The Guardian: Uncut and Full of Cant

On Saturday morning The Guardian decided to give UK Uncut a front page boost.  The protestors managed to shut down three dozen of the 1,720 branches of Barclays bank. Surprised they found any branches to occupy given Saturday opening hours.

The gist of the shabby story was Barclays bankers are evil tax dodgers. The evidence was a hatchet job with the paper making the spurious claim that Barclay’s only paid 1% tax on their £11.6 billion profits. In arriving at a profit before tax figure of £11.6 billion, The Guardian has added the profit from the ongoing business (£4.5 billion) to profits from a disposed business (£726 million) and the gain made on disposal of that business (£6.3 billion) to reach a total of £11.6 billion.

What they chose to ignore however was the total tax take Barclay’s had to pay; payroll taxes, bank levy, non-recoverable VAT, employers NI, SDRT and so on. Over the weekend Tim Worstall and the FCA Blog tore chunks out of the piece:

The article compares the cash paid to HMRC in respect of UK corporation tax in 2009 (£113 million) to the profits generated by the consolidated Barclays group worldwide in 2009. In the UK, tax is paid in arrears, so 2009 taxes would relate to widespread 2008 losses, not 2009 profits.

Multinational companies such as Barclays pay tax in a number of jurisdictions. Generally speaking Barclays only pays UK corporation tax on profits it generated in the UK.  Anything earned outside the UK doesn’t get taxed here. So it’s a howler to compare the UK corporation tax payment to the global consolidated profit. Most of those profits were taxed where they were made.

In 2002 (under Gordon Brown, Chuka), the UK government introduced the substantial shareholdings exemption, a corporation tax exemption for UK businesses disposing of a substantial shareholding in a part of their business. The idea was that businesses should be able to restructure their businesses without having to worry about chargeable gains implications. Barclays are heavily criticised by The Guardian for using it.  The last time that Guido saw this being used was by the, err, Guardian Media Group to save themselves some £60 million of taxes in 2008:

“In 2008 GMG sold half of Auto Trader publisher Trader Media Group and made an exceptional (one-off) profit of more than £300 million. No tax was payable on the return from that sale because under UK law GMG qualified for SSE”

In 2008 The Guardian made £302 million in profits and paid no corporation taxes. The CEO, Carolyn McCall, was paid an £827,000 package. Yet we don’t see the UK Uncut crowd kicking up a stink about The Guardian’s tax structures or their fat cat pay and bonuses.

Over the weekend the Guardian editor Alan Rusbridger (half-a-million a year since you asked) tweeted about Barclay’s offshore holding corporations. Guardian Media Group holds hundreds of millions in assets in a Caymans Island domiciled offshore corporation.

Guido put it to the GMG press office that GMG has £223.8 million invested in an overseas/offshore hedge fund managed by Cambridge Associates which trades currency derivatives. They don’t deny it and have declined to confirm the fund’s structure for tax purposes.

Guardian readers seem to be under the illusion that it is owned by a not-for-profit charity. The Scott Trust was wound up in October 2008 and the Guardian is a for-profit-privately-owned media business, the well paid directors of which confirm in their annual accounts that they operate tax strategies in line with their fiduciary duty to the shareholders – just like any other business.

The old Scott Trust was set up in 1936 to avoid inheritance taxes and wound up in 2008 so that GMG could cynically exploit the SSE capital gains tax shelter to pay 0% in corporation taxes on their £302 million in profits that year. GMG claim that it was about modernising the holding structure, in fact it was a disingenuous cover for corporate venality.

For three quarters of a century the The Guardian has been shirking taxes, Guido has no problem with them acting in their shareholders’ best interests. The hypocritical cant from them however about others doing the same is beyond contemptible…




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Quote of the Day

John McDonnell does a funny:

“I’m told there are a group of KGB colonels who are suing The Sun for associating themselves with us.”

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