An interesting series of questions about the Fair Tax Mark. Most interesting:
The Unfair Tax Mark
If you were a fake doctor, selling a fake remedy, the clever thing to do would be to create a fake illness or wildly exaggerate the dangers of a real one. Then you could offer your fake solution (for a fee of course) to a worried, nervous public.
Is that what has happened with the Fair Tax Mark organisation? You may have heard of it. It takes money from companies, runs tests on them about their tax affairs and then hands out a ‘Fair Tax Mark’ (“FTM”) if it decides the company deserves it. And then the company can tell all its customers what a fair and upstanding member of the business community it is.
That could be important in today’s climate. There’s lots of public anger at tax dodging. A company’s reputation could be damaged by adverse publicity and it could be argued that having a FTM is the cure or vaccination against this bad publicity.
It so happens that one of the FTM founders and one of its directors is Richard Murphy a tax campaigner who is constantly writing about tax “abuse and evasion” using numbers and making claims that no-one else recognises. He’s estimated tax evasion and avoidance at four times the official figures. An extra £90 billion he says is being lost. He’ll tell you that HMRC is underfunded, that Companies House isn’t checking on companies, that the government is deliberately not collecting all the tax it could.
If you were to believe what he wrote, you’d think it was a lawless tax ‘wild-west’ out there.
And then he offers companies the chance to pay a fee to be given a FTM. So that they can be seen as one of the ‘good guys’.
Murphy writes extensively about the ‘illnesses’ of tax evasion and then sells a certificate of vaccination.
But is the FTM worth anything? The Fair Tax Mark Organisation is not an official body, it’s not overseen, it’s not accountable, there’s no external appeal process against its verdicts, it doesn’t publish its findings, it doesn’t have any investigative powers. All we can say for sure is that a fee is charged and a FTM given.
Even then, is the FTM a sign that the company is one of the ‘good guys’? I’m not sure. Energy firm SSE was given a Fair Tax Mark in 2015, shortly before it was named as having failed to pay some of its staff the National Minimum Wage. Did the FTM people investigate that before handing out their FTM? Or isn’t paying NMW something the FTM people are worried about? Or is it something that can be overlooked for a fee? We just can’t tell, because the FTM people won’t go into details.
And another company ATM Coffee Limited which was awarded the FTM in March of this year. A quick look at their Companies House records shows that it is 27% owned by a family Trust. Anyone reading Murphy’s columns will know that he constantly criticises the UK’s Trust rules for the secrecy they allow for those who benefit from Trusts. Was the granting of ATM Coffee’s FTM accompanied by details of the beneficiaries of this Trust? No. We don’t know who they are.
I’m not for a moment suggesting there’s anything wrong here. But if Murphy sells the FTM on openness and transparency and if he criticises Trust secrecy, it seems an odd way to go about things.
The point is this. The tax rules are complicated and if you wanted to, you could fool the public (and MPs) into thinking there was some sort of wild-west out there, with manipulative companies running rings round a hapless HMRC. And if after doing that you set up a company which took money off companies to give them a ‘Fair Tax Mark’ which you alone decided to award? I think that’s dubious.
And it’s not as if the FTM people are being totally straight anyway. On their website they have re-published an article from the Daily Mirror. In the Article the Daily Mirror calls the Fair Tax mark “the UK’s official accreditation scheme for businesses paying their fair share of corporation tax”. But of course FTM is not officially accredited. Not at all. It’s totally unofficial. Sure, newspapers get things wrong but why did FTM republish the article on their own website? To mislead readers? Even worse, when I emailed FTM and asked them to remove the article, they refused. They admitted the article was not accurate but refused to remove it! Why? Anyone reading that article is going to be mislead and FTM surely knows it and doesn’t seem to mind.
So, who has bought into the FTM so far? If you read the FTM literature, they reference “1,500 shops and offices” as being FTM accredited. Wow, 1,500 companies? Sound impressive? Actually, no. It’s less than 40 companies, it’s just that a couple of them have lots of offices. So why not say that? Why not say “40 companies”? Isn’t saying 1,500 shops and offices a bit, well, likely to mislead? Like allowing an article on their website saying they are ‘officially accredited’ when they aren’t?
It’s not even THAT difficult to get a FTM. There’s a list of questions and up to 20 marks are awarded but you only need 13 out of 20 to get the FTM and some of those are awarded for listing the names and addresses of directors and trading address of the company!
It doesn’t set the bar very high – but maybe it wouldn’t attract a fee paying client base if it did?
But the thing that really sinks the FTM in my view is its views on dividends. Small company owners pay themselves dividends to avoid NIC. It’s the biggest single NIC avoidance plan out there. The government has changed the rules a lot in the last couple of years because it is so concerned about this. But what does FTM say about companies that avoid NIC this way? Can they be awarded the FTM despite taking part in the biggest single loss of NIC to the government? Yes, because according to the FTM people;
“We have chosen not to…subtract, marks for the taking of reward from companies by way of dividends in lieu of salary because this arrangement is so commonplace”
So, FTM’s view seems to be “it’s an obvious NIC avoidance trick but everyone’s doing it so that’s OK.” The point here is that FTM seem to be saying that there are some legal ways of saving tax/NIC they disapprove of and some they are prepared to turn a blind eye to in order to attract. customers.
So, what do we have?
An unofficial organisation which allows misleading information on its website, which gives FTMs to companies that don’t pay NMW, avoid employers’ NIC or which are owned by family Trusts, contrary to the condemnations of one of its directors and which decides itself, with no accountability, who gets the FTM and which was set up to supposedly reassure a public made suspicious (at least in part) by the writings of one of its founding directors.
Is that a ‘Fair’ Tax Mark? You make up your own mind.