Starbucks in the tax avoidance dock, 4G launching with Kevin Bacon in tow and the festive TV advert war all made the news this week. Steven Perryman rifles through the week’s headlines so you don’t have to

1. Tax – Starbucks in the dock

It seems that the arrival of the red cups in Starbucks – an event that gets way more traction than it should (a countdown website? Really?) – has actually spelt danger for the American coffee brand. Its had a tough week.

It started at the House of Commons where Troy Alstead, its Chief Financial Officer, was plonked in front of a public accounts select committee to defend its UK tax arrangements. It didn’t go well.

Trying to explain how the company hasn’t paid a penny of corporation tax in three years, but has an oddly high ‘royalty fee’ going to its European HQ in the Netherlands, proved tough with a horseshoe of MPs surrounding him dissecting every word.

But it was the claim that it has only made a profit once in its 14 years that proved too much, with Austin Mitchell MP finally snapping. ‘My heart has begun to bleed for you,’ he snarled. ‘I’m going to have to rush out to Victoria Street and have a double caramel macchiato because you’re doing so badly.’

It could have been worse: he could have worked for Amazon. Andrew Cecil, the online retailer’s Director of Public Policy (erm, where is the finance exec?), was accused of being ‘totally evasive’ after failing to explain who owned the company, and was unable to detail the income made by the British arm of his business. In the end he was sent away with derision ringing in his ears and calls for Amazon to send someone more fitting.

As if all that wasn’t enough for Starbucks, the Daily Mail has also started its own crusade against the coffee chain. The charge? Its free wifi encourages children to look at porn whilst they sip their coffee, obviously.

Beneath the sensationalist headline and inevitable hyperbole is a worthy discussion point.  With the Lords contemplating legislation to require internet service providers and phone companies to censor their internet connections by default, a new ethical debate has rightly emerged. Cory Doctorow kicked off the debate in The Guardian this week by arguing that filtering won’t work and will put power into censorware firms, helping cover up human rights abuse. Definitely one to watch.

But Starbucks shouldn’t feel too aggrieved. As Matt Packer argued here on AAT Comment this week, the general public find big brands hard to hate as they are just too convenient and engrained in our lives to have antipathy for.

And they won’t be the last to face such scrutiny, especially with HMRC’s new campaign to crack down on tax avoiders launching this week. We couldn’t help but notice that the new M&C Saatchi-designed poster to accompany the campaign bears a striking resemblance to the ‘devil eyes’ General Election poster from 1997. The target for that poster? Tony Blair. The target for the new poster? Tax avoiders like Tony Blair. Just a coincidence, surely?

2. Business – gas companies feel the chill

Feeling the chill? If you’re not, you could be with news that gas prices are on the increase this winter. Feel warmed, then, that the big power companies may be about to be the next set of corporates to get a public flogging.

This week it was announced that the City watchdog, the Financial Services Authority, is investigating claims by a whistle-blower that Britain’s £300bn wholesale gas market has been ‘regularly’ manipulated by some of the big power companies, exploiting weaknesses that echo the recent Libor scandal.

Just weeks away from the Autumn Statement there was more bad economic news, with research by the Social Market Foundation think-tank (SMF) showing that George Osborne will need to cut government expenditure or raise taxes by £48bn in the next Treasury spending round.  What with that and news that the City of London can expect to lose its crown as the leading global financial centre this year, it’s looking like a bleak winter ahead for the Chancellor.

Although it hasn’t all been bad news, with UK unemployment falling to its lowest total for more than a year. And accountants will be pleased to hear of reports of the profession seeing an increase in pay and demand, despite stagnation in other careers.

HMRC’s Real Time Information (RTI) bandwagon continues to roll on with a pilot scheme going ahead with as many as 250,000 employees between now and the end of March next year.

ICAEW has waded straight into HMRC, pointing out that its proposed RTI scheme is ‘at best unrealistic and at worst impossible’. Kevin Reed of Accountancy Age, meanwhile, argued this week that the answer could be to push back implementation another year.

3. Technology – EE footlooses ahead of its rivals with Kevin Bacon in tow

In technology the UK’s first 4G network has officially launched via EE, accompanied by a suitably ubiquitous advertising campaign (we would love to know how much EE slipped Kevin Bacon for those TV ads).

It was announced this week that the telecoms regulator Ofcom has given mobile operators four weeks to join the auction for superfast mobile broadband spectrum. The auction – pencilled in for next year – is expected to raise £4bn.

How Vodafone must be looking forward to that, with the news this week the mobile phone giant made a loss of £1.98bn, compared with a net profit of £6.68bn a year earlier. How it must wish it had the foresight of EE.

Which begs the obvious question: how did EE side-step the auction process anyway and get ahead of the game six months early? Well, the answer is by reusing a section of its own spectrum allocation previously set aside for 2G use. With initial reviews of the solitary 4G service this week proving very positive (just don’t mention the cost), the boffins at EE really have got every excuse to Footloose at the Christmas bash this year.

And finally – The Snowman takes on ‘Mum’

The festive season really is upon us and the retail giants are about to go to war. Sainsbury’s landed the first blow this week with reports that it has posted a 2.5% rise in half-year pre-tax profits increasing its market share to 16.7%, its highest in almost a decade. Tesco, the perennial market leader, is on the back foot already.

But the real battle will be on our TV screens, with the battle of the Christmas adverts now in full swing. And how they need to work this year, with news that there has been a fall in UK retail sales stoking fears that Britain is heading for a triple-dip recession.

How important retailers are seeing their adverts is best illustrated by John Lewis’s £6m ode to The Snowman, which the retailer rather extravagantly filmed on location in New Zealand. Nice work if you can get it.

But the real headlines have been made by Morrisons and, notably, Asda, for their rather stereotypical – or, as some are arguing, sexist – takes on the festive period. Dad wrestling with the Christmas tree, Mum peeling the spuds – and Nan reading 50 Shades of Grey in the corner. It’s all there:

Welcome, finally, to the silly season.

Steven Perryman is AAT‘s Editorial Manager

Apple joining the tax avoidance bandwagon, calls for students to discover their ‘hippocampus’ when revising and Wiggo’s take on living the tax-free life in Monaco, all made the news this week. Steven Perryman rides through the week’s headlines

1. Tax – hacks take a bite out of Apple

We give up. Just when tax flirts with dissipating from the news, it keeps coming back. If anything, this has been the busiest week yet. The festive break seems our only hope now of a return to the silly season.

Another week, another American brand. This time it’s the biggest: Apple. The Californian technology company has apparently paid less than 2% tax on profit made outside the United States last year. And? Aren’t the business hacks getting a little lazy with these stories now? Surely news that Apple might be on the decline may be of more interest?

Rather depressingly, HMRC admitted this week that it is currently unable to prevent big multinational corporations from declaring their profits in foreign countries. But there is hope. The government has announced that it is to start recruiting a team to oversee the development of guidance on the new General Anti-Abuse Rule (GAAR) to tackle abusive tax avoidance. Heads of large American brands need not apply.

As you would expect, tax avoidance is still getting a lot of coverage. Perhaps too much. This means broadcasters are increasingly looking for ‘alternative’ viewpoints on the subject. BBC’s Newsnight is currently ahead of the game by inviting fashion blogger, Poppy Dinsey, on to discuss corporate tax avoidance.

Not necessarily a strange decision in its own right, although the exclusion of economist Richard Murphy – whose research they were discussing – was odd and led him to complain of ‘straightforward discrimination’. Which is just the sort of accusation the BBC could do with just now, right?

In other tax news, the airline we all like to hate – Ryanair – is embroiled in a tax case in Italy. The budget airline is facing a €12m (£9.6m) tax bill on an alleged violation of Italian tax and social security contributions to its Italian employees. That’s really great news for anyone who has had to face the dictatorial bag checking process at the boarding gate (not that I’m bitter about it).

2. Education – how the ‘hippocampus’ helps you revise

With half term out of the way, education news turned back to graduates with the rather depressing news that 40% fail to get graduate-calibre posts more than two years after leaving education. The study by Warwick University’s Institute for Employment Research tracked 17,000 people from the moment they began applying for higher education courses due to start in autumn 2006 into the winter of 2011-12. What with sky-high fees to contend with, the cost of a degree just keeps on rising.

In other news, ACCA students have been warned again that too many exam scripts are proving unreadable, leading to candidates possibly losing valuable marks if the markers can’t read them. Perhaps computer-based assessments are the answer, guys?

Ah, exams – the bane of all our lives. Revision tips are always handy – amusing acronyms being the obvious way to remember things, right? Not so, according to David Cox, a neuroscience student who wrote an interesting blog on revision for The Guardian this week. According to Cox: ‘When you learn something new, a group of neurons activate in a part of the brain called the hippocampus.’  The what? Is that a really word? Scrabble players take note.

3. And finally…Wiggo on Monaco

We couldn’t review this week without mentioning Barack Obama, who won his second term as US President. He was even winning once the race was won too. His tweeted picture of himself hugging his wife, Michelle, became the most retweeted post ever on the social networking site. Watch out for a cynical attempt at replicating that with a British politician very soon.

But we also have to mention Tour de France winner, Bradley Wiggins, who has been all over the news this week plugging his biography and getting knocked off of his bike. Amid all the column inches, it was his response to a question about avoiding tax by living in tax haven Monaco that caught our eye.

‘I wouldn’t go to Monaco or anywhere like that,’ he lamented. ‘It’s a s**t hole. I couldn’t think of a worse place to live.’

Don’t you just hate people who sit on the fence?

Steven Perryman is AAT’s Editorial Manager

Tax has barely been off of the front pages recently with a spate of avoidance stories involving high profile brands and celebrities. But, as Steven Perryman argues, it is an ethical issue that has threatened to derail the prospects of US Presidential candidate Mitt Romney too

Transparency in politics rarely ends well.

Just ask the MPs embroiled in the UK expenses scandal three years ago. Tales of duck houses, moat clearing and blue movies being claimed at public expense rightly caused widespread furore. America, it seems, is no different.

Tax avoidance and the 2012 US Presidential election

The US Presidential election has been facing its own tax scandal. It’s all Democratic Senate leader, Harry Reid’s, fault. He claimed on the Senate floor in August, based on an alleged informant inside Bain Capital where Mitt Romney made his fortune, that the Republican presidential challenger had paid no tax for 10 years.

The Romney campaign team reacted angrily, releasing a letter from his accountants with a summary of his returns from 1990-2009. The letter showed that he had paid an effective average of 20.2% over the period, with the lowest return 13.66%. In case you’re wondering, the top rate of income tax in America is 35%.

Even the casual observer would fail to notice the absence of the last two years returns in that initial riposte, which was also merely a ‘summary’ rather than the hard figures themselves. If anything, the disclosure stirred the issue up even more, with the campaign managers from the respective candidates engaging in a negotiation battle to settle the debate once and for all.

Romney under pressure

With President Obama’s tax returns from the previous 12 years there for all to see on his own website, and with naysayers rightly pointing out that Romney’s father, former Michigan Governor George, released a dozen years of tax returns during his own unsuccessful run for president in 1968, he was left with no choice. A video secretly recorded at a donor dinner, in which he disparaged Obama voters saying they pay no income tax, hardly helped his cause either.

Romney relented and released his much-anticipated 2011 tax return in September, which showed he paid a rate of 14.1%. This amounted to a tax amount of $1.9m (£1.1m) in taxes in 2011, on $13.7m of income. In 2010 he paid about $3m, a 13.9% rate. Painful reading for any Romney supporter, but as Fox News rightly points out, such figures can’t always be taken at face value.

What the disclosure did mean was that the candidates’ respective tax policies have been easier to digest for the American voting public. Knowing the information has enabled the Washington Post to apply both candidates’ earnings to their proposed tax systems. It certainly makes for interesting reading.

How does Romney pay such little income tax?

But how does Romney pay such low tax on seemingly large earnings? One of the ways has seen him effectively renting the tax-exempt status of the Mormon Church – a charity – to defer taxes.

It is a system which doesn’t raise an eyebrow anymore given that we have become accustomed to tax avoidance scandals involving Jimmy Carr, Bear Grylls and our own former Prime Minister, Tony Blair, this year to name a few. Although perfectly legal, such schemes raise ethical questions, particularly in austere times such as these.

Stateside the issue has inevitably threatened to derail the Romney campaign – Obama even using it as an attack in the second presidential debate.

Impact of Superstorm Sandy on the controversy

Of course, a Presidential campaign is rarely fought on one topic alone – and Superstorm Sandy has rightly usurped the lot over the past week, offering Obama the kind of profile raising and photo opportunities that resonate with voters at the most crucial time of a campaign.

With the ballots officially opening this morning, the muddy waters of transparency – this time at least – may not prove to be as decisive after all.

AAT has recently launched a new website – AAT Ethics – which looks into ethical issues such as tax avoidance, offering support and guidance through podcasts, videos and articles.

Bad news for electrical retailers, Tony Blair taking free labour to the extreme and a macabre discovery in the aftermath of Superstorm Sandy all made headlines this week. Steven Perryman is your guide

1. Business – UK economy in a pickle

It didn’t take long. After last week’s euphoria at news the UK economy grew in the third quarter of this year, normal gloomy service resumed this week. Maybe it was Halloween or the clocks going back.

The CBI was the party pooper this week with its prediction that the UK economy’s long haul out of recession would last for at least a further two years. But banks thrive in a recession anyway, don’t they? Er, no actually, with news this week that Barclays has reported a £47m loss for the third quarter of this year, compared to a £2.4bn profit for the same period last year. Ouch.

Being fined £290m for manipulating crucial interest rates certainly didn’t help – and neither will the news this week that the bank is to be fined a further £270m for rigging US energy prices.

British institutions have also had a hard week. Hot on the heels of the planned closure of plants of car manufacturer Ford last week, comes news that Branston Pickle is to be sold to Japanese company Mizkan in a £92.5m deal. Whether pickle jars that play the national anthem are a thing of the past remains to be seen.

On the high street, the expected demise of electrical chain, Comet, was confirmed this week with news it is to go into administration putting 6,000 jobs at risk. In a bizarre coincidence, John Browett, the former Dixons boss, has been axed as Apple’s retail chief having only joined in April. Whispers coming out of the Californian company’s fortress is that store staff didn’t like his emphasis on profits over service, which is just what Comet needs right now.

Could Apple’s loss be Comet’s gain? Stranger things have happened.

2. Education – New Labour to free labour for Tony Blair

Although it’s half term, education has stayed high on the news agenda, with the chairman of the Independent Commission on Fees, Will Hutton, warning that a further fall in university applications next year would be ‘very worrying’. It could be argued universities are already worried, taking into account two degree courses announced this week.

In Salford, Peter Kay launched the university’s first-ever degree in comedy, while The Guardian reported popularity with students taking degrees in modern music. Surely the odds on a degree in partying and watching Countdown launching soon have just shortened.

It’s not all about going to university though. At an AAT-hosted round table event to discuss employer attitudes towards skills, the issue of whether employers are failing to appreciate the positive aspects of young employees – such as technology and social media skills – was debated.

It’s a debate Tony Blair could have done with sitting in on. News broke this week that his office could face investigation over its use of unpaid interns. It was news which prompted an instant u-turn from the multi-millionaire ex-Prime Minister. Less New Labour and more free labour, eh Tony?

3. Tax – ‘tis the season to be…sober

Ah, tax – the news subject that just keeps on giving. Tax avoidance is slowly creeping away from the front pages, but not without a final kick from Labour who has finally spotted a hot topic (four weeks after everyone else). Labour MP Helen Goodman has criticised Google, Facebook and Twitter’s lack of social responsibility, calling for them to help fund anti-cyberbullying measures.

In bad news for bookshops, it was reported that VAT levied on e-books may be dropped by the government if a legal challenge by law firm Berwin Leighton Paisner proves successful. Tablets and e-readers will surely top many Christmas lists at that news.

It is only a month or so until George Osborne’s Autumn Statement on 5 December, and the armchair Chancellors are already circling. CIPFA has waded in, warning the Chancellor that he needs to place emphasis on stimulating growth, such as tax cuts or private sector investment, come December.

Meanwhile one of George’s cash cows – alcohol duty – has come under the spotlight as we head into the lucrative Christmas party season. This week there have been calls for the government’s beer tax ‘escalator’ to be scrapped. Under the annual rise, beer costs rise by 2% plus inflation meaning the price of a pint in the UK rises by between 5p and 10p each year.

It is something which has got the Campaign for Real Ale (CAMRA) hyperventilating through its beards, with concern over the number of pub closures brought about by rising costs. That, coupled with an impending global wine shortage, means this year’s festive period looks like it will be drier than usual. Cheers!

4. USA – Superstorm Sandy: too good an opportunity for retailers

All eyes have turned to America this week, and not to monitor the last throes of a tightly-fought Presidential election. Instead it was to watch the impact Superstorm Sandy had on the east coast.

The effect was devastating, with a record storm swell of four metres recorded in New York. It was an event even the US Presidential candidates daren’t use for political gain, with both Obama and Romney rightly abandoning the campaign trail. It’s a shame that some US retailers couldn’t show the same restraint, despite the lure of a seemingly irresistible marketing angle so close to the profitable festive period.

Leading clothing retailer American Apparel sent an email to consumers about a 20 per cent off sale ‘in case you’re bored by the storm’, while Urban Outfitters sent out an email alert containing the subject line: ‘This storm blows (but guess what doesn’t)…’ The offer inside touted free shipping. Gap, meanwhile, checked in at Foursquare to the ‘Frankenstorm Apocalypse,’ touting plans to do ‘lots of Gap.com shop.’ Just as well these storms only come round once in a generation.

5. And finally – Superstorm Sandy remains

As always, the ‘and finally’ story was a tough call. Highly commended efforts include news that a prowler at Tom Cruise’s house was hit by a stun gun fired by a security guard. The offender? Not a stalker, but the actor’s drunk neighbour who entered the property by mistake.

It is only fitting, though, that a story borne out of Superstorm Sandy should take top spot. Rather fittingly for a storm that struck the same week as Halloween comes the macabre news that bones from a centuries-old human body were unearthed by a giant oak tree toppled by Superstorm Sandy in New Haven, Connecticut. The resulting news article is like a scene from CSI.

Only in America, as they say.

Steven Perryman is AAT’s Editorial Manager