I had
thought the whole issue of tax avoidance had begun to settle down, efforts to
stop multinationals shifting profits from the UK to countries with lower tax
rates rates has been a crusade this summer. Despite existing legislation for
transfer pricing etc a new all encompassing law, the General Anti Abuse Rules,
has been brought in to keep more profits taxed in the UK.
This
legislation seems to have combatted some of the aggressive tax avoidance that
the press and politicians want to see stopped.
Then out
of the blue a great success story, Vodafone's sale of its 45% stake in Verizon
has brought it all back into the public spotlight.
The £84 billion sale will give rise to no tax liability!
This
seems to have upset a few people again. What they seem to forget is that the
tax free gain belongs to Vodafone. They have indicated that a very large chunk
of this money will be returned to shareholders via a dividend. It is at that
point that tax will be charged as it hits the ultimate beneficiary. Why should
this be a problem?
After all
Vodafone are following the tax rules that exist in most European countries,
sales of shares by a trading company in another trading company are tax free
under the Substantial Shareholdings Exemption.
In fact
it is a very good way of growing businesses, which surely the
UK wants?
It also isn't simply there to benefit the biggest companies in the world. Dodd & Co have used it to help farming and tourism businesses to dispose of some of their own business interests without suffering a tax charge.
Wouldn't
it be better to celebrate a success, which will in time generate tax for HM
Treasury, and preserve reliefs that all businesses can use to help themselves
grow rather than inviting more tax?
After all if you cant beat them join them, and make sure your business also makes use of all the available tax reliefs.
Want to find out if it will work for you?
You can email me rob@doddaccountants.co.uk
or follow me on twitter @Rob__Hitch
