Finance Bill amendment falls by narrowest of margins
This week, the UK came incredibly close to becoming a global leader in tax transparency.
Amidst the media maelstrom that covers the UK following the EU Referendum, it’s perhaps unsurprising that there was little coverage of the #ShowMeTheMoney amendment to the Finance Bill that was passing through parliament on Tuesday, 28th June.
Attempting to end artificially low rates of corporation tax payment
This amendment had its origins in a Ten Minute Rule Bill that Caroline Flint MP tabled in March, which sought to require multinational businesses that operate in the UK to divulge the revenues, profits and taxes they pay across the world. This Country-by-Country (CBC) Tax Reporting Initiative was motivated by the controversies surrounding the likes of Google and the seemingly artificially low rates of corporation tax paid. Crucially, the Bill was supported not only by the Fair Tax Mark, business and campaign groups, but by MPs of all political persuasions.
An opportunity spied in the 2016 Finance Bill
Fast forward to June, and an opportunity arose to press the case for CBC Tax Reporting via an amendment to the Finance Bill. A parliamentary reception was organised on the eve of the vote to encourage support from a wide base of MPs.
Sam Peacock from FTSE-100 listed SSE plc, a Fair Tax Mark accredited business, then outlined how they were the first UK multinational to embrace CBC Tax Reporting under the Mark and urged other businesses to follow suit. Oxfam and Christian Aid pointed out that developing countries lose more in unpaid taxes from big business every year than they receive in aid.
Amazingly, despite the political turmoil surrounding Westminster, 77 MPs from nine different parties signed the amendment, including the majority of the Public Accounts Committee.
On the day of the Finance Bill discussion, the amendment was supported by 273 MPs, but fell short of a majority by just 22. The Government indicated it was sympathetic to the aims of the amendment but resisted its immediate adoption on the basis that progress was proceeding at a European level via the UK’s membership of the EU, in spite of the referendum outcome last week.
When pressed further, the Treasury Minister, David Gauke did, however, concede that if progress was not forthcoming via Europe then the matter would need to be revisited and that the Government was broadly sympathetic to the aims of the proposal.
Winning is still possible, and our businesses are getting there first
So, with continued hard work, it’s possible that the UK may be on the cusp of a major breakthrough on multinational tax transparency: with CBC Tax Reporting helping to curtail profit-shifting to low tax jurisdictions. This not only protects the UK’s tax base, but creates fairer conditions for those businesses who endeavour to pay the right amount of tax in the right place at the right time – and our accredited businesses are doing just that.
Paul Monaghan, co-founding board director of the Fair Tax Mark