back to article Tax me if you can: VMware UK tosses shrunken offering to HMRC

Trendy social media firms and ad slingers often come under attack for hiring beanies to minimise their tax contribution, something they see as sensible commercial practice. VMware UK may fall into that bracket too. Virtzilla's Brit ops paid an actual tax rate equivalent to 11.52 per cent or £1.997m on the £17.331m pre-tax …

  1. tiggity Silver badge

    taxing

    "No doubt others who generate more than half a billion in sales locally will find cunning loopholes to (legally) avoid their fair share."

    Indeed, legal but not very moral.

    Big problem is complexity of UK tax laws, they need radically simplifying, and tax evasion treated as guilty until proven innocent - currently you can have ludicrously intricate systems in place that are legal but constructed purely to avoid tax, not for any other business reason, and companies can happily avoid tax. If these structures, with no compelling other business reason, were automatically treated as evasion then companies would have to pay their due.

    Not going to happen, too many top bean counters advise govt on tax changes, then sell loophole solutions to their clients based on new tax rules they just helped devise.

    Generally it seems its only us poor suckers on standard PAYE that pay their fair whack of tax

    1. jmch Silver badge

      Re: taxing

      "tax evasion treated as guilty until proven innocent "

      I'm all for simplifying and tightening up tax rules, but even the scummiest scum has a right to presumption of innocence and due process.

      What is more important is to overhaul not only the tax rules but the enforcement. For example this

      "ludicrously intricate systems in place that are legal but constructed purely to avoid tax, not for any other business reason"

      is an excellent place to start

    2. LucreLout

      Re: taxing

      Indeed, legal but not very moral.

      According to whose moral framework?

      Tax avoidance (not evasion) is perfectly fine in my moral framework; after all, it is MY money that I earned.

      Big problem is complexity of UK tax laws, they need radically simplifying, and tax evasion treated as guilty until proven innocent - currently you can have ludicrously intricate systems in place that are legal but constructed purely to avoid tax, not for any other business reason, and companies can happily avoid tax.

      If you want to have a system that companies and individuals cannot exploit for their own best outcome then the only answer that is workable is a flat tax that is perpetually kept low. 20% of everything, nothing more and no exemptions. It's low enough to not be worth avoiding, and high enough to pay for what the state needs to do. The more you earn the more you pay, so its "progressive" for whatever corruption of that word you prefer. Everything else has avoidance baked in with evasion coming on line when the rake gets excessive.

      If these structures, with no compelling other business reason, were automatically treated as evasion then companies would have to pay their due.

      I can construct a ludicrously simple system that avoids the taxes you propose. The only way to increase the take and actually be "fair" is a low flat tax that the state has to learn to budget within. My employer has the same conversation with every chancellor of the exchequer every year when year after year they pay us a visit (literally) and ask us to "follow the spirit of the law", which is nonsense as the law has no spirit, only words forming rules which we obey.

      1. jmch Silver badge

        Re: taxing

        "the only answer that is workable is a flat tax that is perpetually kept low. 20% of everything, nothing more and no exemptions. "

        That's what I fully support and agree with. Same level of tax on all income whether it's earned, dividend, capital gains, inheritance etc.

        The thing with taxes is that governments like to use exemptions to promote certain behaviours (eg if there is a shortage of housing they can give an exemption to landlords to promote more housing). That's something I agree with in principle, but the implementation of any exemption has to be temporary - say you can grant it for 5 years then it automatically expires - because the whole point is to allow small course corrections in the economy not large permanent shifts.

        Of course in practice the pressure from industry groups to grant ever-increasing exemptions would be gigantic

    3. Cynic_999

      Re: taxing

      Not moral? There is nothing moral about modern taxation, which is taking a greater and greater percentage of our income and spending it on things that are increasingly irrelevant to our standard of living, unnecessary and/or designed to line someone's pockets.

      I'd say that it a moral *duty* of any person or organisation to avoid paying a penny more to our government than is absolutely unavoidable.

      You may or may not know that income tax was introduced by the UK government as a *temporary* emergency measure that was promised to be withdrawn at the end of the Napoleonic war. IMO it is the government that has behaved immorally, not those who legally avoid paying tax.

    4. Velv
      Headmaster

      Re: taxing

      Indeed, legal but not very moral.

      The reason we have laws is that different people throughout history have had different views on what is moral. Writing laws gives everyone a hard reference point, and we do update laws as gaps appear and public opinion changes.

      If we all agreed on the same moral viewpoint we wouldn’t need the laws. It would be nice if we all played by the spirit of the laws, but ultimately it is the letter of the law that counts.

    5. Roland6 Silver badge

      Re: taxing

      >Big problem is complexity of UK tax laws

      I think it is more to do with international tax treaties and the way companies registered and HQ'd overseas with non-UK resident directors, get treated under these treaties.

  2. msknight

    I don't understand tax

    On top of my day job, on which I pay PAYE, I have a side career as a completely, totally and utterly unsuccessful author.

    I earn so little by this mechanism, that the tax office shut down my assessment portal account and I simply write them a letter, once a year, with the amount I've earned that year, from book sales.

    Then... a few months later, they send me a cheque for a tax rebate as I've over paid.

    I just don't get it.

    http://msknight.booklikes.com/post/1760949/aww-come-on

    http://msknight.booklikes.com/post/1662374/even-the-tax-office-is-a-critic

    As I haven't written anything for a couple of years, this is likely to result in £0 earnings this financial year. It's going to be interesting to see what happens as a result of that.

    1. Anonymous Coward
      Anonymous Coward

      Re: I just don't get it.

      Perhaps your tax code always overcharges you a bit, which might just be an artifact of the code's built-in imprecision, or might be because it's predicated on you earning some book money. So when you send them the amount, they have to do a proper calculation, and because you earn less than their expectation, they refund you what the tax code already overcharged?

      Just a guess, I'm not an accountant.

    2. Roland6 Silver badge

      Re: I don't understand tax

      >As I haven't written anything for a couple of years, this is likely to result in £0 earnings this financial year.

      Just because your side career hasn't generated any earnings, doesn't mean it hasn't incurred legitimate expenses, which assuming you are a self-employed (totally and utterly unsuccessful) author, will generate losses for this employment/trade. These losses can be set against previous years income, other taxable income received in the current year, or held over to be set against a future year's taxable income.

  3. LucreLout

    Poor emotion driven article

    "No doubt others who generate more than half a billion in sales locally will find cunning loopholes to (legally) avoid their fair share."

    And the definition of the word "fair" that you're using is what? And why?

    Just how much of what I earn do you feel entitled to? And why?

    Tax above 20% of GDP is simply waste. There's nothing the state needs to do that done efficiently could not be done with the first 20% of our earnings.

    1. Crisp

      Re: Poor emotion driven article

      You benefit from education, healthcare, infrastructure, and the enforcement of rules and regulations designed for your comfort and protection. You also enjoy the protection of the police from crime and the protection of the armed forces. You benefit from the administration of licences and passports.

      You benefit from the continued stability that all this provides. You wouldn't be able to enjoy making as much money as you do without a vast web of support.

      Why shouldn't you pay for it? And if you happen to find yourself as one of the above average individuals that can contribute more because of the support you get, why shouldn't society claim back on its investment?

      1. LucreLout

        Re: Poor emotion driven article

        @Crisp

        If you think your "society" is worth paying for then make payments voluntary and see how you go. Most people think most taxes are wasted which is why most people wouldn't pay them were they voluntary.

        The public sectors own auditors consider they waste at least 20p in every pound more than the private sector - which itself wastes a 10p. That 30p of waste could be a straight cut and would reduce income taxes by about 20p in the pound.

        Ultimately I have control over the tax structure I work within, and have hit the limits of what I'm willing to pay. Using legal avoidance measures I pay about 30p in the pound and will not contribute further than that. If I am forced to incorporate to avoid tax increases then I will be able to drop that 30p down to around 15p quite legally. Good luck funding your society with that.

        High earners already pay a vastly disproportionate share of tax while consuming the fewest public services. Fair means everyone pays the same and derives the same benefit. So work out how many pounds the state takes to run, divide that between the adults, and that is everyones fair tax burden. I'm paying rather more than that.

        He who pays the piper calls the tune. 'twas ever thus and thus it will ever be.

        1. Eeep !

          Re: Poor emotion driven article

          "Most people think most taxes are wasted which is why most people wouldn't pay them were they voluntary."

          Please can you provide a source that confirms that most people think that most taxes are wasted?

          Especially if they indicate which of the NHS/police/fire/social services they consider the biggest waste of their taxes?

          1. LucreLout

            Re: Poor emotion driven article

            Please can you provide a source that confirms that most people think that most taxes are wasted?

            Sure - taxes have to be extracted on masse with the threat of imprisonment and other menaces in order for people to pay them. Thus most people would not otherwise pay them. No need to over complicate things trying to fashion what you consider a nuanced position, but which is really just muddled thinking.

            Especially if they indicate which of the NHS/police/fire/social services they consider the biggest waste of their taxes?

            Its probably the 99% of their taxes that don't fund the delivery of those serivces they consider waste. Even the public sector, and I've provided plenty of links for this on other threads, thinks it wastes 30% of the money it spends - the reality is probably double that. And the service is probably deliverable in an efficient and cost effective manner, ie focussed on service provision for users not income provision for staff and former staff, on around 20% of the current spend.

            No matter how you slice the numbers, there is no more money - the public sector will either have to get used to doing a lot more for a lot less, or we'll have to get used to doing without whole sections of the public sector. There's no third option.

      2. Cynic_999

        Re: Poor emotion driven article

        "

        You benefit from the continued stability that all this provides. You wouldn't be able to enjoy making as much money as you do without a vast web of support.

        "

        I'm willing to pay a fair price for such infrastructure. But the total amount of tax that gets taken in one form or another amounts to well over 80% of what I earn which is wa-a-ay outside the ball park. N.I., PAYE, council tax, VAT, fuel tax, road tax and the increased prices of goods due to the taxes imposed on the manufacture and supply chain.

        You might also explain how bombing Iraq back to the stone age has in *any way* contributed to my wellbeing in the UK - and that's just one expensive venture my tax money was spent on.

      3. Anonymous Coward
        Anonymous Coward

        Re: Poor emotion driven article

        But he's not able to contribute MORE because of the support he got. In your world view society invests in everyone (presumably equally) so surely everyone should contribute equally?

    2. jmch Silver badge

      Re: Poor emotion driven article

      "Tax above 20% of GDP is simply waste. There's nothing the state needs to do that done efficiently could not be done with the first 20% of our earnings."

      Completely true. The thing is that when big multinationals and fabulously rich people use the existing complex tax code to pay 10%, and people with very low incomes have a large chunk of their income exempt and also pay 10% or less. So the state takes 30%-40% from the middle class to compensate.

      To be clear, I'm perfectly OK with there being a small slice of income that is tax-free for everybody. I'm not OK with a complex tax code allowing those rich enough to hire armies of lawyers to pay significantly less

  4. Anonymous Coward
    Anonymous Coward

    Just how much of what I earn do you feel entitled to? And why?

    society is entitled to it as it benefits all involved..(unless you prefer to live in a place with no rules and any body can just rob,kill or rape you and your family)

    only selfish arseholes dont understand that the only reason they earn a living and not be robbed blind by every immoral bastard is society and good goverment and that requires money.

    See those roads, you, the company you own/work at uses them.. society made that..

    See the police that stop any twat robbing you, the company you own/work at uses them.. society made that..

    everything society does to improve "life" for all benefits you.. stop being a leaching twat..

    yes it's not perfect and the present bunch of greedy selfish twats have made it worse...

    1. LucreLout

      Re: Just how much of what I earn do you feel entitled to? And why?

      society is entitled to it as it benefits all involved..

      No, you want society to have it because you would rather spend MY money on things YOU want but otherwise cannot afford. That's not the same thing as what you propose.

      Society needs me to want to work - the public sector lives entirely off the efforts of the private sector because the public sector does not pay tax, it is paid from tax. We long ago passed the peak of the laffer curve, where I've spent the past 5 or 6 years reducing my working hours (I'm down about 40% now) in order to not gain any higher income because it's simply being stolen byt he tax man and wasted on nonsense that I would not fund by choice.

      Society, ultimately, is "entitled" to nothing. I earn the money, not society.

      unless you prefer to live in a place with no rules and any body can just rob,kill or rape you and your family

      Ahh, emotive rhetoric. Nice.

      See, the problem with your view is that you can have law & order well within the 20% rate at the outer limits of fairness.

      only selfish arseholes dont understand that the only reason they earn a living and not be robbed blind by every immoral bastard is society and good goverment and that requires money.

      Law & order doesn't require "good" government and certainly requires only a fraction of the price we pay in taxes.

      I earn a living because of my own efforts: nothing whatever to do with "society".

      See those roads, you, the company you own/work at uses them.. society made that..

      I paid for the roads decades ago. I pay for the repair, such that it is, with sky high fuel and road taxes. Not income tax. Not one penny of that sees the transport system.

      See the police that stop any twat robbing you, the company you own/work at uses them.. society made that..

      You're going to find that the police preservation of law and order extends only so far as stopping the generally law abiding victims from delivering retribution upon the entirely law breaking criminals. It protects me from nothing, and only protects them from me.

      everything society does to improve "life" for all benefits you..

      No it doesn't. Not remotely. Not tangentially. Not at all. "Society", whatever you perceive that to be in your fevered delusions, does nothing for me. I pay more than enough for anything your "society" may be doing of use in the first 20% of my taxes. The rest is exclusively waste.

      yes it's not perfect and the present bunch of greedy selfish twats have made it worse...

      They have, but referring to all public sector workers as twats is a bit harsh.

      1. Anonymous Coward
        Anonymous Coward

        Re: Just how much of what I earn do you feel entitled to? And why?

        Tell me the tax take from "road tax" and fuel duty. Then tell me the cost of maintenance of existing roads and building of new ones. Facts please.

        Next up, tell me what you "would not fund by choice".. I'll start, by saying I would rather not fund public transport in London, which I pay far more towards than towards public transport where I live and work.

        1. LucreLout

          Re: Just how much of what I earn do you feel entitled to? And why?

          Tell me the tax take from "road tax" and fuel duty.

          28.2 Billion from fuel tax but it also forms a substantial portion of VAT raised as VAT is due on top of the fuel & fuel tax price - I've not given a figure for that yet. Its about 4% of all tax revenues. VED is only 5.5 billion.

          https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/fuel-duties/

          https://www.ifs.org.uk/bns/bn09.pdf

          Then tell me the cost of maintenance of existing roads and building of new ones.

          For class b, c and unclassified is costs 1.8 billion.

          for class a and motorway it costs 2.2 billion

          So a total cost of about £4Bn or perhaps better exprssed as about 12% of what is taken from the roads is spent on the roads, including building new ones. I've not included road or bridge tolls, yet either.

          https://www.localgov.co.uk/Road-maintenance-spending-at-lowest-level-in-a-decade/44564

          https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/374676/FOI_712722.pdf

          So, you have your facts and I'll bet pound to a penny your previous view simply no longer holds water. There's an annual surplus of £30Bn generated from the roads annually. Now, change your opinion from one of emotion to one of reason.

          While you're asking for facts though, consider this link:

          https://www.ifs.org.uk/publications/9178

          27% of ALL income tax is paid by the top 1%.

          33% of all NIC is paid by the top 10%.

          The lower 50% need to work a lot harder and or longer as they pay only 10% of income tax combined.

          The 50% of adults that pay no income tax somehow still get all the services.

          That, however you slice it, is totally disproportionate and unfair.

          Now, lets consider our operational risk here for a moment. You have 1/3rd of your recipts coming from about 1% of your people. That 1% make up the most internationally mobile part of your populace. If just half of that 1% get fed up and move their earnings or themselves abroad, you have to close the NHS, because you won't be able to afford it. IT raises about 200Bn and NIC about 130Bn. 1/3rd of that is more than half the current NHS budget.

          Are you sure you've thought through your position? Because it seems wildly unfair, horrifically risky, and utterly dependant on the largesse of a very small number of very mobile tax payers who most probably don't use many of the services paid for (they Venn overlap between these people and private schooling & healthcare will be huge).

      2. Anonymous Coward
        Anonymous Coward

        Re: Just how much of what I earn do you feel entitled to? And why?

        everything society does to improve "life" for all benefits you..

        No it doesn't. Not remotely. Not tangentially. Not at all. "Society", whatever you perceive that to be in your fevered delusions, does nothing for me. I pay more than enough for anything your "society" may be doing of use in the first 20% of my taxes. The rest is exclusively waste.

        We found this years Grinch/scrooge...

  5. DavCrav

    "Tax above 20% of GDP is simply waste. There's nothing the state needs to do that done efficiently could not be done with the first 20% of our earnings."

    Yeah, those damn poor and old people, wanting unemployment benefit, healthcare and pensions. And you with your schools.

    1. LucreLout

      Yeah, those damn poor and old people, wanting unemployment benefit, healthcare and pensions. And you with your schools.

      Unemployment is and has been for the past decade, a choice. We've had near on 5 million people move here form eastern Europe and near on all of them have found work, in a language not their own. Credit to them, and in my view they're welcome here.

      So what have the domestic unemployed been doing rather than finding work? If Pavl can find a job in Hemel when he's based in Warsaw then why hasn't Sharron from essex found work in her own town?

      Universal healthcare doesn't require the NHS. Plenty of other places have it and manage without the wasteful bueacracy that we're shackled to due to the peons inability to seperate unionised greed from service provision. There are better alternative systems.

      Schools - most schools in the UK are failing. The teachers are burned out and killing time until the pension kicks in. The school day is to short. The school holidays too long and too often. The grades are gamed to the point of being literally worthless. That you think the schools are a success is ludicrous and demonstrative of the paucity of your position.

      Pensions... unless you're paid by the state, you're not getting a pension. The state pension age for Gen X is rising faster than we're ageing. The private pension age is linked to that now too, so that's toast. Only the public sector with their solid gold unearned lottery winnning pensions can expect to retire in this country. Pensions. You must be joking.

  6. Version 1.0 Silver badge
    Unhappy

    Wealth should be charged accordingly

    Setting a single tax rate sounds good but the fact is the wealthy get far more benefit from the system than the poor.

    Try this, throw a brick through a window in Islington and throw another one through a window in Kensington Palace Gardens and see what happens ... there's a huge difference in police response time and behavior.

  7. Velv
    Headmaster

    No doubt others who generate more than half a billion in sales locally will find cunning loopholes to (legally) avoid their fair share.

    Have you ever heard the phrase “turnover is vanity, profit is sanity, cash is king”. What you turn over means fuck all. You can be turning over £1,000,000,000,001, but if your costs are £1,000,000,000,000 then you made a pound profit, which isn’t going to keep you in food very long (one McDonalds Saver burger for you).

    There are some companies exploiting the letter of the law to gain an advantage, and governments need to work to change those laws. But your off the cuff comment on sales shows an ignorance of the subject you are trying to write about.

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