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British town tries offshore tax tricks to rattle government

[LONDON] Small businesses in a British town including a baker, a bookseller and an optician are mimicking the tax avoidance schemes used by multinational corporations in an effort to pressure the government on loopholes.

Small shops in the town of Crickhowell in southeast Wales, which has a population of 2,800, are drawing up plans to minimise their tax bills.

They hope their move will be copied by other towns - and force the government to crack down harder on tax avoidance by some of the world's biggest companies.

They are being advised by experts and the attempt is being carried out for a 2016 BBC documentary called The Town that Went Offshore.

The historic town is the birthplace of George Everest, after whom Mount Everest is named.

Its centre is dominated by independent traders.

Businesses involved in the attempt also include a coffee house and a smokery.

"It's jolly clever," said Jo Carthew, who runs the Black Mountains Smokery, a family-run business selling smoked salmon and cured meats.

"Until now, these complicated offshore tricks have only been open to big companies who can afford the lawyers' fees. But we've put our heads together, and worked out a way to mimic these big tax dodgers."

In recent weeks, the group had a meeting with officials from Her Majesty's Revenue and Customs (HMRC), Britain's taxation authority.

"We believe in paying tax but firmly believe that big companies should pay their fair share too," Ms Carthew told AFP.

"The concept we have come up with will hopefully demonstrate that, in principle, small businesses, working in coalition, could become more tax efficient by mimicking strategies used by multinationals," she said.

"We intend this to serve as a threat to government rather than a promise - an incentive to encourage them to close loopholes in the tax laws."

Last December, Britain slapped a new 25 per cent tax rate on the UK-generated profits of multinational companies that seek to avoid paying their fair share to Treasury coffers.

The move came amid simmering public anger over the tax affairs of multinationals like US technology giants Amazon, Apple, Facebook and Google and coffee group Starbucks, who seek to shift their profits from higher tax countries to those with lower tax rates.

The companies concerned say they respect the law in the countries in which they operate.

The Diverted Profits Tax seeks to raise more than £1.0 billion (S$2.2 billion) over the next five years.

An HMRC spokesman said of the Crickhowell plans: "They came in and talked and put some of their concerns about this incorrect perception that large business isn't taxed properly.

"We make sure that all businesses, large and small, pay the tax payable under the law," he told AFP.

The documentary will be part of a series called Britain's Black Economy, to be screened on BBC Two television.

AFP