The Fight for Tax Justice in the UK

Leonie NimmoEthical Consumer Research Association

Stockholm15th 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

● Multi-stakeholder co-operative● 25 years old last Monday!● Ethical Consumer magazine● Consultancy for NGOs & companies● Campaigns

(Not for profit)

Ahead of the curve

Birth of UK Uncut

● Demand for tax justice hit UK streets Oct 2010● Week after deepest cuts to services since 1920s

announced● Closed down Vodafone● #ukuncut went viral● 3 days later, nearly 30 Vodafone shops shut ● “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

● 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

● “subject companies delivering and bidding for the delivery of public service contracts to high ethical, environmental and anti-tax avoidance standards”

● Signed by more than 70 MPs

Olympic-Sized Victory

● July '12 EC article highlighting the temporary tax haven created for the Olympics, calling on companies to pay fair share

● 38 Degrees petition● Gathers 230,000 signatures

● All 14 companies targeted buckle

Tackling tax havens:

From your local council to the Cayman IslandsEthical Consumer Conference September 2012

Richard Murphy – Tax Justice NetworkChris Jordan – Action AidKate Hope – UK UncutLeonie 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● Water industry

● 2011 - subsidised by taxpayer £200m; dividends paid = £1.6bn; price water increase = 5.7%

● Healthcare companies ● Independent newspaper investigation Oct 13 30 companies running NHS services avoiding millions

in tax Interest rates of up to 16% 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 affairsof civil servants

Student Loans Company scandal (2)

Danny Alexander in Commons ● Committed himself to 'Managing Public Money' (2007)

● “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)

● 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• At discretion of contracting authorities ● Self-disclosure of information that HMRC has already● Not just unsuccessful tax avoidance schemes we are

concerned by● Would not prevent arch tax avoiders from winning

contracts● Only contracts above £5 million• No look-back period initially, then six years● Only applies to the bidding entity, not the corporate

group

New EU Directives

● Due to come in early 2016● Much of what UK put in place will be meaningless● When companies pay back tax owed won’t be able to

exclude them● Shorter look-back period

Tax avoidance & public procurement

● Central government is not adequately addressing the issue

● First thing to tackle should be transparency● But there is a political will behind tax justice

● 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

● 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

» More work to do!● Analysis of whether inputs into goods and

services being purchased were supplied by tax havens

● Need progressive local councils to step up● Other ideas?!