated it since then (just, it got displaced by more time-sensitive things) – I imagine that the Grauniad’s correspondents have separately had the idea of checking the accounts.

YMT – I don’t think your final sentence applies. Being able to derive correct information from data has never been a core human skill, even among intelligent humans, and being able to understand data *and* write it up in a way that laypeople can understand is bloody rare. It’s unfair to judge people for not being able to do so (although continuing to ignore things when they’ve been explained is a different story).

Just read Max’s linked piece. I’m not impressed at Barclays’ FD for muddying the issue by pretending that the bank “pays” PAYE/NI/foreign equivalents (it doesn’t – its employees do. Barclays just collects the money on the taxman’s behalf to cut admin costs). But he does seem to confirm the GBP1bn figure for actual global tax paid, which is pleasing.

@ John B

Excellent article. Factual and without the hyperbole and bias so often found on this blog. Thoroughly commendable.

@ Richard Murphy

Vodafone paid tax in Germany on money made in Germany. There is nothing illegal about paying taxes in the country they were earned.

If you do try and stop this though the only thing you will achieve is forcing a company to set up subsidiaries all over the world simply for tax purposes, or see head offices increasingly move abroad. You wouldn’t see any more tax paid onshore in UK.

The only thing that will see more tax paid in the UK is less red tape, better business conditions and more competative taxes. People won’t pay tax here if they don’t reside here.

Pagar – The short answer is, we don’t. The UK government guarantees Barclays’ liabilities to retail depositors who have accounts with Barclays UK. It doesn’t guarantee anything else – if Barclays went bust and you had a million quid on deposit with Barclays Spain or Ghana then you’d be reliant on the Spanish or Ghanaian deposit compensation schemes.

I understand that but my point was that, had Barclays run out of money in the recent liquidity crisis, the UK government would have stepped in to prevent them from going bust, as they did with others. They now believe that, along with the others, they are “too big to fail” and that gives them a commercial advantage when it comes to risk taking.

That is why we should surcharge their profits. They are part of a UK based oligopoly and cartels make excess profits.

Watchman, I am not suggesting that nationalisation would yield enhanced profits. What i am suggesting is that if it had been state-owned, the country and not a small group of shareholders would have gained.

As regards the subsidiaries in other countries, I see no conflict in the state (ie this country) owning the company and its assets and the country in which the company operates levying appropriate taxes on its profits.In this way both countries gain.

Under the present system Barclays subsidiaries own the company’s assets and drain the resources from the country in which they operate whilst attempting to avoid taxation. If the company had been state-owned I would expect it to operate internationally in an ethically appropriate way that honours the nation in which it resides, pays normal rates of taxation and contributes to the communities it serves.

@ 32 Tacitus

Why stop at banks? Why not nationalize everything? Then the state can enjoy all the benefits of everything!

Moron. Hasn’t history taught you anything?

Quick question – and sorry if this has already been covered and missed it – but how much profit did Barclays made in the UK in the relevant period? Surely thats the key comparator here?

Word John.

Excellent piece.

“I understand that but my point was that, had Barclays run out of money in the recent liquidity crisis, the UK government would have stepped in to prevent them from going bust, as they did with others. They now believe that, along with the others, they are “too big to fail” and that gives them a commercial advantage when it comes to risk taking.

That is why we should surcharge their profits. They are part of a UK based oligopoly and cartels make excess profits.”

That’s what the bank levy is all about. An insurance levy on liabilities of banks which are not already covered by other deposit insurance schemes.

No, really, this is it. Retail deposits are covered up to £50k (I think that’s the number now?). There are various other little schemes as well. And any other amounts of money that the banks owe to other people now pays the bank levy. As an insurance preium to pay for that guarantee.

And looking at the rate which is charged: it’s not that far away from what the FDIC (the US equivalent) charges, so it’s not obvious that this insurance premium is at the wrong rate either.

I enjoy Richard Murphy’s posts, and his comments here are equally joyful. They are written in such short sentences that they bring to mind the speeches of a young Tony Blair.

The face that his full stop key is clearly broken just adds to the effect; it’s almost like reading poetry, except it doesn’t rhyme or, you know, make any sense.

More please!

Tactius, whadda you bet that a state-owned company would discover that the ethically appropriate way to act that honours the nation in which it resides includes lots of nice perks for staff, photo-ops for politicians, plenty of activities in marginal electorates, and hefty taxpayer subsidies for all those contribution to the communities in which they operate?

You are of course free to expect whatever you like about how government would act. The history of the world though is that government employees, be those politicians, high-ranking civil service department heads, or lowly paid employees, are as subject to self-interest as any private sector actor.

That’s what the bank levy is all about. An insurance levy on liabilities of banks which are not already covered by other deposit insurance schemes.

So the banking cartels skim off the surplus profits giving half of it to their overpaid staff in bonuses and the rest to HMG in levies?

Great!!!!!

As a consumer I would much prefer if there were a real market in financial services- this could be achieved by breaking the banks up and lowering the barriers to entry.

39. Bilbao boy

It looks like the PR people from Barclays really ought to be sacked.

This information should have been explained by them not by John B here. As Luis (2) says the level of misinformation to Grauniad readers (the most important people in the world) has been alarming.

If I were a major sharholder in Barclays, I would be looking for PR departmental blood.

40. Bilbao Boy

Richard Murphy has no ability to discuss. When faced with an argument which destroys his argument he goes off at a tangent (see his postings here).

He does not discuss. He does not analyse, he has his axe to grind.

41. Chaise Guevara

Last week’s 10 O’Clock Live, while in general an improvement over previous episodes, nevertheless felt the need to bang on about Barclays’ “1% tax rate” by comparing its international profit with its UK tax paid. If we’re going to object to rampant capitialism, we should at least get the facts straight.

Richard Murphy’s (and Acid Ben’s) question still remains unanswered.

£13bn of Barclays £30bn worth of business was done in the UK.

Yet their corp tax payment to the UK government was less than a tenth of their overall tax contribution.

Are Barclays UK managers that dire that they make smaller profits than their overseas colleagues? I don’t think so. So there’s a gap here.

BilbaoBoy: Yes, I think you’re right – Barclays’ letter published in the Guardian on Tuesday was a) late b) misleading. A press release the Monday after the Guardian article saying “we paid a billion quid in tax on profit of four and a half billion quid, but most of it was paid abroad because that’s where we made the profit” would have been far better than a letter to the Guardian a week later that mostly made irrelevant points about employees’ tax.

Chaise: Yes, definitely. Which is why much of the whole UKUncut thing is so dispiriting. People still think that Vodafone is dodging tax on the money they pay it by having mobile phone contracts in the UK, which isn’t the case. So completely legitimate criticisms of companies like Arcadia, Amazon and Google (where tax that would otherwise be paid on profits made from UK consumers is avoided) get tarred by the same brush.

44. Luis Enrique

BenM,

I wouldn’t place too much weight on your or anybody’s guesses about the true geographic distribution of Barclays profits. Perhaps its managers did very well to make any profit at all in the UK in 2009, who knows. I know plenty of banks that didn’t.

If the accusation is that the Barclays is engaging in something akin to transfer pricing to recognize profits outside the UK, we need to know that the tax rates prevailing in the countries it paid £1,064m in, are so much lower than the UK’s.

anybody know that?

I had a quick look at their 2009 accounts when these reports first surfaced and came to the same conclusion.

It’s not even clear to me whether people are comparing like with like. The reports referred to corporation tax paid IN the year 2009 rather than FOR the year 2009, which are quite different things, timing wise.

@ BenM and others

Barclays had a write down (loss) on their UK loans books which wiped out most of the UK trading profits.

44 / 46

Isn’t that Richard Murphy’s main point?

That country-by-country reporting would help us to answer these questions?

Otherwise we’re scrabbling around second guessing the numbers.

“you say Richard:
“Tax compliance is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.”
So why didnt The Guardian pay UK tax on a UK deal? Why do you say their use of Caymen based subsidiary for the deal is fine, then argue for something different for others?”
I guess Richard does mind the Guardian paying less as a % than Barclays because a) he works for them b) he supports their politics.
If the Telegraph had done the same he would have been against it.

The hypocrisy is amazing.

“5. Richard Murphy

Hang on a moment though…..and this is Tax Research UK commenting

a) we can ask why capital gains are tax free – and not just accept they are”
Because that is the law? Why didn’t you complain about the Guardian not paying tax on capital gains.

49. Luis Enrique

BenM

as far as I know (and that’s not very far) country-by-country reporting is a sensible idea (supported by World Bank and others) that shouldn’t be tainted by the fact that RM supports it.

I have to admit I’ve ignored the trolls who seem to have offered much of this commentary

But let’s be clear:

a) I criticize the Guardian’s use of offshore

b) I ask for a change in the law that let the Guardian enjoy a tax free gain – just as I ask for the change for Barclays

c) I created country-by-country reporting – I don’t just support it

d) I criticise Barclays for not making it clear what they meant when saying what tax they paid – which gave rise to this confusion

e) And although many of you seem to love to criticise – has anyone come up with a better solution than country-by-country reporting for solving the data need in this case?

If not, the argument that I offer no analysis and all the other twaddle written is just that

But it’s been useful to comment here to remind me a) why I don’t invite you onto my site (because you don’t add value) and b) to remind me not to bother commenting here again

51. Luis Enrique

c) I created country-by-country reporting – I don’t just support it

you first had the idea of requiring multinationals to disclose more information on a country-by-country basis?

well …. good for you Richard, your idea has become extremely influential.. Congratulations.

(I still think you spout utter rubbish most of the time, but hey ho)

Richard,

Whilst I agree with you about the Guardian (clearly you aren’t going to support their tax avoidance any more than anyone elses if you want to be taken seriously), perhaps somethings you say are a bit churlish:

But it’s been useful to comment here to remind me a) why I don’t invite you onto my site (because you don’t add value) and b) to remind me not to bother commenting here again

If you do not thing debate and criticism adds value, fair enough, but it seems rather strange that you are not prepared to engage with those who challenge you if you think you are correct. Are you that certain of the correctness of your arguments that you will ignore those pointing out flaws (and if you filter out most of the stuff about the Guardian, those commenting on your views are pointing out flaws) and just carry on with the flaw still there?

The best ideas are tempered by discussion and debate, not simply thought up and promoted by small cabals of like-minded thinkers. And if you have anything worthwhile in your ideas (I can see some advantages to country by country reporting – it makes the marketplace for taxation avoidance more open and easier to use) then why are you scared of tempering them and strengthening them by allowing opposing views.

Yes, people can prove you wrong – see John B’s excellent original post above for example a – but you see, the measure of the man(/woman – we’re in modern times and all that…) is how he or she gets up and responds to that.

# 51 – the first version is here http://visar.csustan.edu/aaba/ProposedAccstd.pdf published January 2003 – both the general and extractive industries demands flow from this

# 52 – there is no debate with the closed minded

[deleted]

# 52 – there is no debate with the closed minded

Hahahaha!

Richard blogs of ‘investor visas':

Apart from blatant discrimination on the grounds of wealth, which is clearly a breach of basic human rights. Article 2 of the UN Universal Declaration of Human Rights says:

Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.

[investor visas are a] deliberate discrimination on the basis of property. This should be, and I hope will be, challenged under human rights legislation.

ukliberty submits comment:

hmm, that seems odd because (1) IIUC the Declaration isn’t justiciable in the UK and (2) there’s nothing in it that seems relevant.

Richard doesn’t allow comment through.

“there is no debate with the closed minded” – seems not!

Richard @ 53,

Incidentally, I do congratulate you on coming up with something like country-by-country reporting and carrying it through. I had been assuming it was one of those background ideas that just existed, but even if I may not agree with the idea (I am actually ambiguous at the moment), it is nice to see that level of dedication and effort rewarded with the idea being taken seriously.

But I am having trouble taking you seriously, because you just posted this:

# 52 – there is no debate with the closed minded

when I suggested that you needed to engage in debate as the best way to strengthen your ideas rather than refuse to engage with others. I’d suggest you look carefully at how that reads…

# 53 My comment does take comments – lots of them

But no one bothers with the neoliberal far right that is populating the space here a) because your tone is usually offensive, indicating inability to debate b) you are promoting ideas wholly unacceptable in the UK and so irrelevant to engage with c) base your arguments on a fantasy of human nature that makes meaningful debate impossible

If i think your assumptions are wrong arguing about their interpretation is waste of time

And I’ve got better things to do

Which is why I’m withdrawing here

@52 hits the nail on the head for me Richard.

So long as you insist on censorship on your blog unless posters ate in 100% agreement with you, people rightly or wrongly will surmise that proves your arguments are flawed.

You say there is no debate with the close minded, but you yourself won’t debate. You can’t have it both ways. As soon as you’re questioned on your stance or figures you either shout troll or run away. Should we just accept everything from you unquestionably?

As for your post @50

a) I criticize the Guardian’s use of offshore

perhaps then you should address this with the guardian for liable and insist they publicly retract the following:
http://www.guardian.co.uk/help/insideguardian/2011/feb/22/blogpost
http://www.guardian.co.uk/money/tax-gap-blog/2009/feb/02/tax-gap-guardian

b) I ask for a change in the law that let the Guardian enjoy a tax free gain – just as I ask for the change for Barclays

But you haven’t answered ny question to you on cap gains. You want everyone to be liable for cap gains on selling property?

c) I created country-by-country reporting – I don’t just support it

What do you support instead? Interested as you mention country by country reporting quite extensively as your ideal.

d) I criticise Barclays for not making it clear what they meant when saying what tax they paid – which gave rise to this confusion

Is this Barclays fault, or their accountants for not itemising?

e) And although many of you seem to love to criticise – has anyone come up with a better solution than country-by-country reporting for solving the data need in this case?

You won’t engage with people to help come up with a solution.

[deleted]

Richard,

I’ll overlook the illogic of neoliberal far-right (you can’t be extremist and near to liberal at the same time) and assume you were just using a convenient label.

However,

But no one bothers with the neoliberal far right that is populating the space here a) because your tone is usually offensive, indicating inability to debate

I try very hard not to be offensive (although I will jump on what I perceive to be logical flaws in arguments quite hard – as I expect people to do to me). Indeed, I tend to extreme politeness (e.g. only using formal terms of address for politicians) to be careful of not being casually offensive. Note also that I am actually admiring of your efforts with country by country reporting (if I am being sarcastic in writing I try to make it obvious – sorry if you misread me). So presumably I am worth debating with?

b) you are promoting ideas wholly unacceptable in the UK and so irrelevant to engage with

Interesting point of view – how do we determine what is wholly unacceptable in the UK without putting it to the electorate? Also, why would a view wholly unacceptable within a country not be worth engaging with. For example, I bet I could find several middle-eastern countries where the idea of women voting would be (publically – but I, like you, can’t tell what people think privately is acceptable) seen as wholly unacceptable. So by the logic of not assuming the UK is a particularly special place, does that mean that those who oppose women voting can disregard me (who supports the idea) as irrelevant to engage with? I fear they may be a logical discrepancy in your offhand dismissal there.

c) base your arguments on a fantasy of human nature that makes meaningful debate impossible

I’d be intrigued to know what this fantasy is. My arguments are generally based on freedom and democracy – they do have a libertarian and free-market bent, but no-one’s perfect… I am assuming your point is that people like me who do not believe that the state is automatically beneficial for people are so different in mindset from you that there is no point in debating. This is a pity – I’d say my political beliefs (and ability to present them) have been vastly improved from debating with people with very different mindsets than me – hopefully they have gained from this as well.

Of course, it may be that the fantasy is one I do not share…

So the conclusion is that rather than simply accept that Barclays paid what would seem like a very small proportion of their tax liability to the UK exchequer because it paid lots to other exchequers (who cares?) there remain serious questions about just why that tax payment in the UK appears to be so low in comparison to the volume of UK activity.

Which rather undermines some of the triumphalism of the posts above.

62. Chaise Guevara

@ 61 BenM

There appear to be some fairly sensible answers to that question: firstly that percentage of business is not the same as percentage of profit, and secondly that if Barclay’s had a tax write-down that could easily see them legitimately paying very little for the fiscal year.

If not, I guess we’re comparing tax rates.

Excellent post. I see Sunny’s put up some link to a bunch of neerdowells having some sort of protest party at a Barclays bank. Are you sure he cleared this article to be published at LibCon? Funny how all the regular UKuncunters like Ellie Mae O’Hagan and David Wearing aren’t trying to puncture your factual analysis here. They know their case is skating on thin ice. Can’t let facts get in the way of anything!

@ Richard Murphy

c) I created country-by-country reporting – I don’t just support it

Hmmm…not so sure about this. When I was being trained my course mentioned it in the context of transfer pricing, and essentially said that it isn’t really possible to enact effectively because of the complicated nature of crossborder businesses these days. Only thing is, my course material was written in the late 80s. it’s not a new idea.

As such, I think that you can say with some jsutification that you’ve been pushing the idea hard, but you certainly didn’t create it. It’s been around for a long time, and disregarded as being unwieldy and unworkable.

That all said, you’re statement above fits with the heightened ego you seem to possess – disregarding other people’s opinions that don’t fit with your own, or preventing them posting on your blog.

Whilst I rarely agree with Duncan Weldon, at least he is willing to argue his case and take on board other people’s views, and is open to all criticism. Sunny, lets anyone post here, unmoderated within reason. For all I think of his party political pointscoring BS, he does at least let us all have free debate, and I applaud that.

You deny and prevent debate – one only needs to visit Tim Worstall’s blog for a daily fisking of your posts – and that is part of the point i’m trying to make. Why does one need to visit his blog at all? Shouldn’t the discussion of your posts be underneath them?

Instead all we get to see are the posts blowing smoke up your ass…and it makes me feel that your frail ego can’t take the possibility someone might take your polemics apart and make you look silly.

# 64 You provide all the evidence needed for not engaging

a) LC is diminished by the comments of the trolls contributing here

b) I bet no one reads the comments here – as they do not on CiF because quite candidly sane people recognise those from beyond the fringes when they see or read them

c) You’re lying

d) You reveal a simple passion for abuse – not debate

e) That’s why I ban such commentary – and I think Sunny and CiF should as well. Good editing requires keeping bad comment out so that sensible debate can take place. It has not done so here – as is readily apparent

” I bet no one reads the comments here ”

Haha – clearly you do!

I thought you were “withdrawing”?

You delete all comments with which you disagree.
And of course everyone who disagrees with you is on the “neo-liberal far right” – leaving aside the fact that liberalism and the far right don’t generally have much to do with each other.
You are as illiterate politically as you are economically.

67. Luis Enrique

come on BenM, the people who care about how much Barclays paid to other exchequers are the people in those countries. Just like we care about the taxes Ford and Nissan pay in the UK. This post points out that it’s wildly misleading to say Barclays paid only 1% tax on its profits, which it is. You might as well compare the UK corporate tax Coca Cola paid against its global profits.

The OP shows that the tax Barclays paid on profits is pretty much 28% after appropriate adjustments, so if it is engaging in shenanigans to recognise what were really UK profits in other tax territories to reduce its tax bill, it obviously isn’t achieving much by doing so because it appears to have ended up paying about the same rate as it would in the UK, which might give you some pause for thought if you hadn’t already convinced yourself that Barclays has sneakily avoided UK tax.

Doesn’t Richard’s post at 65 prove everything that 64 said?

This man is incredible. He has the ego and arrogance the size of a planet and the sad thing is he doesn’t realise it.

69. Luis Enrique

somebody who knows more about corporate taxation than me can perhaps answer this … although multinationals evidently aren’t required to publish accounts in which they allocate revenues, costs and taxes on country-by-country basis, would I be right to assume that they have to supply the tax authorities in each country with information not too dissimilar to that in orders to satisfy the relevant revenue authority that they’ve complied with tax requirements?

I am all in favour of more reporting – as many argue (World Bank etc.) these companies already have the information anyway, so publishing it would cost much, and the more ways people have of assessing what companies have been up to, the better. But I can’t immediately see it’s going to change things that dramatically.

70. Howard Brocklehurst

“Good editing requires keeping bad comment out so that sensible debate can take place”

The trouble is Richard that to many people “sensible debate” is a eupheumism for “agreeing with Richard Murphy”.

You are at least honest enough to admit this on the moderation policy page on your blog when you say that comments are only allowed “if they do not question the fundamental tenets of this blog”. A more explicit way of saying you can only post here if you agree with me is hard to fathom.

There are people who are here, quite reasonably and politely, asking or suggesting to you that you might want to let in more dissenting opinions, but your response to them on these pages proves their point, comically so.

Anyone who doesn’t agree with you is labelled “neoliberal” or “far right extremist”.

The funniest thing is when you say you “cannot debate with the closed minded”. The tragedy is that you fail to see the irony in that statement.

67. Luis Enrique

come on BenM, the people who care about how much Barclays paid to other exchequers are the people in those countries.

Of course they do.

But here in the UK we have just suffered a massive financial catastrophe where our over massive, over indulged banking sector had to be bailed out by UK taxpayers.

That is why these questions are so pertinent. A lot of previous contributors simply accept Barclays position as if the calamities of 2008-2009 never happened.

# 70 There is no irony in that statement

It means extremists aren’t welcome

90% or more of comments on my blog make it through moderation at present

I think that’s a reflection of open minded debate

That you don’t indicates your libertarian views – but the fact is – it’s not true anything goes

“Anyone who doesn’t agree with you is labelled “neoliberal” or “far right extremist”.”

Or brilliantly and (oxy)moronically – both!

Richard M: you’re failing to draw a distinction between mindless abuse and legitimate comment indelicately phrased. The former should be modded for sensible discussion to ensue on a large public forum; the latter should not. You delete both.

Blanco: yes, Sunny approved this piece – although I do have live posting rights, I run stuff that’s could be considered off-message past him for politeness’ sake.

Luis: yes, all MNCs submit country-level tax accounts for every country they operate in (and financial accounts for every country where they have a limited company). I agree both that it would be better if these were compelled to be published, and that it doesn’t make all that much difference that they aren’t.

Good editing requires keeping bad comment out so that sensible debate can take place.

You don’t belong on the internet, mate.

Freedom of speech as long as it’s mine…….

Anyway, not to worry, as LC is newly promoting the 1% canard prominently here:

http://liberalconspiracy.org/2011/03/02/watch-the-barclay-1-scam-comedy-skit/

77. Howard Brocklehurst

“90% or more of comments on my blog make it through moderation at present

I think that’s a reflection of open minded debate

That you don’t indicates your libertarian views”

Wow – that I apparently think something of which I wasn’t aware makes me a “libertarian”.

In fact I am not a libertarian. But to be fair you have disproved the previous statement I made which was,

“Anyone who doesn’t agree with you is labelled “neoliberal” or “far right extremist”.”

I should have course included “libertarian”.

Anyway, I thought you were withdrawing from this debate. You have come back 4 times after saying you withdraw at #50. You also say at #65 that no one reads the comments here – obviously you’re reading them like a hawk. I am also almost certain you have Worstall’s blog open all day to see what is being said about you. The speed with which you reply to anything critical he writes about you (e.g. the fact that you have tax avoided by taking low salary/high divis from companies you have directed; or taken your wife in as partner of TR LLP when in fact PAYE on salary to her is far more appropriate) is funny.

@70 Richard

90% of comments may make it through your moderating/editorial process, but simply looking at the last week ALL are in 100% agreement with you. There isn’t even a whiff of any criticism or disagreement. Which is peoples point.

You won’t engage with thine with differing views, or anyone who questions your stance because they want to understand better. Instead thhe shutters come down and you start throwing troll & neo-lib tags at them.

If you are confident in your plans & beliefs on taxation you should engage. Not doing so fuels beliefs that there are flaws in your ideas.

UK uncut follow you very closely as you well know, and my opinion is they are being driven head first into the taxation debate without really understanding this area properly. I also lay blame with Brooks & the guardian on this regard. Eventually, again my opinion, is this will sadly be the movements undoing.

They also follow your lead.in discussion. Throw in a handgranade idea, then run when the debate starts and questions asked.

Those of us closer to centre left politics tend to need our concerns/questions/views responded to for us to follow. Because I said so doesn’t cut it with us. We’re also not big on censorship.

79. Richard W

I am disappointed that the folks who believe the solution to every problem is a higher rate of tax have avoided the recent Oxford University research.

” As a proportion of gross domestic product, UK corporation tax revenue has generally been above the G7 average in spite of charging a lower-than-average rate for the past 25 years. ”

Maybe they would like to address this devastating finding?

Yes the research finds that smaller companies are paying a higher rate than larger companies. However, the largest 1 per cent of companies are paying 81 per cent of all corporation tax. Multinationals are paying almost 90 per cent of UK corporation tax. Without a doubt there is a tax gap. However, the tax gap comes from the self employed bloke who fixed your roof not large companies. Corporation tax is the most job destructive tax of all and should be abolished.

80. Sam Bridges

“e.g. the fact that you have tax avoided by taking low salary/high divis from companies you have directed; or taken your wife in as partner of TR LLP when in fact PAYE on salary to her is far more appropriate”

When RM was desperately responding to accusations of hyprocisy, I think the best one was when he replied to criticism following someone pointing out that he had written half a dozen or so articles in the Guardian in the early 2000s when he was still in practice, explaining how you could avoid tax by, amongst other things, employing a nanny through a company or incorporating a sole trade business.

RM’s defence was that he disapproved of these schemes at the time of writing but was trying to bring the matters to the attention of HMRC to close the loopholes! Shame he didn’t point these out in the articles!

@ 69 Luis Enrique

Companies do indeed provide information to local authorities. They do so via their accountant/auditors, in these casess keeping the transfer pricing people at these companies very busy. They then report their earnings on a total basis, without breakdown. Doesn’t mean the internal breakdowns don’t exist, and haven’t been disclosed.

As an exmaple, StanChart jsut released their results, and learning from Barclay’s mistakes actually released the amount of money earnt and tax payed in the UK.

@ 65 Richard Murphy

a) LC would be nothing bar a party political mouthpiece without a right to reply.

b) You read them, and given the threads tend to be well populated, others seem to as well. Evidence is, as usual, against you there.

c) Manual was written by a very well known auditor, updated every year for training courses. One of my friends still works for them giving the same training course I went through a decade ago. I probably even still have it somewhere at my parents house. Begins with a P and ends with a C.

d) You don’t debate. You make a statement, then prevent all opposing views from being aired.

e) See above – anyone that doesn’t agree with you is described in some unflattering way and their argument summarily dismissed without recourse. The debate, if it veers from your defined path is then labelled as “not sensible” or populated by trolls.

Personally I think it makes you look like someone who is unable or unwilling to rigourously defend their ideas.

I also think I’ve seen Libyan dictators less delusional than you, but that’s just me.

Sunny, though I am diametrically opposed to most of his views and think a lot of what he says is utter tripe, at least lets us freely debate said tripe, and is willing to argue his points. For that you have to give him credit. Doesn’t necessarily mean conclusions are reached or anything gets settled, but that isn’t the point.

You don’t give people the same freedom of speech. What does that say about you?

82. Luis Enrique

Richard Murphy for all I know you can claim credit for pushing the idea of country-by-country reporting, for what good it will do, into prominence, so that it is now being considered by international accounting boards etc.

But I don’t think it would be very wise to claim you were the first person in the world ever to suggest having multinationals break down their accounts by country. That seems less likely to me, although I grant until evidence is presented to the contrary, it’s a theoretical possibility.

“90% or more of comments on my blog make it through moderation at present

I think that’s a reflection of open minded debate”

You’re rather forgetting those who don’t bother to comment at your blog because you’ll never publish their comments. So, of course, they (I) take to their (my) own blogs to mock your pretensions…..

Where, rather gloriously, the critiques get a wider audience than if you’d allowed them in your comments section in the first place.

I thought about chiming in to tell RM that he’s a ludicrous hypocrite, but why bother? He’s done a perfect job of demonstrating that himself. Sometimes I honestly think it’s all an elaborate wheeze designed to undermine the views he apparently espouses.

# 83 But no one on earth takes you seriously Tim – except your Trolls

In the sane world of real world politics being dissed by you is a mark of credibility

So the more you do it the more I win

Keep at it, I say!

86. Chris Whitrow

Rebuttal is fairly straightforward:

1) Barclays made over £11 billion profit worldwide (NOT £4.6 billion as you claim). About 40% of its profits are from UK operations: that’s the £4.6 billion on which Barclays owes 28% tax to the UK HMRC. So your figures are wrong – very simple.

2) If you are right , then why hasn’t Barclays itself claimed that it has paid over £1 billion in tax to other jurisdictions? Because it hasn’t.

3) In order for your figures to be correct, Barclays’ UK profits would have to be only about £400 million, which is only 3.6% of their total profits. This is clearly ludicrous.

87. Luis Enrique

Chris Whitrow

Rebuttal is fairly straightforward:

1) The £11 bn figure includes profit from asset sales, which I think Labour made tax exempt if re-invested in business, just like we want banks to do (see pdf here)

2) Barclays has claimed that it paid over £1bn in tax to other jurisdictions, in its published accounts

3) Why is it ludicrous to think Barclays made only £400m in 2009? Plenty of other banks made losses that year.

88. Chris Whitrow

So, you honestly expect us to believe that Barclays paid only 10% of its global corporation tax in the UK when 40% of its profits are generated here? Its UK retail operation makes a very consistent profit year on year.

What about that £1 billion supposedly paid overseas. On what? The £7 billion asset sale is not part of it, so what is? 60% of £4.6 billion perhaps? In that case, Barclays would be paying 36% on profits outside the UK and just 6% on UK based profits. The claims in the article do not add up, so it’s safe to assume that the author’s interpretation of Barclays’ accounts is wrong.

You do not need to be a tax accountant to smell a very big fish, here.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Barclays paid a billion quid in tax – but not to us http://bit.ly/ihmD3Y

  2. Rick

    RT @libcon: Barclays paid a billion quid in tax – but not to us http://bit.ly/ihmD3Y

  3. Jane Phillips

    RT @libcon: Barclays paid a billion quid in tax – but not to us http://bit.ly/ihmD3Y

  4. Nick H.

    RT @libcon: Barclays paid a billion quid in tax – but not to us http://bit.ly/ihmD3Y

  5. atc_

    RT @libcon: Barclays paid a billion quid in tax – but not to us http://bit.ly/ihmD3Y

  6. Pucci Dellanno

    RT @libcon: Barclays paid a billion quid in tax – but not to us http://bit.ly/ihmD3Y

  7. Mark Taylor

    Barclays paid a billion quid in tax – but not to us http://bit.ly/dGfw5H

  8. Andrew Taylor

    Barclays paid a billion quid in tax – but not to us http://bit.ly/f3Bqvv

  9. Paul Reds

    RT @Andrew_Taylor: Barclays paid a billion quid in tax – but not to us http://bit.ly/f3Bqvv

  10. Andrew Ducker

    Barclays paid a billion quid in tax – just not mostly in the UK http://bit.ly/hlK2bi

  11. curmudgeon 1

    Barclays paid a billion quid in tax – but not to us | Liberal Conspiracy http://t.co/vFJCTiw via @libcon

  12. Lil Wayne

    Barclays paid a billion quid in tax – but not to us | Liberal …: In other words, Barclays made a profit of £4…. http://bit.ly/frBCyu

  13. So just how much tax did Barclays pay and how much should they have?

    [...] John B with an excellent piece. [...]

  14. Ken Tindell

    As ever, the Lie has circled the Twittersphere before the Truth got its boots on. Better late than never: http://bit.ly/hL786q #ukuncut

  15. Matthew Sinclair

    Post on @libcon of all places makes clear Guardian misled to the point of lying about Barclays tax http://bit.ly/eb9R9H

  16. Russ Noble

    Barclays paid a billion quid in tax – but not to us | Liberal … http://bit.ly/fPLPDH

  17. Fred Carver

    @parsons__green @mcintyre321 I'm never one to defend Barclays but did see this: http://bit.ly/eb9R9H

  18. Douglas McLellan

    @Jim_Jepps @twodoctors Here is Liberal Conspiracy re Barclays story. http://t.co/8rtKOxg but if thats not what you meant – sorry.

  19. FCAblog » Shouldn’t The Guardian hire a deputy City editor who understands accounting?

    [...] need to be specific about how its tax bill stayed so low, because various bloggers (e.g. here) have explained it for them. Heck, I even explained it myself. It's pretty freaking obvious to [...]

  20. Ritchie on Timmy elsewhere

    [...] actually, we do know exactly why Barclay’s paid the amount of tax that it did. Here. (Written after I had filed my report, so not included, but well [...]

  21. Samuel Mack-Poole

    @IainDale @lbc973 http://liberalconspiracy.org/2011/03/01/barclays-paid-a-billion-quid-in-tax-but-not-to-us/





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