The Fair Tax Mark was set up by Richard Murphy so obviously we’ll not be surprised to find that it is staffed by know-nothings. It is still a tad of a shock to find out that the person actually running the organisation doesn’t understand the very thing he supposedly accredits, the taxation of companies. But this is so, sadly:
Coffee shop chain Caffe Nero paid no corporation tax in the UK last year, despite ringing up profits of £25.5m. The company, which has 613 stores in the UK and Ireland, said it paid no corporation tax because its parent company reported a loss. Caffe Nero is part of Rome Pikco Group, a holding company that manages the chain’s presence in the UK, Turkey and the Gulf states, and reported a loss of £22.2m in the year to the end of May 2016.
Well, that’s fine. One part of the group made a profit, another part of it didn’t. Not quite exactly but roughly enough we tax at the group level, meaning we net off those profits and losses to get to the profit figure for the organisation as a whole – an obvious and logical thing to do.
As to why the no profit as a whole, from when this was all being shouted about last year:
The current owners of the company bought it with debt. There is interest to pay upon that debt. And corporation tax is a tax upon profits. The reason Caffe Nero does not pay corporation tax is because it does not make a taxable profit.
This information is readily available, seems simple enough to us and has been that easily available for half a decade now.
There really is nothing more to it than that. Well, except for the fact that the people who self-appointed to be the arbiters of what is fair tax seem not to understand this:
But Paul Monaghan, chief executive of the Fair Tax Mark ethical accreditation scheme, said its tax arrangements are ‘parasitic’ and ‘insulting to the intelligence of the British people’.
He added: ‘Time and time again, the likes of Caffè Nero come up with reasons to avoid paying their share of corporation tax.’
The reason Caffe Nero hasn’t paid any corporation tax is because they don’t owe any corporation tax. And don’t we think that someone running the Fair Tax Mark should say that, well, they don’t owe tax which is why they haven’t paid tax so that’s, erm, fair? And shouldn’t someone awarding Fair Tax Marks actually understand tax?
Or are we being hopelessly neoliberal here?