26/04/2013 Newsnight

Tonight, is it wrong to avoid paying tax, if you are rich enough

to own one of these and happy enough to say you are Britain's

biggest taxpayer, are you a saint or mug? Whenever I speak you are

frowned upon. We need to do that taxation. For

certain sectors for getting away with paying very low tax. Who do we

want to figure on our brand-new �5 notes. Should it be him. We have

I'm going to find out who killed Wellington. The serious incident of

the West End hit. Why do some people pay less tax

than they should. The punch line is the same

Big companies and small individuals have been named and shamed. Their

scams and excuses are depauornityed to make public blood boil. Tonight

we ask a few fundamental questions about tax. Why can't the Government

devise a system that prevents avoidance, and would anyone pay

more tax than they had to. Britain's tax system is as

complicated as the ecosystem and around as long. An export levy was

exposeded by king done in 1505. Each tax has a shrew of Bolton

thanks to exemptions, reliefs and write-offs and loopholes, making

the understanding of tax only for the dedicated. To show how complex,

suppose a Government make as profit of �10 million this year. It should

pay 23% in corporation tax. If it was carrying over losses of

previous years of �1 million. That cuts the taxable amount by �230,000.

If part of the profit included the �2 million sale of a property,

which was then reinvested, the tax can be rolled over saving �460

though though if it spent �1 million on research and development,

that qualifies as tax relief and allows us to write off �2867. If �1

million are thanks to a patent, that is a lower rate tax saving the

company �130,000. That leaves a final corporation tax of �1.2

million, half the headline amount. Confused? You should be. These are

only some of the reliefs and exemptions that can be used. It is

no wonder an army of well paid tax executives have grown up advising

Governments and companies on how best to implement tax rules, or

indeed how to avoid paying tax in the first place. Today the Public

Accounts Committee of MPs, the scourge of UK tax avoiders

resurfaced with the big four accountants in its sights. The big

four accountany firms put their experts into Treasury and HMRC and

help write the technical rules that become new laws, and armed with the

insider knowledge they go back to their companies and use that

knowledge to devise new schemes for tax avoidance. The PCA C was

unstinting in criticism of HMRC, saying it was way too cosy in its

relationship with big audit. One tax inspector turned author agrees.

The relationship between the big four and HMRC is extremely close,

far closer in the last ten years or so, under various initiatives to

relax corporate taxation in favour of the biggest companies. The

bigger accountany firms have been the people to go to get the

corporate view in the first place. But London is a megacity because it

attracts the finest advisers and consultants in the world. The MP

for the City is worried that all this fog-horning from the PAC and

others could jeopardise that. think the PAC were playing to the

gallery a little bit. I think that is to be regreted. There is no real

evidence that the big four are in the pockets of the Treasury. I

think it is a very healthy state of affairs that some of our brightest

best tax and accountany advisers have a chance to see the public

sector in action. One of the dangers here really a danger of

political risk, I think, if Britain is seen as a place where there are

arbitary decisions made about tax, we are bring anything a general

anti-avoidance rule as well, it might well lead to many of these

big international firms of accounts, and indeed throughout the financial

services world thinking twice about whether they want to expanned here.

The Government is in something of a bind, they can't exactly speak out

against big companies who aren't breaking the law or the letter of

the law. Nor can they ignore the wish of millions of voters who have

seen their real incomes fall because they can't avoid paying tax.

If the Government were to clamp down hard on big multinationals and

those who advise them, the danger is those companies will take their

business overseas to where the taxes are few and the rules fewer.

David Cameron has to pursue a global solution to the problem. He

wants the EU council President, Herman van Rompuy, to raise it at

the next EU summit, he will be raising it himself when he chairs

the G8 in June. But the OECD that brokered many of the world's

international tax treaties to prevent firms from being taxed

twice feels things may have gone too far. This is really, after 70

years or whatever trying to avoid double taxation, which we all

agreed should be avoided, now you have double non-taxation. So the

thing has gone like a pendulum. We are trying to get it back, to some

sort of balance where there is a fair sharing of the burden.

Otherwise it is only the middle- classes and the SMEs that are left

to tax. This obviously is a politically unacceptable situation.

86 years ago Oliver Wendell Holmes said that taxes were the price we

pay for living in a civilised society. Back then companies and

the very rich paid most taxes. Today it is increasingly smaller

firms and ordinary individuals bearing most of the burden.

Earlier I went to meet the businessman, John Caldwell, the

Phones 4 You founder, shortly before he took to his racing car at

Brands Hatch, why not, he's worth an easy billion pounds. You have

been called the biggest taxpayer in Britain, does that leave you

feeling like a mug or an angel? Neither. You know Britain needs all

the tax pounds it can get. We are in very tough times, that is clear

to everybody. People don't realise quite how indebted the country is,

and what trouble the country is undergoing. We cannot afford people

taking tax bucks away from us, they have to be paid. I didn't pay them

just purely out of a sense of obligation. I paid because I did

think it was right, but also I wanted complete freedom in a

country I love more than any other. I didn't want to have to be an

exile and allowed 90 days back in, I wanted complete freedom. But I

also felt I needed to do my bit. it a kind of philanthropy? Yes, but

unfortunately where the people you are giving your money to are

frittering it away and wasting it. It feels like a mug's fill

lanthropy. But ultimately -- philanthropy, but ultimately it is

a legal obligation. Is there a temptation to avoid tax with the

loopholes? Every businessman needs to reduce his CoS. By reducing

costs and increasing profit you retain money in the business to be

used for expansion. Tax is one of those big costs on the business. It

is the responsibility of the chief executive to reduce the tax to a

reasonable level by fair means. it wrong then to use those

loopholes? This is a difficult one really. I can't say it is wrong to

use them because at the end of the day each company has to reduce its

tax bill to what it thinks is appropriate and fair, given the

laws of the land. But I would very much favour more pressure brought

to bear on people that are seen to be really taking this too far. And

also the general public just considering boycotting businesses

that are seen to be tax avoiding. And I can tell you for sure if the

public boycotted a retail business avoiding tax and damaged their

profitability they would start paying the tax. It is a name and

shame campaign? It is a name and shame, it has to be today. The

country is in a mess. I don't want to keep stressing that. But Britain

needs all the tax pounds it can get. We know who the companies are that

have been named as not full tax- payers, do you boycott any of

those? I don't probably deal with them. If I do I don't know that I'm

dealing with them. I would definitely boycott them. I would

encourage other people. We have to do something. What does any

businessman understand, he understands his bottom line. What

will affect the bottom line more than anything else is not taxation,

fair taxation, yes it is painful, it is a big cost to the business,

but it is nowhere near a cost as not having the profit to pay the

tax on. You have been converted to this line of thought, because there

was a time in your business when you did use the loopholes quite

happily? When I first set up business I wanted to retain every

last pound in the business to help grow it. Tax accountants started

flooding through the doors with tax scheme after tax scheme after tax

scheme, we were seduced into a low- taxation ri geem of running the

business. -- regime of running the business. It was perfectly fair and

proper, but I don't agree with it now, as a point of morality,

especially where we are today I don't agree that some parts of the

nation should get away with very, very low tax rates, meanwhile the

ordinary working people, as well as some corporates are paying the full

rate. We need to club together. Wasn't it legislation that actually

stopped you, wasn't it when Gordon Brown put an end to those employee

benefit trusts? Not really because I was already thinking these tax

schemes are just wrong. They are challengable. To an extent some of

them are perfectly fair and proper, a lot of them are leading and

cutting edge. Some of those can be stopped, but some are not stopped.

But the law can only do so much. Then what we need to create in the

country, a bit like speeding. At one time I could speed every day

and nobody would frown. It is a good line as Brands Hatch!

whenever I speed, try not to, whenever I speed you are frowned

upon. We need to do that with taxation. That it becomes immoral,

unket kal and against the public -- unethical and against the interest

for certain sectors to get away with paying very low tax. Let's

discuss the morality of taxation. Joining me is John Christensen,

brought up in jersey, but now director of the Tax Justice Network,

and the economist minutes ter Tim Congdon. You heard the last point

that he said he wanted the tax to be the new speeding or smoking,

something increasingly frowned upon by society, tax avoidance?

Governments want enterprise, enterprise comes from companies,

and all around the world what is happening is that Governments are

reducing company tax rates. Take it or leave it really. You can't have

all this rhetoric about enterprise and then say you want to have

higher taxes. Enterprise is not how you can manage your own tax bills

down is it? The only way you can pay tax is by producing something.

Producing a profit in the case of the company. And obviously if you

are not producing something and not generating a profit you can't pay

any tax. So clearly if you want nations that are prosperous,

companies that are profitable, I'm afraid that will happen. They can't

all be swallowed up in tax. This is the argument often made, John

Christensen, that if your aim is to get growth and encourage employment

and all the rest of it, don't keep hitting them. The tax rates are low

any way, they are very low in this country, they are much lower than

they were 30 years ago. Many companies are making huge profits.

But the company directors are making the choice to not pay that

tax. Some companies, multinational companies, can shift their profits

off to tax havens, Luxembourg or whatever, they make that choice to

not pay tax. Other companies here in Britain making a profit can't

use Luxembourg or the channel islands to shift their profits,

they are forced to pay tax. You had heard the point made, if people

really cared, and yes there is loot of public outrage and rhetoric

about this, if people really cared wouldn't they just boycott the

companies that we know don't pay what is considered to be their fair

share of tax? I'm very much in favour of boycotts and reputational

damage to those companies that choose to not pay tax when they are

making profits. I don't think that the tax rate in this country in any

way stifles innovation or enterprise, it is a very low tax

rate, yet companies are still choosing to avoid tax very

aggressively. It is certainly true that the current policy of the

Conservative Government is to reduce corporation tax. In fact to

reduce it 20%. It is certainly true that a long time ago it was 52% the

corporation tax rate. Things have change. But we live in a

competitive world. If other countries are not going to impose

high corporate taxes what do we do? So what would be your point then,

that it is fine as long as it is not illegal to do whatever you can.

You disagree with John Caudwell? people are obeying the law, and

paying taxes according to the statute book, then what is, what

are they supposed to be doing wrong. There has to be at some point an

understanding that if companies and tax-payers are abiding by the law

they should be left alone. Surely the Government could simplify the

tax system or finding a way that saying we and the public have

decide this is wrong, we will outlaw it like speeding or smoking

indoors? It is not that simple. The Prime Minister has recognised that

the rules set out at an international level are not fit for

purpose. The Organisation for Economic Co-operation and

Development has been charged with redesigning the rules. We need new

rules for the 21st century. We cannot leave it as it is at the

moment. To the discretion of some companies, multinational companies

to shift their profits to tax havens and not pay tax, whilst

other companies operating here in Britain just at national level have

to pay tax. What of the question of companies get up and leaving?

won't. You say that with real confidence? For decades they have

been saying they will. important thing is company

shareholders are taxed, as long as they taxed it will be difficult for

companies to do that. There was a 52% tax rate a few years ago.

Shareholders have all moved off shore, they are in tax havens

themselves, they are not paying tax on the dividends. That is the real

world we live in. Capital is offshore and not paying tax. What

would happen if the loopholes were closed what would happen to the tax

system. There is an argument which is that if more people, if everyone

pays their fair share of tax the tax burden actual lie goes down?

Let's be clear that all these things built up over a long period

of time, and you can't say, for example, that you can't companies

to invest in research and development F you want to encourage

them to do that you put in place incentives. The tax system has the

exemptions, companies use them. If you want a neutral tax system these

politicians, these Governments should stop talking about giving

them incentives for R & D and investment. Just pull back and the

tax rate is 30%, that's that. Governments aren't doing that.

People don't complain when they get cheaper on-line goods. They don't

complain that is a rather interesting and efficient way to do

your shopping now, even if the company is known to be not as forth

coming? We are losing jobs, small businesses are being put out of

business. Some companies are now putting themselves into monopoly

situations that means they will be making massive profits untaxed not

contributing this country. These companies use our infrastructure

and they need a good market. It is not right that they don't pay tax

in this country while competitors are paying tax.

Thank you very much. If you are looking for controversy you

probably won't find it on the new �5 note. Winston Churchill, not in

the end David Beckham, was the choice. War time leader and Nobel

Peace Prize win he, the choice will surprise few. Tonight we will hear

why his appearance may also have been a factor in the decision to

put him on our cash. I would say to the House as I said to those who

joined the Government, I have nothing to offer but blood, toil,

tears and sweat. The choice was ultimately down to the outgoing

Bank of England governor. Winston Churchill was a great national

leader, a great British statesman and perhaps most of all universally

recognised as such by everyone around the world. Here is a few of

the other people the public nominated before the Bank of

England made its ruling. It seems none of them were good enough for

the ultimate English A-list, just what does it take?

Before you start believing those are pound notes we should talk you

through this. We have historian Susannah Lipscombe and Pam West a

bank note collector. Thank you very much for coming in. Talk us through

palm you have got some of your notes here that you have collected,

when they are choosing these figures that are going to dominate

our money, it just about cultural icons or is there something to do

with the appearance and the look that they choose as well? They

often have chosen people that would be hard to imitate, for example to

forge. That takes part of their choice in the process. But they are

choosing people that have also not caused any controversy. Who are

iconic, who are important people that hopefully we would recognise,

but as long as we know we recognise sterling we are happy with the

pound in our pocket. What did you mean, who would be hard to forge?

Because you might have somebody, we have had Darwin, for instance, he

has a beard. A beard is often very difficult for a forger to imitate.

So we should look for a lot of facial hair generally on our bank

notes? It could be. Who else have you got here, talk us through this.

This is massive this one? This is the old white fiver. People often

say it is massive and like a fish it is "this" big. This went out in

the 1960, the last date of issue was the 20th September 1956,

followed by the lion and key five pound with the head of Britannia.

We moved on to Stevenson and then subsequently Elizabeth Fry our

current icon. We know that Winston Churchill will be next. The

interesting thing is why he hasn't figured before?'S A pretty obvious

choice, isn't he. Quite uncontroversial to go for wirblg.

I'm sure he -- Winston Churchill. I'm sure he deserves the honour of

going on a �5 note or a bigger one. Whilst it is an obvious choice it

means it is moving Elizabeth Fry off. She might not be that well

known, but she was IRA former and an important character in the

history that we want to tell about ourselves. And this is interesting.

What do you think that is, do you think we're now going for a sort of

great leader rather than a revolutionary? That is the first

thing we have to think about. We are choosing a Great War time

leader. Because we are in austere times and we need national unity?

Certainly the quote they have chosen from him is sort of

appealing to that sense, doesn't it. "I have nothing but blood, toil,

tears and sweat". It feels like the economy climate today. It is

interesting that Elizabeth Fry was put on the notes in 202, at a time

when you think they were appealing more to the sense of social reform.

The other thing about it. Perhaps it plays to the idea that you need

a beard to be hard to copy is that with Elizabeth Fry again, we won't

have any women but the Queen on the bank nights. There was Florence

Nightingale at one point? There was. But they are few and far between.

How is it actually chosen. Is there such a thing as a Conservative-led

choice as opposed to a Labour-led choice? Well Roger Withington, a

designer of bank notes in earlier years. He produced a list of 72

names of people that would be potentially good people to have on

the bank note. Some of those have been chosen. I would really love to

see Jane Austen or the Bronte sisters. It would be lovely to see

another woman, apart from a great woman, the Queen. This is the other

thing, when we put up the ones on our screen we have chosen people

that the public love. The Diana figure, the Beckham, you know, the

musicians and so on. That is never going to happen is it? They have to

be dead. So from that perspective. However, these are people that we

know from our time, they are our historic icons. They are famous for

various things. They are great people, there is no doubting that.

But generally the bank notes have had people who have come from a

much earlier period in time. Does it surprise you that we choose

people, as we were hearing, who aren't controversial, we have not

been a country that is scared of controversy have we? No, that is an

interesting decision actually not to go for controversy. And perhaps

in this case we have gone for the really, really safe option. But

actually I think there is a bit more to it. It does seem to me that

the bank notes are representing a version of history. On �50 notes it

is telling about the Industrial Revolution. Charless Darwin, you

mentioned, is on another bank note. Adam Smith on another. It is the

sort of version of ourselves. I think that we do want to insist

that this version is modern and up- to-date. Even in the people it

chooses to represent about our history. Because this is a version

of history and we need to be conscious of that. Thank you very

much, thanks you both for coming in. It was an idea the author couldn't

initially contemplate that his quietly brilliant book written

inside the head of a troubled boy could become a musical with a live

audience. Of it a book he insisted about difference not disability. It

was a move he resisted for long. Then a few weeks ago The Curious

Incident of the Dog in the Night- Tmie hit the West End and the

audience, at least, has never looked back. Steve Smith has gone

to meet the author, Mark Haddon. is a book about the kid with

behavioural problems living in Swindon with his dad who a plumber

and heating engineer. As a recipe for a best seller it is not great,

is it? It is not good for your mental health to think I have sold

six million copies. I said it was like having a fantasy that your car

could fly. It is like people do. And then you are going down the

motorway one day and your car does actually fly. And you think this is

what I dreamed about, but it is really scaring me at the moment. It

is a little bit like that. It is probably easier to have a flying

car than sell six million copies these days. I'm going to find out

who killed Wellington. Somebody killed her dog? With a fork. Mark

Haddon's unlikely best seller about a boy with behavioural issues is

now a West End hit. Up for eight Olivier Awards on Sunday.

family Christopher? Father and mother, but mother is dead.

there any of you in that voice, there are theories that we're all

somewhere on that spectrum, particularly men! There is lots of

me in Christopher in a sense that the novel contains narrative

chapters and essays about science or religion or about evolution

inbetween the narrative chapters, those are me. They are my

obsessions chopped in little pieces and inserted into the novel. In

Christopher of course there are bits of me, there is bits of me in

everything. Haddon started out writing children's books,

illustrating them himself. Down to his characters and a certain boy

wizard children's fiction is hot property. Some take a Dance

Schooler view. Wasn't it most infamously Martin Amis who said if

he had brain-damage he could write a children's book. He hasn't

stepped up to the mark and proved it yet has he. There are peculiar

and difficult skills to writing children's books, ten years ago it

was film script writing courses where all the men would turn up in

expensive cars and pull up on the gravel and be hard work when it

came to working with them in workshops. Parently those courses

are now relaxed and the cars are a little scruffyier. The same people

seem to be going to the kids' writing courses turning up in

flashy cars and more men than you might expect. There is a lot of

debate about how we raise children, I wonder what thoughts you have

about that? It is so tempting isn't it when you sell a lot of books to

think you actually know what you are talking about when someone asks

a question about. That I don't know anything more than any other parent

does. I think we do get obsessed with the education of really bright

children. I think what school needs to do is put a huge amount of

effort into the kids who might get left behind. If you get a poor

education you're probably getting most of it at school. Therefore the

responsibility school has to you is so much greater. Stkpwhrpld I like

maths and also I like outer space and I like being on my own.

Haddon says he's happy to put his money where his mouth is, as the

royalty cheques roll in, he would like to pay more tax. It is

absolutely extraordinary at the moment that the money we pay to

disabled people for what was previously the Disability Living

Allowance is being cut, and at the same time I'm getting a tax cut. It

absolutely beggers belief. That is supposed to invent advise you as a

winner and achieve Tory hire more people, I think, is isn't that the

theory? Do you know I really don't know what the theory is. I don't

think there is much theory behind t I think there is a profound lack of

empathy behind it. You can find Mark Haddon in the book shops and

theatre and keep an eye out for him on the bus. I sit on a bus

overhearing other people's conversations. I love the fact that

it opens doors into 100 lives. You are sitting next to a couple of

elderly ladies talking about how good the Harvest Festival was this

year. And you think I know those lives. It is difficult to stay in

touch and pick up those cues that you refer to, with the best will in

the world? You keep travelling on the bus, don't you. I don't know,

do you? Not in the publishers's limo? I singularly failed to set up

a gilded life for myself. I'm rubbing up against ordinary people