Vir Cantium

I'm right, you know …

Frankie Boyle leaps to Vodafone’s defence

Remember the furore a few weeks ago, when Vodafone posted healthy profits but paid – gasp – no UK corporation tax?

Well, that left wing comedian firebrand Frankie Boyle – of all people – has come to their defence.

Granted, he probably wouldn’t see it that way.

However, let’s suppose that Vodafone’s CEO tweeted the following about the reasons for the zero tax bill:

We incurred the capital expenditure for reasons separate from tax and our accountants applied for tax relief on this.

You see, the main reason for Vodafone paying no corporation tax is that they had set a significant amount of capital expenditure against their taxable profits, by way of capital allowances and related reliefs*. Unless Frankie really thinks that all that investment in new tech and so on was just an elaborate tax dodge, then it is clear that Vodafone’s tax bill was reduced entirely legally, indeed using provisions set in place by Parliament.

Vodafone could have chosen not to claim the allowances, but why should they do that?

It’s a bit like Entrepreneurs’ Relief, which reduces the capital gains tax rate to 10% on distributions of reserves on the dissolution of a qualifying company – such as Frankie’s.

Frankie could have chosen to distribute those remaining reserves in his company as a dividend (paying around 36% income tax net) or even as salary (that’s just under 60%, including employer’s NI). But why should he do that?

Oh yes you do, mate. Go back a few years and you might remember the venture capitalists who pointed out that they were paying tax at a lower rate than the office cleaners. Yes, that was through treating income as capital (as you have) and using Business Asset Taper Relief – a forerunner to today’s Entrepreneurs’ Relief.**

So I applaud his use of legal means to reduce his tax bill – starve the beast and all that. The problem, for him, is that he is now clearly a hypocritical b-tard. Therefore I trust we’ll hear no more nonsense from him about tax dodging (blurring the distinction, as he and his fellow travellers do, between tax avoidance and evasion).

Pigs have evolved into a rather aerodynamic shape these days, haven’t they?

* See Christie for his usual excellent precis of the situation and demolition of yet another bunch of ‘financial’ ‘journalists’.

 

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2 responses to “Frankie Boyle leaps to Vodafone’s defence

  1. Bon Chance July 2, 2012 at 4:50 pm

    Point 1: How do you know what was being liquidated by Mr Boyle’s accountants? You might want to make your ‘readers’ aware that if the company was liquidating its assets, he would not have paid income tax at an effective rate 36.1% exc NIC, but CGT at just 20-26%.

    Point 2: You do realise the importance of entrepeneurs to the UK economy? Most taxation policies have ulterior motives aside from individuals ‘tax-dodging’ one of the most important eing economic stimulus. Fair enough, a number of individuals slip through the net and should be castised for it, however do you really think people like Frankie Boyle are clever enough (or have the time to understand these issues? No, they pay smarter individuals to do it for them). How about instead of whinging about it 24/7 you actually put your time to use and think about coming up with a new relief to encourage economic growth, sans loopholes. Oh wait, not that smart are we…

    • vircantium July 2, 2012 at 6:52 pm

      Sadly you appear to have missed my point. I have no problem with Boyle using these provisions and reliefs. I do have a problem with him and his ilk attacking others for seeking to minimise their tax bill – through legal means – and yet then doing so themselves.

      Yes, he would have paid CGT at 18% or 28% had he not claimed the Entrepeneurs’ Relief/Rate – the latter is optional, after all. Similarly he could have gone further and chosen to withdraw the accumulated reserves via a dividend prior to liquidation and paid income tax at 36.1% or even paid himself a salary/bonus and incurred an even higher rate of tax/NI (not that I would ever advise a client to do that, of course).

      The fact that he might not understand the above does not excuse him from his hypocrisy having been ‘found out’. At least Jimmy Carr apologised.

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