In the news: Marks & Spencer profits fall amidst tax storm

Marks & Spencer saw its profits fall in the same week as a tax furore

Marks & Spencer saw its profits fall in the same week as a tax furore

This week tax avoidance has been everywhere: the high street, 10 Downing Street and across the pond. Steven Perryman picks his top news stories from the past seven days

1. Marks & Spencer’s knickers in a twist over tax accusations

Jimmy Carr can breathe easy. Finally the smarmy comedian – who was embroiled in a tax avoidance furore last year – has a UK-based ally to take some of the heat with him.

Yep, everyone’s favourite purveyor of pants, Marks & Spencer (M&S), faced criticism from tax campaigners this week over the way it structures its online sales to Europe – with one describing the operation as similar to that of American internet retail giant Amazon. Ouch.

Not good news for M&S, who also reported that its pre-tax profits fell to £564.3m, down from £658m last year, despite group sales rising 1.3% to £10bn for the year to 30 March.

You can’t help but think there are some more sleepless nights ahead for its new designer, Belinda Earl.

2. Boston tea party at 10 Downing Street

Meanwhile, over in Downing Street David Cameron’s cosy cuppa with the bosses of some of Britain’s largest multinational corporations descended into a Boston tea party.

Chief executives of companies including Burberry, Tesco, Vodafone, BAE Systems, Prudential and GSK took the opportunity to lobby the prime minister in advance of the G8 meeting in Northern Ireland, where Cameron has pledged to use UK’s presidency to tackle aggressive tax avoidance by multinationals.

Also present was Google’s chairman, Eric Schmidt, despite the internet search firm coming under fierce attack from MPs last week because of its tax arrangements. Well, you should never turn down a free lunch, right?

3. Google’s tax whistleblower goes public

So much for secrecy. Just four days on from providing anonymous ‘whisteblower’ testimony on Google to the Public Accounts Committee, the mole has gone public already.

Clearly sniffing out an opportunity for his 15 minutes of fame, former Google employee Barney Jones unveiled himself to The Sunday Times, proclaiming: ‘The real victims are ordinary taxpayers in Britain who are being cheated by Google.’

Not that Google seem bothered, with the company reportedly spending up to £1m on a lavish bash for its staff called the Zeitgeist Conference. The company has hired out the Grove Hotel in Hertfordshire, where warbling singer Jessie J will perform (when they need to empty the venue, we assume).

4. Is ‘Teflon Apple losing its sheen?

They say mud sticks, but technology giant Apple has appeared Teflon coated of late.

It has ridden safely through the choppy waters of accusations of bad factory conditions, a challenge to its smartphone domination from Samsung and a first profit fall in a decade without breaking a sweat.

But, as Google and Amazon both found out this side of the pond, aggressive tax avoidance eventually catches up with you and is a potential PR own goal. This week the company’s Chief Executive, Tim Cook, gave testimony to a Senate sub-committee investigating multinational tax practices.

In it he confirmed its findings that Apple had taken tax avoidance to a new extreme by structuring companies so they did not incur tax liabilities anywhere. In his testimony Cook also refused to consider moving back a total of $100bn the company has stashed offshore until Congress considers lowering the 35% US rate.

Could this be the straw that breaks the camel’s back? Samsung will be hoping so.

 

Steven Perryman is AAT Comment's former Content Editor.

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