The UK Government, like many across the world, is making available unprecedented financial support for businesses and workers impacted by the Covid-19 economic lockdown.
This is right and proper given the economic lockdown is being undertaken to lessen the impact of Covid-19 on society; in particular, in protection of the elderly and those with existing health conditions.
The package of support includes:
- a Coronavirus Job Retention Scheme
- deferring VAT and Self-Assessment payments
- a Self-employment Income Support Scheme
- a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
- a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
- small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
- a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
- the HMRC Time To Pay Scheme
In addition, a number of business sectors are requesting bespoke bailout packages. With, for example, Virgin Atlantic reportedly calling for a £7.5 billion bailout for airlines.
To date, the UK Government has largely resisted these calls, insisting that industries should utilise the interventions already announced by the Treasury for business loans and to subsidise workers’ pay and allow tax delays. In a letter to the aviation industry, the UK Chancellor, Mr Sunak, noted: “We would expect all companies to be pursuing all possible actions to preserve cash and maximise liquidity, including engaging with shareholders, lenders and the markets and utilising all available assets and facilities”.
At the Fair Tax Mark, we leave the consideration of the merits of particular bailouts to people more qualified (and this must obviously include a primary consideration of the impact on workers).
But if bailouts are to progress, then we believe that they should be accompanied with fair tax conditions (a “Fair Tax Lockdown”)
- Publish a binding tax policy that explicitly shuns tax avoidance and the artificial use of tax havens, and commits to the declaration of profits in the place where their economic substance arises (i.e., no profit-shifting). This policy should be the subject of an annual compliance audit, and be “owned” by a designated board director.
- Ensure that the consolidated annual profit & loss of the parent company is publicly available, together with details of associated corporation tax payments (total, current and deferred tax). Multinational enterprise should disclose this on a Country-by-Country basis. A current tax reconciliation should be provided, together with a narrative to explain any deviations from the headline tax rate(s).
- Make clear who the ultimate beneficial owners of the business are, and those with significant control.
We believe that these measures are fair, material and proportionate. If a business is not actively involved in tax avoidance, these conditions can quickly and easily be committed to.
Paul Monaghan, Chief Executive, Fair Tax Mark