SeaWoozle: Is it legal to avoid tax?
It is illegal to evade tax but not to avoid tax as sanctioned by tax law.
Closing tax loopholes can sometimes be seen as tinkering around the edges of tax reform but small reforms add up.
Here’s an example from Tax Justice UK.
Video Games Tax Relief (VGTR) cost a record £197 million in 2022. Despite being designed as a relief to help independent developers produce “culturally British” games, evidence shows it is large, often multinational firms that are benefitting. HMRC data shows that claims over £500,000 account for 88% of the total amount paid out. And one big company in particular seems to benefit from the lion's share: US-owned company Rockstar, who produce Grand Theft Auto, revealed it obtained almost £80 million in VGTR in 2021-2022 - 41% of all VGTR paid out in the UK.
Maybe £197 million doesn’t sound a lot in the great scheme of things. But my local council has had to budget £800 million for 2024/25 to pay for 16,000 people needing adult social care.
Abolishing VGTR could pay for the care of 4000 vulnerable people. Rockstar’s tax break for 2021-2022 alone would have paid for the care of 1600 people.
thegamer.com wrote under the heading The 15 Most Despicable Acts Committed In Grand Theft Auto … Even among the violent video games out there, theGrand Theft Autoseries stands in a class all its own. One feature of the game is paying for sex and then murdering the sex worker to take the money back. Another is walking up to a person or group of people and start swinging a bat, shooting, swinging a blade, or whatever. You can rack up quite a body count.
Whether playing violent video games impacts on real life behaviour is much debated and a subject for a separate topic but one can’t help wondering why the Treasury is giving special tax breaks to makers of this kind of stuff?
TaxWatch reported that Rockstar Games has not paid any corporation tax in the UK in ten years, despite making billions in profit.
The staggering amounts paid out to Rockstar Games was raised by Lord Prem Sikka in February 2022, speaking during a debate on the Finance (No. 2) Bill, he said:
According to its accounts, it has claimed £136.6 million in total in tax relief over the years. It has paid no corporation tax at all but has paid £67.5 million in dividends. Where exactly did those dividends come from? They came from picking the pockets of the British taxpayer. There is no other explanation for this. It does not seem to me that these kinds of tax reliefs are monitored. No evidence is provided by any government department to show what exactly the benefit to the UK economy is of this American company receiving all these tax reliefs.”
www.taxwatchuk.org/rockstar_games_tax_relief/
Baron Sikka is a British-Indian accountant and academic author of The pin-stripe mafia: how accountancy firms destroy societies.
Tax revenues are the life-blood of all democracies. Without these no state can alleviate poverty or provide social infrastructure, healthcare, education, security, transport, pensions and public goods that are necessary for all civilised societies. All over the world tax revenues are under relentless attack from a highly organised tax avoidance industry dominated by four accountancy firms: Deloitte, PricewaterhouseCoopers, KPMG and Ernst & Young. They employ thousands of individuals for the sole purpose of undermining tax laws which does not create any social value, but enables corporations and wealthy elites to dodge corporate tax, income tax, National Insurance Contributions (NIC), Value Added Tax (VAT) and anything else that might enable governments to improve the quality of life. ...
Despite judges outlawing their tax dodges, successive governments have failed to investigate the firms, or prosecute their partners. Instead, the partners of major accountancy firms are given peerages, knighthoods, public accolades and government consultancies, all funded by taxpayers. The same firms have colonised regulatory bodies, fund political parties and provide jobs for former and potential ministers. This penetration of the state has bought them political insurance and their anti-social practices continue to inflict enormous social damage.
