The Fight for Tax Justice in the UK
Leonie Nimmo
Ethical Consumer Research Association
Stockholm
15th March 2014
Good to meet you!
How to stop public money
going to tax dodgers?
David Quentin, UK Barrister specialising in tax
A Fair Tax accreditation scheme for
public contractors?
Ethical Consumer Research Association
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Multi-stakeholder co-operative
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25 years old last Monday!
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Ethical Consumer magazine
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Consultancy for NGOs &
companies
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Campaigns
(Not for profit)
Ahead of the curve
Birth of UK Uncut
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Demand for tax justice hit UK streets Oct 2010
Week after deepest cuts to services since 1920s
announced
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Closed down Vodafone
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#ukuncut went viral
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3 days later, nearly 30 Vodafone shops shut
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“Now is the time to get angry, to get organised
and to build a resistance to austerity. See you on
the high streets”
Targets
Privatisation & tax avoidance
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Government contracts going to tax avoiding
companies
Sept '11 – EC uncovered extent to which
companies winning public sector contracts used tax
havens
Nov '11 – Early Day Motion 2399 – Caroline Lucas MP
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“subject companies delivering and bidding for the
delivery of public service contracts to high ethical,
environmental and anti-tax avoidance standards”
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Signed by more than 70 MPs
Olympic-Sized Victory
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July '12 EC article highlighting the temporary tax
haven created for the Olympics, calling on
companies to pay fair share
38 Degrees petition
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Gathers 230,000 signatures
All 14 companies targeted buckle
Tackling tax havens:
From your local council to the Cayman Islands
Ethical Consumer Conference September 2012
Richard Murphy – Tax Justice Network
Chris Jordan – Action Aid
Kate Hope – UK Uncut
Leonie Nimmo – Ethical Consumer
EC's work on tax justice
Grant from Lush Cosmetics
- Amazon boycott – Europe-wide Dec 14?
- Fair Tax accreditation scheme
- Tax avoidance & public procurement
Tax avoidance and public procurement
The UK Context
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Water industry
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2011 - subsidised by taxpayer £200m; dividends paid =
£1.6bn; price water increase = 5.7%
Healthcare companies
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Independent newspaper investigation Oct 13
30 companies running NHS services avoiding millions in
tax
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Interest rates of up to 16%
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Very poor standard of care
Student loans company scandal (1)
• Feb '12 – Head of Student Loans Company getting
paid via a tax avoidance scheme – salary £182,000
• Danny Alexander, Chief secretary to the Treasury,
said he wasn't aware of arrangement - but he was
required to approve as more than £142,500
• Investigation into tax affairs
of civil servants
Student Loans Company scandal (2)
Danny Alexander in Commons
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Committed himself to 'Managing Public Money' (2007)
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“Central government bodies should... restrict contractors’
use of offshore jurisdictions...”
Consider wider cost to the Exchequer when considering
Value for Money (in context of civil servants)
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Should the same apply for procurement contracts?
Lib Dem Conference Sept '12
Danny Alexander
“In the summer, I shut down the scandalous situation where
thousands of public sector workers were being paid in a way
that potentially allowed them to pay too little tax... Rules are
now in place to stop that happening... But I have discovered
that there is nothing that prevents the very small minority of
firms that don’t play by the rules from winning government
contracts... That is not right. That is not fair. And I am
determined that it comes to an end... So I have tasked
HMRC and the Cabinet Office to come up with a workable
solution to this problem and we will set out more details later
this year.”
‘New’ tax & procurement policy Apr 13
• European Directives allow for discretionary
exclusion of companies that haven't
fulfilled tax obligations
• ‘New’ tax & procurement policy April 2013
Allows for discretionary exclusion of
companies that haven’t fulfilled tax
obligations
‘New’ tax & procurement policy Apr 13
Problems
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At discretion of contracting authorities
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Self-disclosure of information that HMRC has already
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Not just unsuccessful tax avoidance schemes we are
concerned by
Would not prevent arch tax avoiders from winning
contracts
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Only contracts above £5 million
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No look-back period initially, then six years
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Only applies to the bidding entity, not the corporate group
New EU Directives
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Due to come in early 2016
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Much of what UK put in place will be meaningless
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When companies pay back tax owed won’t be able to
exclude them
Shorter look-back period
Tax avoidance & public procurement
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Central government is not adequately addressing
the issue
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First thing to tackle should be transparency
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But there is a political will behind tax justice
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46 Local councils now signed up to Financial
Transaction Tax
How can local councils avoid contracts going to
tax avoiders without falling foul of EU Directives?
Legal opinion
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Use Fair Tax Mark!
Would need to be awarded to the products or
services not the company, so related to the
subject matter of the contract
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More work to do!
Analysis of whether inputs into goods and services
being purchased were supplied by tax havens
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Need progressive local councils to step up
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Other ideas?!