Treasury committee could grill US companies over 'tax evasion'



American companies at the centre of a UK tax avoidance controversy could face a root and branch investigation by the Treasury Select Committee.

The Commons committee, headed by Andrew Tyrie MP, is considering whether to lend its weight to the escalating furore over the UK tax affairs of large foreign-based businesses with UK arms and could call companies to account by early next year.

Such an investigation would look at how tax policy should be recalibrated by the Government to ensure profits are not being siphoned off aggressively to lower tax-paying jurisdictions and away from the exchequer.

It would mark an escalation of the campaign against corporate 'tax evasion' which is set to see executives from Starbucks (NasdaqGS: SBUX - news) , Amazon and Google (NasdaqGS: GOOG - news) grilled by MPs (BSE: MPSLTD.BO - news) within days. The trio already face a probe from the Public Accounts Committee, and have been asked to given evidence next Monday.

The PAC is looking at the effectiveness of HM Revenue and Customs and whether it is doing enough to ensure the taxman gets everything he's owed. Today, the Committee is to questions Lin Homer, chief executive of HMRC, and will focus on the methods that foreign corporations employ to pay so little in tax, and whether the taxman is able to cope.

Margaret Hodge, who chairs the PAC, said: "Ordinary people and small businesses, who always pay their taxes, are furious that big corporations find ways to wriggle out of paying their fair share. It is not right."

Ms Hodge's comments came as US regulatory fillings showed that Apple (EUREX: AAPF.EX - news) is paying less that 2pc tax on its oversees profits , despite earning $36.8bn of profits outside the US. According to reports, Apple (NasdaqGS: AAPL - news) shifted money through offshoots in low tax countries and tax havens, such as the British Virgin Islands. The company also keeps $83bn of its $121bn cash pile offshore.

Apple also uses a subsidiary in County Cork, Ireland (Xetra: A0Q8L3 - news) , where corporation tax is half what it is in the UK, to channel its British business.

In its latest UK accounts, Apple made £1bn in sales and £81.3m in profits, generating a £14.4m tax bill. But it has been claimed that a more realistic tax bill would be closer to £570m.

"We need to ask whether HMRC has the right skills to challenge big companies and why businesses are being allowed to get away with this?" asked Ms Hodge.

"The UK tax regime is so complex that it is much easier for highly paid lawyers and accountants to devise ways to avoid tax all within the law."

Starbucks (HKSE: 4337.HK - news) has paid no corporation tax in Britain for the past three years, while Amazon, Facebook and Google have together paid less than £30m of tax despite sales of £3.1bn over the past four years.

Ms Hodge said that if the likes of Starbucks wanted to benefit from the public services, such as roads and transport, "which are paid for out of tax, they have a big duty to pay fair contribution".

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