Scott Reid: The taxing issue of how to avoid public enemy status

By SCOTT REID
Published on 18/11/2012 00:00

FOR a business that has expressed fears over its long-term future on the high street, John Lewis appears to be doing rather well, thank you.

With its department stores gearing up for the festive madness, there’s every chance it will rack up another double-digit sales gain this week. For some months now, Middle Britain’s retailer of choice has been outgunning its peers. Healthy sales should equate to healthy profits, and healthy year-end bonuses for its thousands of staff, or “partners”.

It will also trigger a nice little earner for the taxman, though the John Lewis boss is concerned that others may be paying less than their fair share to HMRC.

Andy Street issued a stark warning last week about the impact on the British high street if the Treasury fails to create a level playing field for corporation tax. He believes firms domiciled in overseas tax havens will “out-invest and ultimately out-trade” businesses paying their full whack in the UK.

It was no coincidence that Street’s broadside came just days after bosses from Amazon, Google and Starbucks were subjected to a grilling by MPs over the seemingly paltry rates of corporation tax paid on their UK operations.

Others have rallied to support the John Lewis MD, including Dixons chief executive Sebastian James, setting the stage for a “them and us” showdown that some hope will lead to a boycott of those nasty American corporations.

Yet the issue of fair taxation is a little too complex to be framed in such black-and-white, good-versus-evil terms.

Bear in mind that the likes of Amazon and Starbucks have created thousands of jobs in recent years. Those workers pay taxes, both directly and indirectly. Many of Starbucks stores have opened in formerly vacant locations, providing a rates boost for local councils.

The debate also touches on the changing face of the high street, with increasing numbers of consumers choosing to shop via a click of a mouse or prodding of a smartphone screen. Town centre traders yearning for a level tax playing field may be whistling in the wind.

None of the companies in the firing line are being accused of doing anything illegal. They are operating within mind-numbingly complex legislation. Loopholes are an inevitable consequence and, if closed off, others will surely open.

Truth be told, tax-avoidance holds universal appeal – for companies and individuals alike. CBI boss John Cridland argues that firms have to do a better job convincing the public that they are paying an honest amount.

To date, the PR from those under the cosh has been risible. They may find a more open approach helps curtail that demonisation.

Microbrewers in rude health

TIME to raise a pint glass to Scotland’s band of microbrewers. As we report today, the remote Colonsay Brewery is the latest beer-producing minnow to score success with its wares.

The Hebridean firm’s Colonsay 80 appears to have gone down a treat with customers of supermarket chain Aldi following its inaugural Scottish Beer Festival.

It follows the recent news of a major expansion at the Cairngorm Brewery in Aviemore and the merger of the Isle of Arran and Isle of Skye breweries in a bid to further grow sales. It’s something to make the big boys suffering dwindling sales of insipid lagers sit up and think about. Twitter @scottjamesreid