Pharmaceutical GlaxoSmithKline (GSK) has denounced the portrayal of the company’s tax affairs in the BBC’s Panorama program as “extremely misleading and lacking in context”.

The program, broadcast on May 14, 2012, investigated the company’s use of corporate structures in Luxembourg created by PWC Accountants to reduce its exposure to corporate tax in the United Kingdom. In a statement issued shortly after the program the firm stated that “selective use of facts led to a misrepresentation of GSK’s actions and a failure to recognize GSK’s significant UK tax contribution”.

Panorama stated, GSK used interest payments paid on loans from Luxembourg subsidiaries, which was effectively taxed at less than 1%, to reduce its UK income tax bill by GBP34m. “The company puts its money into Luxembourg and borrows it back. It just sends money round in a circle and picks up a tax break on the way.”

In defence, the company stated that: “GSK is a global company with 95% of its sales outside the UK; however 20% of the company’s tax bill is in the UK. In total, over the period covered, GSK paid around GBP1bn in UK corporation and business taxes, plus an additional GBP1.3bn through income taxes of its UK employees.“

“GSK strongly refutes any allegation of wrongdoing. At all times the company proactively disclosed its tax transactions to the relevant authorities and both the UK and Luxembourg tax authorities are agreed that GSK paid all the taxes due.”

GSK concluded: “The difference between UK and EU laws in this area has always created uncertainty for global organizations like GSK. GSK supports the new Controlled Foreign Company tax rules developed by the UK government related to the taxation of overseas earnings which will provide greater certainty despite the fact that they will increase the company’s UK tax bill.”

Appleton Richardson & Co

Despite Tax Avoidance being legal practice the Chancellor is looking to instate laws that will inhibit these avenues that are available to tax payers or staunch them entirely. There is a difference between Tax Avoidance and Tax Evasion, which is illegal, and that difference is the former works within the law.

With Chancellor Osborne’s research into the matter and possible changes to the law looming it helps for the tax payer to know what they are dealing with. There are several ways in which one can reduce their tax rates and there are a few changes in the law that Osborne wants to enact which will decrease their effectiveness and possibly trip up those who are new to tax planning.

A complex way for a business to statistically warrant smaller charges is by recording artificial losses. The business makes superfluous, though relevant, transactions which show financial losses that are offset against income.

This is not illegal money laundering as the finances are not being distanced from a criminal financial source, but it is considered ‘creative accounting’ by some and it’s something that George Osborne really wants to crack down upon.

He is looking to formulate a General Anti-Avoidance Rule, GAAR, which will better define the line between responsible tax planning and abusive avoidance. This law will certainly move the goal posts.

The tax planner will want to know this new law very well to avoid being considered engaging in criminal activity.

Another method that could more directly be a part of a business structure utilizes the benefits of employing a family member, husband or wife. This logic is perfectly reasonable as a small business might only be making a profit due to the significant savings made on salaries this creates.

By splitting the income tax over two people the company will benefit from a greater tax-free allowance as well as the two more modest-looking salaries keeping them in a lower tax bracket. This currently only applies to individuals with a taxable income of less than £100,000, however.

While this is certainly no small change, for a bank that made £7billion in the first half of this year one wonders whether this is the full extent of the law coming down on them or just a small tap on the wrist.

The bank’s subsidiary, NHFA, was found to have been selling five-year investment plans to elderly and disabled customers – many of whom arguably would have been expected to pass away before the investment horizon.

The complex structure of the high-yielding investment meant that withdrawals before the five years came with heavy charges, and in the event of the policy-holder’s mortality such charges would have meant the return on the investment would have been less than the initial payment.

Their selling point was that the scheme was an attractive way for customers to pay for expensive health care fees and leading charity Help the Aged were even paid a commission for directing the customers towards NHFA.

While HSBC Chief Executive Brian Robertson was “profoundly sorry that… NHFA failed to give suitable financial advice” the Financial Services Authority (FSA) described the subsidiary’s violations as “particularly serious” and “systematic”.

HSBC, the multi-billion pound bank, was therefore charged £40 million for what could conceivably be malicious intent from its subsidiary. This calls into focus the action taken in November against land bankers in Kent and Greater London, in which the FSA and the City of London Police arrested five people in connection to land banking schemes.

The concept in question bears similarities to the long-term investment scheme that NHFA were offering. Customers are sold a plot of land which is forecasted to sharply rise in value once it gains planning permission or other potential once the spread of building development reaches the land. It can then be sold for a profit.

Land banking is a controversial but legal investment opportunity; while it is vulnerable to sharks many investments have fallen through via genuinely mistaken forecasts – and of course many other cases have succeeded. Some of the most prolific advocates of land banking in the UK are our top competing supermarket chains.

So while HSBC is given an easily manageable fine, it suffers nothing more than the stigma of unsupervised investments – something that will most likely not affect, or even become aware to, most of it’s account holders.

On the other hand, while the FSA has to date refused to comment on the arrests in London and Kent, there has also been no mention of a large company being investigated, only “individuals” who have been arrested. Any fines and repayments that these individuals will be forced to make would certainly not be a comparative sum of their net worth to that which HSBC has faced, and that is ignoring the likelihood of a looming custodial sentence.

There was also a case in June last year of a land banker having been banned for life by the FSA from selling land. So where is HSBC’s embargo on investments? These individuals have faced and will face zero tolerance restrictions and fines whereas the prestigious HSBC is allowed to simply weather the PR storm. No other legal action appears to have been taken against NHFA as its founder is currently running another financial advice firm, again targeted specifically at the elderly, called First Stop Care.

Despite heading a scheme that can be strongly implicated in intentional malevolent activity, those responsible at HSBC are shown extreme leniency whereas those individuals arrested in the land banking investigation have experienced swift retribution from the law despite no evidence of genuine scams having yet come to light.

Has the law been too light or too quick to condemn? Either way the FSA’s meting out of justice certainly isn’t consistent.

Kierran Jamieson

Appleton Richardson & Co

The current 5pc minimum holding requirement for entrepreneurs’ relief from CGT – which offers a 10pc rate on the sale of qualifying shares as opposed to a rate of 28pc – has prompted criticism for leaving staff who only have small shareholdings vulnerable to a far higher rate of tax on their gains than that of the actual founder of the business they work for. Therefore Jonathan Straight (founder of Straight Plc, an Aim-listed recycling business) was initially cautiously optimistic about what he read regarding about the new rule in last month’s Budget. It identified itself as allowing members of the Enterprise Management Incentives (EMI) share-option schemes to qualify for entrepreneurs’ relief even when they did not hold 5pc.

However, further details made available on HMRC’s website last week has changed his opinion on the matter, as staff have to turn their options into shares and hold them for one year before they even qualify for the scheme.  As EMI options already have to be held for three years, Mr Straight believes this a less than desirable outcome, especially as staff in the scheme will be negatively affected if they do not have the money required to take up options. It is common practice to fund option purchases by selling shares once the option has been exercised – and these shares will still be subject to tax at the higher CGT rate under the new legislation.

All in all, Mr Osborne’s changes have not evoked the positive response that was anticipated, and Mr Straight in particular believes the matter deserving of further consideration.

 Caroline May

Appleton Richardson & Co

According to The Daily Telegraph, Britain’s 20 biggest tax evaders utilised three main loopholes to achieve this end, managing to successfully reduce their income tax bills by a total of £145 million in a year. In some cases, they were able to lower their bills by as much as half via methods such as writing off business losses in one of their companies against the bills, offsetting business mortgage costs and borrowing on buy-to-let properties against the bills, and taking advantage of the relief on charitable donations.

“We are taking action,” Mr Osborne told The Daily Telegraph in response to this information. Though the measures taken were technically within legal bounds according to tax laws, he does not consider them fair practice.  Therefore he is resolved to enforce what has been dubbed a “tycoon tax” where multi-millionaires must pay approximately a third of their earnings as a minimum tax rate.

In response to Mr Osborne’s toughening policy on tax avoidance, the Tories and the Liberal Democrats are cutting the top tax rate of 50 per cent to 45 per cent from 2013 onwards, the reasoning being that instructing the tax-avoiders to begin paying their income tax means that Britain can afford not to have the higher income tax rate overall.  However, there has been some criticism from charities regarding Mr Osborne’s proposed legislation for next year’s tax relief, where the total amount that any individual can claim will be limited to 25 per cent of their income or £50,000, whichever is the greater figure. Concerns are that this will impose restrictions on philanthropic giving, potentially ending more notable donations to causes.

This is not Mr Osborne’s aim, however. He wishes to advocate and protect philanthropy wherever possible, but also believes that the issue of tax avoidance is a matter that must, and will, be addressed.

 Caroline May

Appleton Richardson & Co

Sponser: Personal finance software Mac

invisible children. March 7, 2012 by abby. Check out this video and share it! I don't usually post this sort of thing, but I have not been so moved as I was by this video, in quite a long time. I am excited about a new kind of activism that seems to

KONY 2012 is a film and campaign by Invisible Children that aims to make Joseph Kony famous, not to celebrate him, but to raise support for his arrest ( Resource: NGO Raises Awareness of Joseph Kony With Short Film Thank you for reading this and

A documentary called Kony 2012 has been launched by action group Invisible Children, in order to draw attention to Ugandan Joseph Kony, who is said to abduct youngsters and place them into his army unwillingly. The film says the children are trained to

The California-based Invisible Children not-for-profit campaign says it wants to harness the power of the internet to raise awareness and bring the indicted war criminal, who leads Uganda's murderous Lord's Resistance Army, to justice.

7, 2012 – Apple gave the new iPad a bunch of new features but no new name. As expected, it has a sharper screen, driven by a faster processing chip. (/The Associated Press) Correction: Clarification: SuperFan badge holders consistently post smart,

By Michael Kan IDG News Service – As Apple unveiled its newest iPad on Wednesday, a local company in China warned suppliers and vendors in the country to stop sales of the tablet or face legal action, in what has become a heated battle over ownership

The "New iPad" is Apple's first foray into LTE, the standard the world at large considers to be 4G, but despite conforming to that standard it can use either Verizon or AT&T networks, not both: and it won't be able to use LTE connectivity anywhere else

Apple CEO Tim Cook announced it, and the SVP of marketing, Phil Schiller broke down all the specs. It's simply called "iPad." Here's what it has: Retina Display, 2048 x 1536. Quad-core A5X processor for improved graphics.

By Lyneka Little Whitney Houston, who passed away at age 48 on Feb. 11, reportedly bequeathed everything to her 19-year-old daughter Bobbi Kristina Brown. According to numerous reports including one in the Associated Press, the superstar singer's 19

By Lyneka Little Whitney Houston, who passed away at age 48 on Feb. 11, reportedly bequeathed everything to her 19-year-old daughter Bobbi Kristina Brown. According to numerous reports including one in the Associated Press, the superstar singer's 19

Whitney Houston's will is revealed and daughter Bobbi Kristina will receive all of the late singer's possessions and fortune.

Whitney Houston has left everything to her daughter Bobbi Kristina, according to a will originally signed in 1993 and amended in 2000.

This extreme ultraviolet wavelength image provided by NASA shows a solar flare that erupted at 7 pm EST on Tuesday, March 6, 2012. An impressive solar flare is heading toward Earth and could disrupt power grids, GPS and airplane flights.

This extreme ultraviolet wavelength image provided by NASA shows a solar flare that erupted at 7 pm EST on Tuesday, March 6, 2012. An impressive solar flare is heading toward Earth and could disrupt power grids, GPS and airplane flights.

A huge solar storm on the sun is interacting with the magnetic field of the earth around the poles. Perry Vlahos of the Victorian Astronomical Society says if the sky is clear, it could be the first time since the early 1990s that the southern light

This extreme ultraviolet wavelength image provided by NASA shows a solar flare that erupted at 7 pm EST on Tuesday, March 6, 2012. An impressive solar flare is heading toward Earth and could disrupt power grids, GPS and airplane flights.

For those who haven't launched Software Update yet, here are some highlights from the new Apple offerings: The iOS 5.1 update, which we discussed earlier today, includes two additional features we didn't see listed in Apple's release notes.

But buried within the yet unreleased iOS 5.1 are references to two unreleased mobile processors, suggesting Apple is actually working on both at the same time. As explained by 9to5 Mac, Apple's A4 processor has a model number of S5L8930X,

Tim Cook says iOS 5.1 will be available for Apple customers today in the US. It's expected there will be updates to PhotoStream, a new camera slider and.

By beccacaddy on March 7, 2012 Comments (0) Apple has just announced at its 'mystery' iPad 3 event that its latest version of iOS 5.1 will be available to download from today. There's been little indication about the new features yet, but the main news