The Town That Took on the Taxman

RADIO: 'Good morning. This is BBC Radio Wales.

'Today, some businesses in Crickhowell are trying to use

'the same loopholes as big, multinational companies.'

Welcome to Crickhowell.

A picturesque little town nestled in the Welsh Brecon Beacons.

It's an unlikely home for the start of a national revolt.

RADIO: 'Businesses in a Welsh town are trying to use...'

The local traders are up in arms.

It really gets up your nose that other people who should be paying

a vast amount of corporation tax don't pay anything.

It's just about fair play.

They are sick of seeing the taxman let so many of their multinational

rivals get away with tiny tax bills

whilst forcing them to pay the full whack.

I don't have an issue with taxation,

I have an issue with the fact it can be avoided

if you've got a bigger lawyer and a bigger accountant than I have.

So, they've decided to tackle the taxman head on.

They're on a mission to investigate the tax tricks

of their multinational competitors...

I'm getting frustrated now. I want to go and find out.

..and see if they, too, can legally avoid tax.

So, it's a scam?

No, it's a trick and it's completely legal.

How amazing was that?!

Outrageous!

The journey will take them to tax havens...

It used to be known as the street that's shady on both sides

and I don't think it's cos the sun didn't get here.

..tax lawyers...

I mean, taxes, in my opinion, they are a choice.

And even the taxman himself.

You may find a business model coming your way

where you and I get much, much closer.

LAUGHTER

But will it split the town?

If you're not with me, you're against me.

-I didn't say that.

-It's exactly...

-I didn't say that.

I said don't just get in my way.

Can these small businesses pull off something this big?

It is a licence to print cash.

Take a bite of that and see how nice that is

because you know you've paid fair tax.

And will this be the spark

that forces the multinationals to pay more tax?

And, before you know it, you've suddenly got a movement.

I'm Heydon Prowse. I'm a journalist and a comedian.

Recently, I've been looking at how multinationals

avoid paying their fair share of tax

and I want to try out what I think is quite a funny idea.

What if a town full of small businesses tries to play

by the same rules as the big boys?

Could it ever work?

Could we take a small town offshore for tax purposes legally

or is it one rule for the small guys

and another for the big multinational corporations?

I'm off to a place that might just be up for having a go.

-CHANTING:

-"Crickhowell says no! Crickhowell says no!"

Crickhowell is a small town, but it's got a rebellious spirit.

Last year, locals successfully fought

to keep a supermarket chain off their high street.

Ah, look! Grenfell & Sons.

Not just Grenfell & Sons,

but Grenfell & Sons, and Granddaughter & Grandson's.

Ironmongers, Webbs & Sons, another family-run business.

Every single place seems to be different, original, unique.

No Starbucks. I haven't seen one Cafe Nero

and I haven't seen one Costa.

You don't have any chains. You've got no chains, no...

-Well, we've got Boots.

-You've got Boots.

-Yeah, yeah.

-And they're terrible.

-Are they?

-Yes, they wouldn't even put Christmas lights up.

-That's...

All the town, Christmas lights up and they wouldn't do it.

This high street is a dying breed, isn't it?

It is a dying breed, yes.

-How many high streets are there in the UK?

-Not many like this.

It's what makes Crickhowell special.

Big businesses coming onto this high street would obliterate that

and it would be really sad and I'm a little bit scared that might happen.

But in this fight to compete with the big multinationals,

small businesses feel they have one major disadvantage.

They are treated very differently by her Majesty's Revenue and Customs.

If anybody tells you running a business is in this day and age

is easy, they are lying.

We don't find it any easier to pay the taxes than the big boys.

Obviously, if we don't, they will come after us big time.

We are a small business. When the corporation bill comes in, we panic.

-Yeah.

-Um... You know, and we have to pay by 31st December

-or we get fined.

-Yeah.

And then you hear these companies who are actually going out there

and getting away with...

I don't know what they're paying in taxes and it really does upset us.

The taxman gives them no option.

They have to pay every single penny they owe, or else.

But it would appear that HMRC isn't quite so strict

with some of the country's biggest companies.

Amazon paid just £11.9 million in corporation tax last year

on £5.3 billion of UK sales.

That's 0.002%,

which is bad news for the local bookshop.

Cafe Nero hasn't paid a penny since 2007.

Shame for a local Crickhowell coffee shop

which paid £130,000 in corporation tax over the past five years.

Last year, Facebook paid around five grand,

less than almost every business in town.

Are you guys coming to the meeting later?

-We would love to support it actually.

-Great! Come down.

So, will Crickhowell stand up to HMRC

and beat the multinationals at their own game?

I've called a meeting in the local town hall to pitch the big idea.

We just handed out a few flyers

and we spoke to a few people in the businesses today

on the high street and it seems there are about 200 or 300 people

which is great.

I think I may regret this stupid idea

when I work out how I'm actually going to pull it off.

APPLAUSE

Hello. Hi.

It's a real pleasure to be here.

We've been walking up and down the Crickhowell high street all day

and it's been amazing.

Some incredible local businesses you have here.

You've got businesses with three generations of people working in them

and, more importantly, you have two different representatives

from two different coffee shops here

and not a single representative from Starbucks.

LAUGHTER AND CHEERING

It's not only that these big corporations are siphoning off

money into tax havens,

it's that the savings they are making are allowing them to undercut

local businesses like yours who do actually have to pay tax.

Can we do a hands up? Who actually pays tax?

I pay tax.

Yes, we all pay tax.

Keep your hands up if you really enjoy the experience.

As a whole, small businesses, like ourselves,

like lots of people here, are the biggest employers in the country

and we don't get the recognition we deserve.

And if we all stopped paying taxes, the country would be bankrupt.

Not just financially bankrupt, but, as it is now with the banks

and large corporations, morally bankrupt.

APPLAUSE

So, what I would like to do with the local businesses of Crickhowell

is I'd like to work out a way to take you all offshore

to legally avoid tax

in the same way that the multinational corporations do.

I know I don't have the expertise personally and I know

we don't have the money to pay for very expensive tax lawyers,

but I vehemently believe, and I'm incredibly,

perhaps foolhardedly optimistic, that we can do this.

So, who's with me?

APPLAUSE

I appear to have convinced some people that this is a good idea,

but is it even possible?

I need to find a core team to investigate.

We're feeling pretty indignant about the amount of tax

that we've suddenly found ourselves paying this year.

Yeah, I would be interested.

-One of us would be interested. That would be great.

-OK. All right.

I think there is something in it.

You get a little group of people, they develop the idea, bring it back

and say, OK, this is what we've come up with.

-Then tell the rest of the town how to do it.

-Yeah.

If the big companies are allowed to get away with paying what

they think is a fair share of tax,

the same rules should apply to me.

-Are you up for it?

-Yes.

-Sure?

-No, I'm up for it.

I think it will be a good crack, yes.

I'm not convinced it's going to work,

but what I am convinced of is that it will get people's attention.

So, here's Crickhowell's crack tax squad.

Jo runs the local meat and fish smokery

with her ex-banker husband, Jonathan.

They moved to Crickhowell for the good life.

For Jo, tax avoidance just isn't cricket.

We didn't start our business to be really rich.

We've had a lovely time bringing our children up

on the side of a mountain. That was our choice.

So, it's not that one feels sort of chippy about income.

It's much more about fair play.

I'm not a financial person at all

and I'm going to go on a very steep learning curve.

Local coffee shop owner Steve is ex-army and still likes a fight.

He's frothing about some of his big coffee rivals.

When you hear these stories of Amazon and Starbucks,

and all the rest of it, being almost tax neutral, it's irritating.

It'll be great to see whether there are any chinks in the armour

that suddenly open up. I think I'll be an asset on this

because I'm not going to toe the line.

I mean, I have views and I will express them. They may not be yours.

Jeff used to be a foreman in the local steelworks.

Now he runs the outdoor equipment shop with his partner, Jane.

Well, I'm going to find out exactly how and why and who

is responsible for this great scam on the British taxpayer

and citizen really.

Irena moved here from Russia 15 years ago

and now runs two successful Crickhowell businesses.

They call her the local oligarch.

I think I might be the only optometrist

and ice-cream parlour owner in the world.

I will try to be as direct as I can.

Russians want more direct answers. We want either a yes or a no.

Every time you see an accountant or a lawyer,

you get out of the room and you think,

I still haven't got the answer. Was it a yes or no?

Irena seems to be up for saving some cash, as long as it's legit.

If you find a legal way of paying less tax, yeah, it would be great.

So, they are ready and like all the best adventures,

this one begins in the pub.

-Hi.

-Hello, everyone.

-Hello.

-This is David Quinton.

Barrister David Quinton used to advise big corporations

on how to avoid their tax.

Can he help little Crickhowell do the same?

I've actually brought something which I can use

to demonstrate what an uphill struggle it is.

This is UK tax legislation.

Ooh!

No, no, that's just the start!

LAUGHTER

Bedside reading!

17,000 pages of tax law.

This could be tricky, but will it put them off?

-I'm not daunted by this.

-Brilliant!

-I'll tell you why.

-In that case...

-I'll tell you why...

LAUGHTER

Let me tell you why I'm not daunted by it.

-Because, at the end of the day, legislation is legislation.

-Yeah.

But precedents are set every single day in the courts

against legislation just as thick as this

that somebody finds a loophole in.

All you've got to do is find the loophole.

You wouldn't have a business if there weren't loopholes in this.

There wouldn't be tax barristers if there weren't loopholes in this.

Yes or no?

Well, er...

A lot of us would get paid a lot less if there weren't loopholes.

Exactly. So, that's a positive.

The little guy, as it were, has a massive uphill struggle.

Whereas if you're a wealthy, multinational company

there will be staff at HMRC dedicated to making your life

as a taxpayer as easy as possible

and, partly to do with the sheer power of their wealth,

the government and the revenue have to negotiate with them.

They don't have to negotiate with you. They can stamp on you.

Irena seems to have a knack for spotting a short cut.

Instead of us inventing something,

can we just look at successful schemes which already exist?

-What do Vodafone do? What do Starbucks do?

-Exactly.

That's a really good idea.

Where the tax havens come in is you think, well, OK,

if such and such a thing happened in the UK,

that would give me a tax charge.

So, perhaps I can make that part of it happen in a tax haven

without any of the rules in here

that - bring it back on shore - applying.

So, the key, as we suspected,

is to move the profits made in Crickhowell to a tax haven.

But which one?

-BOTH:

-Welcome to the Cayman Islands.

Tax havens are countries that attract cash by offering tiny,

or even zero rates, of corporation tax.

Their slick promos look pretty enticing.

I quite fancy the Bahamas.

They are stuffed with money.

An estimated £14 trillion is stashed in tax havens worldwide.

But we may have to look for somewhere a little less exotic.

-PROMO:

-'What is it that makes a secret worth keeping?'

Let's eliminate the faraway ones to start with

and just stick with the European ones.

It would appear the Isle of Man has some low-cost options

so when you're looking at everything else and the costs incurred...

It provides a very good quality of life providing you don't mind the weather.

That's exactly what it says. That's exactly what it says!

# Jive talkin'

# You're telling me lies

# Jive talkin'... #

And, we're off!

# Jive talkin'

# So misunderstood, yeah

# Jive talkin'... #

The glamorous Isle of Man.

It's a speck of land between Ireland and Wales

with just under 90,000 people on it.

It's given the world TT motorcycle racing,

the Bee Gees

and a massive tax planning industry.

The Isle of Man has an extraordinary 30,000 registered companies -

one for every three people.

But how exactly do multinationals use tax havens like this?

To find out, we have arranged to meet Cat Turner,

who used to work in the island's tax advice industry.

-Where are we constitutionally now, in the Isle of Man?

-OK.

We're not part of the United Kingdom,

we are not part of Great Britain, but we are one of the British Isles.

I see some red postboxes, so where does the Queen sit in all of this?

Ah. The Queen is our head of state, but she is not our Queen.

It means that when we make our own laws,

there are a few things that we can do ourselves.

What is the tax rate?

So, for corporates, there is zero tax.

Zero corporation tax in the Isle of Man.

Back in the UK, our Crickhowell companies pay 20%.

So, first stop, Douglas - the island's capital -

to visit the financial district.

So, this is Athol Street.

This is the street an awful lot of lawyers and accountants hang out.

It used to be known as "the street that's shady on both sides",

and I don't think it's cos the sun didn't get here -

I think it is because it's where a lot of that sort of planning went on.

But it's still pretty much the hub

of financial planning on the Isle of Man.

Just to ask a question, because you were a gamekeeper,

-you are now a poacher.

-Something like that!

I worked for 30 years in the finance industry and...

To my shame, I guess, that was my job,

to help people create products that would minimise tax.

So, classic tax avoidance.

Planning, savings, whatever you want to call it.

Spent a long time helping rich people get richer.

Now, Cat is helping us.

She says the first thing these guys need

is something called a corporate service provider

to set up their own offshore company.

So that's a corporate service provider.

That's a corporate service provider.

There are lots of them. What they do

is talk to people like you, who need some planning and some structuring,

set up a company, provide you with directors

if you don't want to be directors yourselves...

And there is a corporate service provider right here

that is home to an investment company that owns the majority of shares

in one of Steve's big coffee rivals - Caffe Nero.

We're outside the offices of Dixcart,

who are corporate service providers and, among other things,

they provide the registered office for Saratoga Limited,

which is the ultimate parent for the Caffe Nero group.

Is Caffe Nero listed as a UK company?

Some of the operating entities for Caffe Nero

are UK operating entities, but the holding company,

which owns shares in those underlying companies...

-Is offshore.

-..is right here.

Can we get inside there?

Cos I want to find out how we do this.

-I'm getting frustrated, now.

-Let's go.

-I want to go and find out.

I'll order everyone some coffee. What does everyone want?

LAUGHTER

-Oh, hi.

-All right?

-How's it going?

We were wanting some coffees,

some flat whites and some cappuccinos,

maybe a few skinny lattes.

Is there anyone from Caffe Nero here at all?

INDISTINCT

No-one from Caffe Nero?

I heard we can get some coffee here and take it back, tax-free.

Steve, do you want to give us some advice on how to do a better coffee?

Just make sure you don't roast the coffee too high, OK?

Because you kill the top note.

Thanks a lot. Cheers.

Caffe Nero say that they don't use tax havens like the Isle of Man

to reduce their UK corporation tax,

but what is clear is that a company here

can be little more than a doorbell and a mailbox.

That is exactly what Crickhowell needs.

But is it possible?

'Time to make a few calls.'

We'd like to set up an offshore holding company

in order so that we can, essentially,

channel some of our earnings to the Isle of Man.

We are located in South Wales.

There are loads of corporate service providers on the island,

but you have got to know what to ask.

-I love the phone cover.

-(Try to sound rich!)

-HE SNORTS WITH LAUGHTER

-Posh accent, Jo.

Put on a posh accent.

Oh, hello. My name is Jo Carthew.

I'm calling on behalf of a group of companies from South Wales.

At the moment, we have got, um,

four very successful independent companies

who are sort of keen to move forward with this.

So £390 to set it up.

And then what you are saying is an annual fee structure.

I thought it would be more than that.

Well, I look forward to getting your e-mail.

Thank you. OK, bye-bye.

You were so nice, he wanted to help you.

-That was lovely.

-You were so nice, he wanted to help you.

-Absolutely red-hot! Well done, kid!

-He'll be googling you now, as well!

APPLAUSE

Jo has got us an appointment for this afternoon.

Steve and Irina head off to do the deal...

# Somewhere

# Beyond the sea... #

..and return with Crickhowell's very own offshore company.

We are going to set up different share structures

so if we bring other people in later, brilliant.

We signed the deal there and then. We've got an Isle of Man company.

It's the next morning. With their offshore company up and running,

they're off to find out how to move their profits

from their Crickhowell businesses into their Isle of Man company.

But they have got to do it in a way that is acceptable to the taxman.

Who better to ask for advice than the investigative journalist

who, in 2012, broke the story

of how Starbucks was then avoiding UK corporation tax?

He is Tom Bergin.

One of the very first things I noticed about Starbucks

and its experience in the United Kingdom

was that over the course of around 13 or 14 years,

it had never declared a profit.

The structures which big companies use to cut their tax bill

mean reducing the profits onshore.

That is counterintuitive, because obviously,

companies are supposed to be in business to make profit.

But the situation one ends up in is one whereby the company

looks like it's not profitable, even though it actually is,

in truth, generating a lot of money.

Could you give us an example of what someone has done that might fit,

or that we might be able to slot our concept in with?

A really common way is through the use of what is called

intellectual property.

Now, intellectual property can be just about anything.

It can be the use of a brand name,

but it can also be something as simple as...how you flip a burger.

The way in which you move in a coffee store.

So, in the case of Starbucks, it had to pay 6% of its turnover

to an affiliate just for the right of using the Starbucks brand.

-So, Starbucks was paying itself to use its own brand.

-Yes.

And the great thing about intellectual property

is that it's really hard to price.

It's very difficult for a tax authority,

because they'll say, "Oh, how do you justify that?"

They say, "Well, we think it's a reasonable price. Prove it's not."

So we see this with respect to tech companies.

Around half of Google's profits go to Bermuda.

Now, Google doesn't have any staff in Bermuda,

let alone any programmers, so it is quite clear -

and Google is open about this - the code is not created in Bermuda.

-But the profit all ends up there.

-Yeah.

That's because the intellectual property

was moved from the United States, where it was created,

and other jurisdictions, into Bermuda.

Maybe we could...we could produce

-a "Visit Crickhowell" intellectual property...

-Brand.

-Brand.

-Yeah.

-So you unify the whole village under one brand.

-Yes.

But the whole point is that

our village is made up of lots and lots of small independents.

That's what we are trying to market. But they are all from Crickhowell.

So you have, like, an umbrella company that holds the...

The marketing...

Intellectual property of the shopping Crickhowell.

And then possibly move the intellectual property around,

because that is the easiest thing for us to do.

For two reasons - one, because we have such diverse businesses,

and two, it is a big grey area, cos as you've said,

when you have your discussions with the taxman,

it's very difficult for them to challenge reasonable decisions.

Have we got a board? Oh, let's take this.

Tom has got more to tell us, but first, a brainstorm.

What is special about Crickhowell?

What could be its unique intellectual property?

Anything goes - no such thing as a bad idea. So, Irina.

Branding, we like branding.

OK. Jo?

Is this, like, word association? You just say anything?

Anything that you think is connected to IP.

-Local.

-Local.

-Orange.

-Sorry?

-Orange.

-Orange?

Anything goes, remember. It's a brainstorm.

-It's a brainstorm.

-What? We might patent a colour.

I think we should think about the things

that do specifically relate to your town, you know?

-Family.

-But you need a line that the visitor

-can associate themselves with.

-Yeah.

It's a bit like, "Skegness, it's bracing."

How long have they had that?

We could say, "No tax, thanks."

-It's about fair tax.

-It's about fair tax.

If you're not paying the taxes, we are not paying the taxes.

-Fair Tax Town!

-Fair Tax Town. Fair Tax Town.

-Fair Tax Town is brilliant. It is brilliant.

-It gives you...

It gives you information and it also asks the question,

-"What is this Fair Tax business?"

-Yeah.

Then people will ask and say, "What are you trying to do?"

Two days in and suddenly,

the team is talking like this could actually work.

Cheers. Well done, well done. Really good, well done.

Say, for instance, you're saving yourself 40 grand a year in tax,

you should be coughing up, say, 20% of that

into some sort of community fund.

You could, of course, pass it to the consumers

so you could actually compete on a better level.

'Tom joins us for a drink and it is soon clear

'that it's a little bit more complicated than we had hoped.'

One of the problems that you have if you just set up a company

in a tax haven and try and have it

license intellectual property to an onshore company

is that you might have additional taxes to pay, in that case.

I mean, specifically, withholding taxes.

What Tom is saying is that the Government has got wise

and imposed a special tax on payments to a tax haven

for intellectual property.

It's called withholding tax.

At 25%, it is 5% more

than corporation tax.

So, you'd think the whole scheme would be pointless.

But you would be wrong. Of course, there is a loophole here, too.

So how did the big boys do it?

The most common way is through the Netherlands, the Dutch sandwich.

-This is a very common technique.

-What?

-The Dutch sandwich.

OK. Tell us more.

The Dutch sandwich is basically a way in which big companies

get around attempts the Government's put in place

to stop them from avoiding tax.

Next stop, Amsterdam, to see if Crickhowell can get their hands

on a Dutch sandwich of their own.

Unlike the British government, Holland doesn't charge companies tax

on payments to tax havens for intellectual property.

No withholding tax.

Fantastic...for multinationals.

To find out whether this can also help Crickhowell,

we are off to see two guys at the Dutch Financial Times.

We have been told that you are experts on this strange

Dutch anomaly in Europe,

that you were the people to speak to,

and how the system works.

If you set up a Dutch company, it's Dutch law,

there is no withholding tax on interest on loans and royalties.

You don't have to pay any withholding tax.

Just for my sake, in simple words,

we have set up our Isle of Man company,

-we are going to put the intellectual property into there.

-Yes.

We are then going to start this cycle

where we set up a licence, sublicence, in the Netherlands...

-Yeah.

-..in a daughter company...

-Yes.

-..and then we're going to start the money moving around in a circle.

-Right.

-Yes.

-That's it.

This scheme is amazingly simple.

The key is to set up a Dutch company,

sandwiched between the UK and a tax haven.

That company can get money tax-free

because there is no withholding tax

on payments from the UK to Dutch companies,

and with no withholding tax in the Netherlands,

they can get that money

to the Isle of Man tax-free, too.

-But we would have to have a daughter company here to do that.

-Yeah.

-You need an entity here.

-And what does that entity look like?

Maybe you can see, there, behind the trees?

-Yes.

-You see that building over there?

There are more than 4,000 companies over there, based there.

They don't have very much room!

They don't even really have a presence?

-They are literally an address?

-Yes, yeah.

-So, it is a scam?

-No, it is trick, and it is completely legal.

So, how many multinational companies

are doing this in Amsterdam right now?

What's the scale of it?

The total number, it is almost 15,000 of these entities

who are only in the Netherlands for tax reasons.

This is what the yearly flow is...

-My God.

-..through the Netherlands.

It is almost 8,000 billion euros.

-Is that 8 trillion?

-8 trillion.

8 trillion euros a year is flowing through the Netherlands.

8 trillion in and out.

I can't believe that!

I mean, actually, you just wouldn't be doing your shareholders justice

if you weren't here with a daughter company, would you?

-You would be stupid!

-It is outrageous.

LAUGHTER

OK, we are off.

Excited by the apparent ease of tax avoidance,

the team want to find out more.

Forward, troops!

Two local journalists, Henk and Martin,

have volunteered take us on a tour of the city's hidden nameplates.

Hello. Hello.

We are here and we are at the office of Subway.

Can we get a little snap with the name plate, while we are here?

Hang on, let me clean it for you, first. Hang on...

Every Subway shop in the UK has to pay 8% of all their sales

in order to use the Subway brand.

The money comes through this office in Amsterdam.

Around half of it is then moved onwards

to the tax haven of Lichtenstein.

Why don't you ring the bell?

We're trying to get a Dutch sandwich,

we were told to come here, we would be able to get one.

-INTERCOM:

-Do you have an appointment?

And Subway isn't the only one.

We're at Facebook.

Facebook's scheme is known as the "Double Irish",

with the Dutch Sandwich.

Don't even ask.

Facebook has a very complicated structure.

It goes via Luxembourg, Delaware, Ireland,

and the money ends in the Cayman Islands.

-This is the fiscal office of U2 and the Rolling Stones.

-ALL:

-Aaah!

It's not just multi-nationals using the Netherlands for tax reasons.

This office collects the royalties

for much of U2 and the Rolling Stones' back catalogue.

Good morning!

Why?

Because Holland offers generous tax breaks on artistic royalties.

-INTERCOM:

-Hello.

Hello, I was just passing as I'm just here for the weekend,

and I just wondered if Bono was in

to sign a copy of my Joshua Tree album.

Thank you.

OK, so, the GDP of the world is 87 trillion.

-87?

-87. 10% of the entire GDP of the world is...

-In Holland.

-..is going through this country right now.

-Cheers.

-Fantastic.

We have beaten it down to the bare bones,

whereas, before, it was impossibly complicated and people were

telling us it's impossible to do this, and it's really difficult.

But, in fact, it isn't. It isn't that difficult.

I was trying to make it more complicated than it was.

-I've hardened my resolve, but softened my view.

-Good, that's good.

And the way it's hardened my resolve is, actually,

you know, I genuinely want to take this a step further now

-and really see, OK...

-Yeah, you keep talking about...

-..let's put it into practice.

-..expanding it.

And what would it look like in 12 months' time?

Jeff's scepticism about the project is melting away,

and Steve is starting to think big.

You guys could teach other towns how to do what you've done.

How do you scale it up? That's right.

-We could sell them the expertise.

-OK, now you're thinking.

-But they would have to pay a nominal fee for the training.

-To us?

-No, to us.

-To us, yeah.

-No, you're just making the show,

-we ARE the show.

-Oh, it's you and us now!

It's very kind of you, but we'll run it from here.

Damn!

It's the next day, and we're ready

to set up our very own Dutch mailbox company.

-How's it going?

-Welcome.

Welcome to the Netherlands.

Thank you.

'Time to meet Dennis and Rolf, two men so proud to be part of

'Amsterdam's tax avoidance industry that they've even agree to be filmed.

'But will they help Crickhowell outwit the taxman?'

Yeah, that's absolutely possible.

It's nice to see some businessmen, and ladies, of course,

here in our Amsterdam office to, er, to talk about this tax avoidance,

because that is what we are talking about.

How is it possible to pay, in a legal way,

without the boundaries of the law,

as less tax as possible?

So the basics that we discuss today,

and you had a phone-call already with my colleague, Rolf,

they are clear and they are sound.

-Shall we set this company up?

-Yeah, OK.

-Let's do it.

-This one...

-Yeah.

-..and this one, please.

-Yeah.

'Dutch law says that all companies need an honorary chairman

'who will come, in person, to Holland each year

'for the annual general meeting.

'Seems a good excuse for a regular trip to Amsterdam,

'so I generously volunteered.'

It's very similar to what we've done in the Isle of Man, isn't it? Incredibly similar.

-OK, so, that's done.

-Thank you so much.

-Congratulations.

-Thanks very much.

-You've got a new company.

-You're a Dutch taxpayer now.

-Yes.

-Not too much!

-We should prepare the first shareholders meeting, actually.

-OK.

You should sit at the head of the table, actually.

-OK.

-Should we change seats then?

-Let's swap.

-Yeah, yeah.

Well, here we are.

'Our tax squad has done it. The final piece of the puzzle is in place,

'and we're all thrilled, apart from Irena,

'who's beginning to have some doubts.'

I appreciate it's absolutely legal, everyone is doing it.

Do you feel like you're just doing your job?

Do you feel like you are helping people?

-Do you feel like, er...

-The...

What's your views on the whole system?

What we are doing, and I am speaking for myself now,

is really helping people and their businesses

to be as successful as possible

by paying less taxes than they normally would.

What I think is strange is that some people even denounce tax avoidance,

even before we can even explain how we are providing

the substance to it, how we are actually creating this structure.

I mean, taxes, in my opinion, they are a choice,

an individual choice of every citizen.

A moral responsibility, in that sense, for me, is like,

it's make-believe. It's like Santa Claus.

You have rules which state how much tax you should have to pay

and the freedom is created by the legislator.

You should use that freedom.

The job is done and we are about to head home.

But first, Hank and Martin take us on a canal trip.

They want to explain exactly how Amsterdam ended up

as the tax avoiders' favourite city.

Amsterdam was the city where

the first stock exchange in the world was founded,

and it was a financial centre from the 1600s until now.

But we've never had a big manufacturing base.

In Holland, for 30-40 years this century,

you've led innovation in a number of sectors,

and if you'd had the moral courage, instead of going for the easy money,

tax, you'd have developed that innovation economy.

-You just haven't done it.

-It's not these guys' fault!

They're just the journalists!

There's a big hole in the argument.

-You make your choices in life...

-Yeah, you're right.

..the Netherlands has chosen to go down a tax route, because it's easy.

It's an industry! It's an industry.

I've got four daughters and I want them to be engineers,

I want them to be creative, I want them to add value to society.

None of this adds value to society.

I'm bloody liberal! I'm not left-wing, for Christ's sake,

you've turned me into a Communist!

In three days!

'Behnaz Akbar is here now with the latest weather forecast.

-'How's it looking?

-Yeah, shivery is a good way of describing it.

'It's been a pretty chilly night.

'We do have another dry, unsettled day to look forward to.

'So, a chilly start this morning...'

Back in Crickhowell, it's the weekend.

The guys have time to reflect on the trip with family and friends,

and also think about what the next move should be.

Is it easier to just say, "How many companies don't do this?"

There are office blocks with one or two employees in,

where 30 or 40,000 companies are registered.

-It's just crackers.

-It's disgusting.

The tax lawyer we spoke to at the start of the operation said,

"Oh, you don't want to do that, it's far too complicated" and everything else.

But it turned out to be remarkably easy.

So, basically, all we have to do now is present it to the town.

If we can get it set up so it's possible for small towns to do it,

then it just gives us a lot of clout

in the argument with the powers that be

that this situation shouldn't exist.

Irena catches up with her neighbour, Peter,

who owns the local department store.

And he's worrying her.

-But if we all do it...

-Mm-hmm.

-..and we all live here...

-Mm-hmm.

..who's going to pay for the roads, for the NHS, for the schools?

There's going to be no services because nobody is paying for it.

My family will say, "Pfft, don't want to get involved in that,"

because, how will that reflect on our customers?

They'll just think we're crooked, what else are we up to,

and they won't come in the store.

And they won't come in to your store,

the butchers, the bakers or anywhere else.

No, I agree with you completely. I got up this morning and I thought,

"Do you know what? It doesn't matter what everyone else does,

"I've got some moral principles," which, it's just,

that's the way the world works, and if someone wants to drop litter,

it's up to them. I'm going not to do it.

Steve has zero doubts. He's come back fired up,

and believes the tax scheme could really work.

He's designing a Fair Tax Town brand,

which he wants the businesses of Crickhowell to adopt.

We'd be putting the brand identity and the brand handbook offshore,

and you pay all your profits to buy that brand handbook.

He reckons that, with enough support, they could be a threat to the taxman.

Either the loopholes get closed, or hundreds,

if not thousands of small businesses could go offshore, too.

I don't want to avoid paying tax,

I want to create the principle and prove the principle

that I will do it and make it work, and then you've got a problem, HMRC.

As Steve gets more determined, Irena gets more worried.

She fears Steve wants to put into practice

the kind of things Starbucks used to do.

To carry out the threat, Crickhowell would have to join together

and lower ourselves down to the same level

as Starbucks and other big companies.

There won't be any tax paid by anybody

and there won't be any money left for anything.

Irena has become convinced that if the scheme really works

they'll just be seen as a bunch of tax avoiders.

The three of them get together for a crisis meeting, with Jo on the speakerphone.

'That's the thing, we don't need to say we're doing it,

'we just need to show that it is possible.'

It needs to be a credible threat. And credible.

'That it's possible and credible.'

I completely disagree, Jo. I sincerely hope Crickhowell would say no to it,

and wouldn't be in with the bad boys who don't pay any taxes.

I think Crickhowell should be above it.

This entire set-up is in an effort to copy Starbucks, threaten...

-Exactly, you...

-No!

-..you're doing exactly what they're doing!

We're not doing what Starbucks are doing,

because we derive no benefit from it.

What we're doing is, we're copying Starbucks as a, basically, to put pressure on the Government

to change the system that allows Starbucks to get away with it!

What I don't want to do is spend an awful lot of time trying to

persuade people that are vacillating over their engagement.

If they're not with us, then they move to one side

and we move forward without them.

Yeah, if you're not with me, you're against me, is that it?

-I didn't say that.

-That's exactly what you said.

-No, I didn't say that.

I said, "Don't just get in my way." Our threat has to be real,

you've got to be carrying a big enough stick

to land the blow you're threatening to land.

And if we don't go there with that credibility,

we're going to be dog meat.

Steve is at home with the family, and he's incredibly worried that

Irena isn't going to be the only dissenting voice in Crickhowell.

So you've all got to get everyone in Crickhowell to be behind you,

to believe in what you're doing,

to trust you,

and then I think you'll have a big bunch of followers.

I'm highly sceptical of whether you'll get that out of Crickhowellians,

-I think they're...

-Maybe you underestimate.

I think it's full of fragile people.

But, um... So I'd rather surrender...

I'm not sure I agree with that.

No, I know you don't, but I do.

I love the Fair Tax Town idea.

But I think you have to widen it to Fair Tax Town where you incorporate lots of other people.

So I would cast my net wider.

I am beginning to think, maybe, Steve...

..is not going to win over any friends if he's being...

..disparaging about the people in Crickhowell.

They're not sure whether Steve's the right person to run it,

because he ruffles lots of feathers.

Um, but he's certainly very energetic and doesn't give up,

so in that way he's absolutely the right person.

But, um, will everyone want to follow? I'm not sure.

Steve's been persuaded to at least try to win the support

of Crickhowell's other businesses.

I will endeavour to explain what we got up to while we were away and what's happened since.

Irena, unfortunately, can't be here.

She's got a bit-part in a Bond film.

LAUGHTER

Right, OK, well, this is how it works.

You've sold your intellectual property to the Isle of Man,

but you can't lease it from there, so you lease it back

at so much per month, according to what your profits are going to be,

you lease it back from the company in Holland.

And, so, you send them money every month,

and they send the money to the tax haven.

You can, also, because you've got

this huge pot of money in your tax haven,

borrow money from there,

despite the fact it's yours, but it's not really yours,

because it belongs to a different company.

Borrow money from there, and then you can claim tax back

on the interest you're paying on the loan!

And pay yourself dividends,

-and pay yourself dividends.

-And pay yourself dividends.

And you can control the amount of dividends you draw,

so you only pay a lower rate,

lower rate of tax on... It's just super.

It is a licence to print cash.

And it happens all the time.

I'm going to hand some of these... You don't...

Just share them, because we've got more people here than I expect.

Can you pass those round? Thank you.

So, for instance,

we could sell this to another town.

UMV Crickhowell, do you want to be like us?

Well, here's the brand handbook, this is how you do it.

Fair Tax Town, this is the scrutiny, if you like,

the little magnifying glass on the big companies.

This is...allows you to say, take off Crickhowell,

put in Talgarth, put in Brecon, put in whatever.

But the fair tax piece is in the middle, and this allows you, then,

to brand it to whatever community wants to carry it.

And then you build that as a brand identity.

And, before you know it, you've suddenly got a movement.

And that movement, I think, will have a real, real traction.

APPLAUSE

With most of the businesses now on board,

Crickhowell unleashes the Fair Tax Town brand on an unsuspecting world.

Free cake!

Free cake this way!

Thank you.

Yes!

Yeah, that's good.

These are the window ones.

Right, I think we'll be able to pop it up there.

# Lazing on a sunny afternoon. #

-Yes!

-How you doing, Heydon?

-Look at that, a miniscule piece of tax.

-Whoa!

Take a bite of that and see how nice that is,

cos you know you've paid fair tax.

We've set up some offshore holding companies.

They even make their own promo video.

-Does that work?

-Very good.

Recently...

Yeah, my brain's gone.

If it's optional for the multinationals,

then it only fair that it's optional for us small...

-LAUGHING:

-She's making me laugh!

Could Crickhowell be about to go viral?

Us smalmm...

-HE SIGHS

-Got the wrong teeth in now.

We've come together to see

if we can copy the tax avoidance tricks that the big boys use.

The big question now is how the taxman will react to our plans.

There's only one way to find out.

The team arrives in London

to meet with Her Majesty's Revenue & Customs.

With Irena a conscientious objector,

Emma from the bookshop has taken her place.

It could be a make-or-break meeting.

Time to plan how to play it.

And who better to talk to than an ex top taxman?

Richard Brooks is now an investigative journalist,

but he used to work for HMRC.

He left because he was unhappy

about the organisation's close relationships with big corporations.

-We want some tips on what to do when we get in.

-Tips.

-Tactics.

-Right.

-Tactics, please.

-OK.

Well, if I were you, my approach would be to say

that I want exactly what the largest businesses in Britain get.

Maybe the thousand or so largest companies operating in Britain

will have dedicated customer relationship managers.

Well, if they're planning any offshore tax scheme,

they go to their customer relationship manager,

they talk it over and they see if they can agree...

They get sort of pre-approval?

Well, yeah, they will agree on what the right tax treatment is.

While they can see large businesses doing it,

they're probably fairly happy.

You know, they know what's going on, it's under control.

But if they see people like you trying to get in on the act,

it's going to alarm them.

I hope it does!

THEY LAUGH

'So here's the plan.

'The team are going to ask HMRC for the same VIP treatment

'that they give to big multinationals.

'The meeting's with the director general of business tax, Jim Harra.

'He's the National Tax Personality Of The Year.

'And the buck stops with him.'

It seems that big businesses are able to come

and negotiate their tax terms with HMRC.

So, really, that's why we're here.

We'd just like some advice, really.

The multinationals, from our point of view,

are both a high-value group but also a high-risk group.

Our approach is to man-mark them,

so we put quite a lot of resource onto making sure

we understand what they're doing, what their tax strategy is,

the details of all their transactions.

Is man-marking just a different way of saying "have a cosy relationship"?

-Man-marking system?

-I don't agree that we have cosy relationships.

THEY LAUGH

-The purpose of...

-Just snug.

No, I don't agree... I don't agree that they're snug.

The purpose of our relationship managers with large businesses

is about managing the risk that they pose.

You regularly sit down with some of the most egregious tax avoiders

in the country, and you talk about tax competitiveness.

You regularly do that. We've looked at the minutes on your website.

It is our job to engage with these people

and understand what they are doing.

They are not, from our point of view,

beyond the pale to engage with.

We want a level playing field.

And, at the moment, we don't have a level playing field

because those sort of conversations are never had with people like us.

There are about 5 million small businesses,

there are only about 2,000 large.

So I do not have the ability to put a named person

on every small business.

'It's time to see if Jim will give us the same deal as the big boys.'

If I could show you a way whereby we play by the same rules

as the big boys, we put our intellectual property offshore.

If I can put a system in front of you

-that meets all of that criteria...

-With a lot of businesses.

..you'd have to judge us fairly, as you are with the others,

-otherwise you'd end up in the law courts.

-Absolutely.

Great. Brilliant.

You may find a business model coming your way

where you and I get much, much closer to each other.

-LAUGHTER

-Ooh!

Well, that's going to be fascinating... Fascinating to see.

I'll enjoy a beer with you.

As I say, I think that's where you'll see that I will

deploy resources to try and manage that risk on behalf of the public.

I don't think he'd ever come across small business people ever before.

He's only ever dealt, you know, in the top echelons.

The emphasis on the scale of operation came through, I think.

-Yeah.

-"We can't afford to look at you

"unless you are sufficient scale to cause a problem."

So we've just got to get out there and get other people signed up

-and show...

-Piles and piles more people, yes.

-Yeah.

Yeah, the most positive outcome I got is he didn't say no.

-He didn't laugh us out of court.

-No.

So he's left the door open, and I think we should walk in.

We set up some offshore holding companies.

And figured out a sneaky trick...

The viral video has reached hundreds of thousands of people.

Thanks, Facebook!

Crickhowell is trending on Facebook, and will be trending soon,

I'm sure, on twitter. So that's very cool.

-I don't know what trending is.

-THEY LAUGH

He's got most of the facts. Turn to page three.

Half a page! Wow!

And it's even been picked up by the press.

That's a bad picture, isn't it?

They don't send their own photographers, the FT!

-You wondered what your mum was up to.

-Yeah.

Your mother is a revolutionary!

Little Crickhowell is suddenly in the middle of a media frenzy.

But there are some sceptical voices out there.

-RADIO:

-'Let's talk to Richard Murphy, who is director of Tax Research UK,

'who says this is an irresponsible stunt.

'What do you think HMRC may do?

'There are a whole host of weapons the Revenue have got to beat this.

'So it isn't going to work.

'And that's really what I'm saying -

'why do something which is not really going to achieve the goal?'

If they're really going to take on the taxman

and put the scheme into action,

they're going to need some pretty heavyweight backing.

Steve's got a meeting with one of the country's top tax barristers.

-Steve.

-Jolyon, nice to meet you. It's a pleasure.

'Jolyon Maugham QC doesn't devise tax schemes,

'but defends them when HMRC challenges them in court.

Typically, QCs like Jolyon charge between five and 40 grand a day.

OK. So, technically, in what we've put together here,

would that pass the scrutiny of HMRC?

The structure is very similar, in a simplified form,

to a lot of the structures that multinationals put in place.

And, you know, you will have some arguments with the Revenue.

Of course.

And I'm not guaranteeing that you'll win those arguments,

but you've got perfectly sensible, arguable points.

You've got a perfectly sensible, arguable case

that you have reduced your tax liability

in consequence of entering into these transactions.

I'll put my cards on the table now.

I didn't for one second expect we'd get this far.

I mean, we went on this journey of discovery.

We're now at a place where we clearly have got something

that is viable, but is going to have some battles to fight.

What's the next step?

You, the coffee shop, put in your annual tax return.

And your tax liability last year might have been 100

-but, this year, it will be 20.

-Yeah.

That's fine. That will raise a flag.

It will with my accountant as well!

It will raise a flag with your accountant as well.

And HMRC will open an enquiry.

HMRC cannot and will not allow that return to go unchecked.

So you then go to the tax tribunal,

you have a row before specialist tax judges.

Perfectly possible, even probable

that you wouldn't be in a tax tribunal inside three or four years.

Really?

It's a long, arduous, painful process.

But I do relentless, I'm comfortable with that.

-JOLYON CHUCKLES

-I'll go the distance.

-They're going to really hate you.

-THEY LAUGH

-I'm all for it. And they can come on down.

-Yeah.

Yeah, great.

Well, I'm excited. I'm really pumped up.

Now I'd like to fight the legal battle,

and really try and change tax law.

So you're moving from the theoretical into the very practical.

And possibly creating transformational change

in the tax system in Britain.

Back in Crickhowell, it's the Christmas market.

And not even the weather can drown Steve's enthusiasm.

Do you know about Fair Tax Town?

And there's a surprise.

Irena's back to join Steve on the campaign trail.

What we're doing is we're getting 500 towns in Britain...

We just want the high street not to disappear!

She's realised that, although they SEEM to be doing the same thing

as the multinationals, in fact, they are doing it for different reasons.

-It's not OK...

-Yeah!

-..for Facebook to avoid tax.

'Me and Steve, we've just accepted each other as we are.

'He's actually much softer than he tries to show.

'He's very soft, Steve.'

-So that's the plan.

-That's our plan.

So rather than beating the boys, you're kind of joining them?

-Well, what we're doing...

-No, we're not. We're not joining them.

-We're never going to avoid tax.

-That's the important bit.

-We are paying tax.

-Well...

It's how all good protests start.

And the movement is starting to spread to other towns.

We're Blazing Saddles of Hebden Bridge,

and we support the Fair Tax Town movement.

Sowerby Bridge is supporting the Fair Tax Town movement.

I'm off to Crickhowell one last time.

It has been an incredible journey.

This idea might have started as my silly experiment,

but the Crickhowellians have really turned it into their battle.

And I've come to understand

why this battle is so important for Crickhowellians,

because the multinationals, with their tax advantages,

are never very far away from high streets like that.

And they're a dying breed. They are constantly in jeopardy.

So it is an important fight, not just for high streets like that

but also for the entire country.

Because, as they keep saying,

tax does pay for some quite important things,

like schools and roads and hospitals.

And I've got a feeling that these guys aren't going to back down.

-Hey!

-Hey.

-Nice to see you.

-How are you?

-Hello! How are you?

-Nice to see you.

Nice to see you.

'The whole team's got together at Steve's for end-of-year drinks.'

'We live in a sort of charade economy,

'whereby ordinary people pay their tax.'

But big business, that's earning far more than anybody else,

doesn't pay any. So I'm pleased to be doing something about it.

Cos it's so grossly unfair.

'Their big plan for the New Year

'is to recruit as many more Fair Tax Towns as possible.

'They want real clout with HMRC and, if nothing changes,

'the threat's there -

'the tax scheme will go into action for real.'

'What I really hope is that this campaign that we started'

is actually going to make a real difference,

and that we really might be able to convince

the Government that they really should change the tax laws,

and make a more even playing field for high-street businesses.

Shall we just have a toast for Crickhowell

and the Fair Tax Town campaign?

-ALL:

-Cheers!

To misquote Churchill, it is not the beginning of the end.

It is just the end of the beginning,

as far as Fair Tax Town, universally spread through Britain, goes.

-ALL:

-Cheers.

Well done.