Council leader: 'Boots are avoiding paying corporation tax'
THE leader of Nottingham City Council has pointed the finger at Boots during a debate about corporation tax avoidance.
But bosses at the city-based pharmaceutical giant have hit back – saying they fully comply with the law.
Councillor Jon Collins listed Boots among other companies that he believes may be avoiding corporation tax – alongside Amazon and Starbucks.
However, "tax avoidance" is not illegal, as it is made possible due to loopholes in the law, and Mr Collins described it as a "moral issue".
Speaking at a full council meeting this month, Mr Collins said: "Even Nottingham-based Boots paid just £14 million tax on profits of £475 million in 2009-10."
In recent months, multinationals such as Starbucks and Amazon have come under fire for paying little or no corporation tax, despite generating UK sales of hundreds of millions of pounds.
Starbucks has reportedly paid just £8.6 million in corporation tax in the UK in the past 14 years. The company was able to cut income tax by paying fees to other parts of its global business, which means it is effectively making a loss and therefore does not have to pay any corporation tax according to the law.
It has now volunteered to pay £20 million over two years.
Nottingham City Council agreed a motion that they believed that such companies are failing to meet their social obligations and that it is a direct result of the Government's failure to regulate them properly.
The council pledged to prevent tax-avoiding companies from having contracts with the council where possible and to lobby the Government to change legislation to stop tax havens.
Mr Collins said: "I believe corporation tax isn't just a legal issue, it's a moral issue. Where companies are making a profit from communities, they should be contributing through taxes to the costs of society in the same way as the rest of us.
"And this is particularly so when public spending is under more pressure than at any time in the same way as the rest of us."
However, a spokesman for Boots said the company "fully complies with local tax legislation" in the 25 countries which it operates, including the UK.
He said: "Importantly, Alliance Boots pays substantially the same amount of tax it would have paid if it was headquartered in the UK.
"The Boots business in the UK has been a member of Alliance Boots since 2006 and still remains based in Nottingham."
He said that in 2011-12, Boots paid £26 million of corporation tax and that its underlying tax charge totalled £147 million – a year-on-year increase of £14 million.
He said £80 million of this charge was in the UK, where the standard corporation rate was cut by the Government by 2 percentage points to 26 per cent.
Conservative councillors did not support Mr Collins' motion.
Councillor Georgina Culley, leader of the Conservative group in the city, said: "Nobody agrees with global firms in the UK paying little or no tax. We regard this as an insult to British business and British tax payers.
"There is much more work to do here but make no mistake, it's this Government that will get that work done."
She argued that it was the fault of "successive governments'" ability to regulate the companies and that in the past two years HMRC had successfully challenged over 40 tax avoidance schemes through the courts. She said the Government was also bringing in an "anti-abuse" rule this year that would further help, and had led a number of other measures.