Posts tagged "tax avoidance"

Tax avoidance clampdown wins support of G8 leaders

Tax avoidance clampdown wins support of G8 leaders

G8 members persuaded to sign Lough Erne declaration, a commitment to end corporate tax evasion and clear up tax havens. Read more…

Four in 10 might join consumer boycott over tax avoidance

Four in 10 might join consumer boycott over tax avoidance

Anger over tax affairs of some big companies shown by survey, with older people most likely to take action. Read more…

OECD prepares new rules to limit corporate tax avoidance

All 34 members back proposals to crack down on schemes that enable multinationals to pay as little as 1% tax on profits, it says

The OECD is to draw up new rules to limit tax avoidance by some of the world’s largest businesses in time for a meeting of the G20 group of nations in July.

The Paris-based thinktank said all its 34 members backed proposals to crack down on schemes that allow multinational firms to pay as little as 1% tax on their profits.

At the OECD’s annual conference, secretary general Ángel Gurría said there was widespread commitment to design a system that allowed countries to collect the taxes set by their governments.

The agreement comes after increasing controversy over the tactics used by firms such as Amazon, Apple and Facebook to avoid taxes in Europe, where they make billions of pounds’ worth of sales. Apple boss Tim Cook was confronted by US senators in a congressional hearing last week over the company’s use of Ireland as the centre of its tax arrangements. Almost two-thirds of Apple’s $34bn (£22.5bn) profits for 2011 were earned by companies registered in Cork.

The OECD is expected to present the G20 meeting of finance ministers in July with an outline plan for assessing the level of tax companies should pay before giving a more comprehensive blueprint next year.

Gurría said: “This is a very challenging piece of work. We have created a regime where it is legal to pay no or little taxes. But I’m very confident we can find a formula that provides a level playing field.”

In a communique agreed by OECD members, the thinktank said profit-shifting by large companies was “a serious risk to tax revenues, tax sovereignty and the trust in the integrity of tax systems of all countries that may have a negative impact on investment, services and competition, and thus on growth and employment globally”.

Sigbjørn Johnsen, Norway’s finance minister, said: “It used to be that we had treaties to stop double taxation, but now we have seen these treaties allow double no-taxation. It is an issue we are committed to addressing. This is a moving train: it is on the rails and it cannot be stopped.

“The OECD has proved its competence in this area. Tax agreements concerning tax havens were absent only a few years ago, but new countries are signing up all the time to transparency agreements. There is no reason why we cannot achieve the same in respect of tax-base erosion and profit-shifting.”

Tax avoidance is also expected to be a key debate at the G8 group of nations summit to be held in Northern Ireland in June, after David Cameron said tactics used by large multinationals to dodge taxes were a serious threat to the exchequer.

Pascal Saint-Amans, head of tax policy at the OECD, said his organisation would tackle the way companies charged subsidiaries royalty payments to avoid taxes in the UK and other jurisdictions. He added that there should also be new rules governing how much debt is loaded on subsidiaries with the specific aim of avoiding taxes.

“We have to ask: is the royalty too high and is it going to the wrong place?” Saint-Amans said. “A royalty should be charged from the place where it was developed.”

If Google was forced to charge royalties from its California base rather than its offices in Ireland, it would be forced to pay the US government’s 35% tax rate.

He said he was optimistic that G20 finance ministers could reach a consensus based on plans put forward by the OECD.

“It is a very ambitious project. We have put ourselves under terrible pressure, but I believe it is achievable,” he said.

Multinational CEOs tell David Cameron to rein in tax avoidance rhetoric

Burberry, Tesco, Vodafone and BAE Systems join CBI chief in lobbying PM to stop moralising on tax ahead of G8 talks

The bosses of some of Britain’s largest multinational corporations have urged David Cameron to stop moralising and rein in his rhetoric on tax avoidance ahead of a G8 summit next month.

Chief executives of companies such as Burberry, Tesco, Vodafone, BAE Systems, Prudential and GSK were keen to take a final opportunity to lobby the prime minister in advance of the meeting of political leaders in Northern Ireland.

Cameron has pledged to use Britain’s G8 presidency to tackle aggressive tax avoidance by multinationals, but is also keen to heed the counsel of his business advisory group, which he met with on Monday.

Also present was Google’s chairman, Eric Schmidt, despite the internet search firm coming under fierce attack from MPs last week because of its tax arrangements.

The president of the Confederation of British Industry, Sir Roger Carr, who was at the meeting, was among those who have taken issue with Cameron’s attacks on the ethics of big business tax engineering.

During a speech earlier in the day at a London event organised by Oxford University’s Said business school, Carr said: “It is only in recent times that tax has become an issue on the public agenda – Starbucks, Google, Amazon – businesses that the general public know and believe they understand; businesses with a brand that become a perfect political football, the facts difficult to digest; public passions easy to inflame.”

In what appeared to be pointed criticism of increasingly firm rhetoric from Cameron on multinational tax engineering, Carr insisted tax avoidance “cannot be about morality – there are no absolutes”.

In January the prime minister used a speech at the World Economic Forum in Davos, Switzerland, to put a marker down on questions of tax structuring by big business. “Some forms of avoidance have become so aggressive that I think it is right to say these are ethical issues,” he said, urging multinationals to “wake up and smell the coffee”.

Carr said: “Tax payments are not, and should not be … a payment viewed as a down payment on social acceptability, or a contribution made by choice in order to defuse public anger or political attack.”

The CBI boss, who is being talked of as a successor to Dick Olver as chairman of BAE Systems, invited the G8 to consider three points in relation to tax reform:

• Avoiding the moral debate – “it’s all about the rules”.

• Fixing the rules on an international stage, not unilaterally.

• Consulting on proposed changes with business.

A Downing Street spokesman said the specific controversy generated by Google’s tax affairs was not raised during the meeting with business leaders, though discussions did focus on “explaining the tax and tax transparency part of the G8 agenda”.

Also speaking at the Said business school event was Margaret Hodge MP, chair of the public accounts committee and one of parliament’s most outspoken critics of tax avoidance. With Starbucks and the big four accountancy firms in attendance, she said: “Your time has now come on accountability. You are now being asked to answer certain questions and it’s important that we all engage.

“One could argue that the way some companies organise their affairs is anti-competitive to many British companies. Especially if you look at the way Amazon arranges its affairs.”

On Revenue & Customs’ appearance before her committee last week, she added: “Their approach, when they came to parliament last week was complacent and patronising, an attitude that actually didn’t help take the committee forward. I don’t think it helped members work closely together across my committee.

“In my opinion they are not aggressive enough. These are issues of how you judge individual companies, but at the moment I’m not clear how HMRC makes its judgments. So toughen up, HMRC.”

Other attendees at the event were representatives of retailer Marks & Spencer, which was accused of running its online business in a similar structure to Amazon’s, and pharmacy group Alliance Boots, which recently relocated its headquarters to Switzerland.

Fury at corporate tax avoidance leads to call for a global response

Anger over the financial affairs of multinationals such as Google, Amazon and Starbucks is gathering momentum in Westminster. Now the UK is poised to lead the debate about international tax reform at next month’s G8 summit

Huge orange and green cranes hover over a vast building site at King’s Cross, London. Over the next three years, 2.4 acres of this site will be transformed into a million square feet of an 11-storey headquarters for the internet giant Google, no doubt chock-a-block with colourful Big Brother-house-style sofas and surreal chill-out zones that mark out its other 70 offices in 40 countries.

The property deal is estimated to have cost around £1bn and was heralded by the site’s development consortium as the “most significant property transaction of recent years”.

“This is a big investment by Google, we’re committing further to the UK where computing and the web were invented. It’s good news for Google, for London and for the UK,” said Matt Brittin, vice-president for northern and central Europe, when the purchase was announced in January.

Like Amazon, Google is seeing increasing success in the UK where one in every $10 of sales is now generated. Yet both firms claim they are merely touching down on UK soil, without a “permanent establishment” and therefore are not paying tax on profits from billions of pounds worth of sales made here.

On Wednesday, Google won the advertiser of the year trophy at the 54th annual Clio Awards – the Oscars for advertising professionals. Accepting the award in New York, Robert Wong, chief creative officer of Google Creative Lab, said: “At the highest order, our job is to remind the world what it is they love about Google.”

That popularity has hit a serious snag. The next day the company was branded “evil” by Margaret Hodge, chair of the public accounts committee, while this weekend Ed Miliband called it “irresponsible”. “If everyone approached their tax affairs as some of these companies have approached theirs we wouldn’t have a health service, we wouldn’t have an education system,” he said.

Along with Amazon and, before that, Starbucks, Topshop, Boots, Vodafone, Goldman Sachs and Greene King, Google is the latest to have become the target of grassroots hostility towards their aggressive tax avoidance policies. The actions of these corporations are not illegal, nor underhand, but especially when we’re all supposed to be in austerity together, jarring horribly with public opinion.

Something “doesn’t smell right”, as the Guardian’s editorial said this weekend, after it ran an account of the extent of Amazon’s dealings in the UK, far wider than what its tax lawyers are implying.

The debate is now raging over whether these companies are the happy beneficiaries of a tax system knitted with loopholes, or the malicious purveyors of smoke-and-mirror accounting. HM Revenue and Customs claims the former – public opinion is rolling towards the latter. Lin Homer, chief executive of HMRC, claimed the public don’t understand. Asked why she was not taking a tougher line with internet giants, she told the public accounts committee: “We see, but understand more fully, some of the information that might seem to the general public to be surprising.”

But campaigners say tax collectors and leading politicians have been caught out; too engrossed in austerity plans, they are scrabbling to keep up with people who point out that there are other ways to balance the books.

“Without a doubt, they are behind the curve,” said Richard Murphy, a chartered accountant, economist and founder of Tax Justice Network. “They have all been caught by surprise because this has come from civil society, a campaign that has been going on for almost a decade but has only been picked up by politicians after the banking crisis when they suddenly realised they were desperately short of cash.”

He said HMRC had been ducking tax avoidance completely. He said it had powers to tackle any suspect tax returns of foreign-based companies. “If the breach is blatant, then they can act. What we haven’t got is politicians who will stand up to this. It’s a critical point. If the state will not stand up for its right to tax big corporations then we are in deep trouble.”

UK Uncut began campaigning on the issue in 2010 and it was its legal challenge that revealed how HMRC waived a £20m bill for Goldman Sachs, as well as a £6bn bill to Vodafone. Journalists, tax experts and campaigners have been investigating and exposing the tax scams being perpetrated by big businesses for far longer – pointing out glaring loopholes in Britain’s tax system.

When Matt Brittin of Google told the public accounts committee in November 2012 that Google did not have a sales presence in the UK, it was the news agency Reuters that quickly uncovered evidence to the contrary, resulting in Brittin being recalled in front of the committee on Thursday, where his company’s behaviour was described as “devious, calculated and, in my view, unethical” by Margaret Hodge.

“You are a company that says you ‘do no evil’. And I think that you do do evil,” said Hodge, referring to Google’s motto, “Don’t be evil”.

Amazon may also be recalled, after numerous whistleblowers from among its employees approached journalists to contest official accounts of its trading practices within Britain.

For the moment the government’s line is that this is a global problem that cannot be solved unilaterally. On Monday, Google’s executive chairman, Eric Schmidt, will meet David Cameron, a meeting No 10 insists is not about tax, but to do with Schmidt’s role on the prime minister’s business advisory group.

Labour leader Ed Miliband, who is due to give a speech to Google employees on Wednesday, has backed a “country by country” international scheme on tax declaration but says that he is concerned that no firm proposals have so far been put forward for the G8. “You have to have much greater transparency. Tax offices have to know country by country how much profit people are making, how much tax they are paying. Unless you know that you won’t get to the bottom of what is happening. You have to deal with tax avoidance schemes. You have to deal with tax havens.

“We are saying there has to be a big, big push on this. It has to be done internationally and if it is not done internationally, Britain should act on its own.”

All eyes will be on what, if anything, can be agreed at next month’s G8 meeting in Scotland, where, as host of the event, David Cameron has pledged to put tax avoidance at the top of the agenda as he insists it is an issue for international co-operation rather than unilateral action.

And it would not be just the wealthy who would be watching the progress of the talks, said Melanie Ward, head of advocacy at ActionAid UK.

“At the G20 summit in 2009, Gordon Brown led the beginnings of a global crackdown on tax havens and, for the first time, put an emphasis on helping poor countries to deal with the losses to tax havens that cost them three times as much as they receive in aid each year. But in the intervening years, tax dodging died away as a big UK issue,” she said.

“It’s shot back up the agenda with rising public anger over the antics of Starbucks, Google, Amazon and reports of sweetheart deals between the government and Goldman Sachs. The UK should close tax loopholes, but the truth is that the UK is responsible for one in five of the world’s tax havens in the form of many of the crown dependencies and overseas territories. These tax havens are a leech, sucking resources from the UK and poor countries alike, so action needs to start with pulling them into line.

“Ultimately, this is a global problem and the solutions are global. That’s why David Cameron must lead the G8 to deliver an unprecedented assault on tax dodging when it meets next month. This means calling time on tax havens and ensuring that poor countries are at the heart of any new deal to share tax information between countries.

“There is a serious risk that a deal will be agreed between rich countries and tax havens that would leave poor countries out in the cold. This would be entirely unacceptable. Tax dodging is hurting ordinary people, wherever in the world they live.”

Richard Murphy said the moral case for international action had already been won. “We now just have to beat off the accountants and businesses who oppose democratic accountability to the state to get it,” he said.

Ed Miliband vows to curb corporate tax avoidance

Labour leader urges David Cameron to work with G8 countries to force corporate giants to pay their fair share

Ed Miliband has vowed to rip up the rule book as prime minister and go it alone if there is no international consensus to tackle multinationals engaging in massive tax avoidance.

In an interview with the Observer, the Labour leader urged David Cameron to find agreement at the G8 summit of leaders next month around an ambitious agenda forcing corporate giants to pay their fair share.

He said that, if Cameron fails, he himself as prime minister would unilaterally act to make multinationals operating in the UK more transparent about the money they make here, the movement of cash around their corporate structures, and the justifications for the tax they pay.

He would also increase the resources of HM Revenue and Customs to strike at tax cheats.

Miliband, who will speak at a Google event in Hertfordshire on Wednesday, said he believed some multinationals, including the internet giant, were not living up to their responsibilities to society. Google was accused by MPs last week of being devious, calculating and unethical after it emerged that it paid just £3.4m in tax on £3.2bn of sales taken from UK customers last year as the sales were technically “closed” in low-tax Ireland.

Miliband said: “Now, what is the politicians’ responsibility: change the law. But it is also to talk about the kind of society we want to create and what the responsibilities of a company like Google are. I don’t think they are living up to their responsibilities at the moment, and I will be very clear about that on Wednesday.

“It is part of a culture of irresponsibility. If everyone approaches their tax affairs as some of these companies have approached their tax affairs we wouldn’t have a health service, we wouldn’t have an education system. And actually the point I will make at Google is that will undermine Google.”

Meanwhile Eric Schmidt, executive chairman of Google, writing in the Observer, has given his first reaction to last week’s criticism of his company by MPs on the public accounts committee. He says tax avoidance is rightly a “hot topic” in difficult economic times and urges genuine reform, but adds: “Politicians – not companies – set the rules.”

But, in a major policy announcement, Miliband says a Labour government would engender a more responsible capitalism in the UK by changing those rules with or without international agreement. Miliband would:

? Pursue a new global system where multinationals must publish their revenues, profits and other key corporate information useful to revenue authorities in each country in which they operate.

? Force multinationals to publish such information in the UK even if international agreement cannot be found on the issue, as they do in Denmark.

? Make it a legal requirement for multinationals operating in the UK to disclose details of any tax avoidance schemes they are using globally.

? Seek reforms to “transfer pricing” rules to stop companies from shuffling money to other parts of their firm based in tax havens in return for spurious services.

? Open up the ownership of companies sited in Britain’s tax havens to the UK revenue authorities, but also seek to allow developing countries access to such information.

Miliband said the government was “dragging its feet” on the issue of tax avoidance. “They have got to act. If they don’t act, we will act in government. This is an absolutely massive and serious issue.

“I think it is a pro-business agenda to say that people should pay their fair share at the top. The head of a big British retailer came to me recently who was outraged by some of the things going on. He was saying he pays his taxes. The business world feels strongly about this.

“This has an impact on people in their daily lives. The less the big companies pay their fair share of tax, the higher tax others will have to pay, the worse the services they will receive.”

G7 agrees action needed against tax evasion, says George Osborne

Chancellor states importance of nations’ collective action over tax avoidance and evasion on final day of financial summit

The G7 group of industrialised nations has agreed collective action needs to be taken to target tax avoidance and evasion, the chancellor George Osborne has said.

Speaking at the end of the two-day summit of finance ministers and central bank chiefs in Aylesbury, Buckinghamshire, Osborne said it was “incredibly important that companies and individuals pay the tax that is due”.

Osborne said there was also strong agreement among the seven member nations – the United States, Germany, Japan, the UK, Italy, France and Canada – on tackling tax cheats.

“We all agreed on the importance of collective action to tackle tax avoidance and evasion,” he said.

“It is incredibly important that companies and individuals pay the tax that is due and this is important not just for Britain and for British taxpayers but also for many developing nations as well.”

Osborne said British overseas territories “need to do more” to end tax evasion.

Asked about the future of tax havens such as Jersey or the Cayman Islands, he said he had already been very tough in his message to them but wanted to see more action.

“Of course you have to respect that many of these territories have important industries and we don’t want to unnecessarily damage them.

“But it is necessary to collect tax that is owed and it is necessary to reduce tax avoidance and the crown dependencies and the overseas territories need to play their part in that drive and they need to do more.”

The chancellor said there was also consensus to ensure banks are no longer “too big to fail”.

He added there is an “improved outlook” for the world economy, with more agreement among the rich member nations on how to nurture the recovery than was often suggested, but admitted the situation remains fragile.

“We are of course meeting at a time when financial market sentiment has improved and there are signs that this is feeding through to an improved outlook in some of our economies,” Osborne said.

“However we all agreed that growth prospects remain uneven and we can’t take the recovery for granted.”

While there were “still many challenges”, he said, “this meeting confirmed that there are more areas of agreement between us on fiscal policy than is commonly assumed.”

Among those attending the talks was Canada’s central banker Mark Carney who takes over from Sir Mervyn King as Bank of England Governor in July.

King said the meeting had been the most productive of the 25 he had attended during his term at the helm.

Joking about his impending departure, King said: “In a week in which retirement came to Sir Alex Ferguson, it is pretty clear it has to come to everyone. I am looking forward to a new life.”

Also at the talks was IMF managing director Christine Lagarde as the body undertakes its annual health check of the UK.

The IMF, which will deliver its verdict later this month, has already suggested Osborne must be more flexible with his deficit-reduction plans.

Shadow treasury minister Catherine McKinnell said: “It’s disappointing that this G7 meeting has failed to set out any concrete steps to promote economic growth or tackle tax avoidance.”

G7 agrees tax evasion action needed – Osborne

Chancellor states importance of nations’ collective action over tax avoidance and evasion on final day of financial summit

The G7 group of industrialised nations has agreed collective action needs to be taken to target tax avoidance and evasion, the chancellor George Osborne has said.

Speaking at the end of the two-day summit of finance ministers and central bank chiefs in Aylesbury, Buckinghamshire, Osborne said it was “incredibly important that companies and individuals pay the tax that is due”.

Osborne said there was also strong agreement among the seven member nations – the United States, Germany, Japan, the UK, Italy, France and Canada – on tackling tax cheats.

“We all agreed on the importance of collective action to tackle tax avoidance and evasion,” he said.

“It is incredibly important that companies and individuals pay the tax that is due and this is important not just for Britain and for British taxpayers but also for many developing nations as well.”

Osborne said British overseas territories “need to do more” to end tax evasion.

Asked about the future of tax havens such as Jersey or the Cayman Islands, he said he had already been very tough in his message to them but wanted to see more action.

“Of course you have to respect that many of these territories have important industries and we don’t want to unnecessarily damage them.

“But it is necessary to collect tax that is owed and it is necessary to reduce tax avoidance and the crown dependencies and the overseas territories need to play their part in that drive and they need to do more.”

The chancellor said there was also consensus to ensure banks are no longer “too big to fail”.

He added there is an “improved outlook” for the world economy, with more agreement among the rich member nations on how to nurture the recovery than was often suggested, but admitted the situation remains fragile.

“We are of course meeting at a time when financial market sentiment has improved and there are signs that this is feeding through to an improved outlook in some of our economies,” Osborne said.

“However we all agreed that growth prospects remain uneven and we can’t take the recovery for granted.”

While there were “still many challenges”, he said, “this meeting confirmed that there are more areas of agreement between us on fiscal policy than is commonly assumed.”

Among those attending the talks was Canada’s central banker Mark Carney who takes over from Sir Mervyn King as Bank of England Governor in July.

King said the meeting had been the most productive of the 25 he had attended during his term at the helm.

Joking about his impending departure, King said: “In a week in which retirement came to Sir Alex Ferguson, it is pretty clear it has to come to everyone. I am looking forward to a new life.”

Also at the talks was IMF managing director Christine Lagarde as the body undertakes its annual health check of the UK.

The IMF, which will deliver its verdict later this month, has already suggested Osborne must be more flexible with his deficit-reduction plans.

Shadow treasury minister Catherine McKinnell said: “It’s disappointing that this G7 meeting has failed to set out any concrete steps to promote economic growth or tackle tax avoidance.”

Tax chief waived £20m owed by bank ‘for fear of embarrassing chancellor’

Dave Hartnett overruled legal advice and HMRC guidelines to settle dispute with Goldman Sachs, high court hears

The former tax chief Dave Hartnett chose to waive up to £20m that Goldman Sachs owed to HM Revenue and Customs after expressing concerns that it would cause embarrassment to George Osborne and the tax authorities if they failed to settle the dispute, newly released documents suggest.

The previously unseen email has emerged at the high court where UK Uncut Legal Action, the anti-cuts campaign group, has brought a case challenging the decision to waive the charges by HMRC officials.

Hartnett personally overruled legal advice, the HMRC’s own guidelines and HMRC’s internal review board, which all stated that HMRC was in a position to force Goldman Sachs to pay back the money owed, the court heard.

Shortly after the oral deal had been made between Hartnett and Goldman to waive the £20m that the bank owed, the HMRC’s high-risk corporate programme board, an internal oversight board, rejected the deal and recommended that negotiations be re-opened to recoup the money owed.

In the email, sent by Hartnett to other senior tax officials, he states that when Goldman Sachs was informed of the board’s decision to reject the deal and force the bank to pay the interest, the bank “went off the deep end”.

He also warns of potential political embarrassment, stating: “The risks here are major embarrassment to the chancellor of the exchequer, HMRC, the large business service of the HMRC, you and me, not least if GS withdraw from the code.”

In Hartnett’s written witness statement, he states: “Goldman Sachs had been involved in tax avoidance in the past and we regarded their signing of the code as a valuable step in securing improved tax behaviour from them. This would have been under threat had we reneged on the settlement (they said they would withdraw from the code if HMRC reopened the settlement).”

Hartnett says that this would be a source of embarrassment for Osborne because a week earlier the chancellor had publicly announced that the government was cracking down on tax avoidance by big banks and had successfully forced the top 15 banks, including Goldman Sachs, to sign up to the code of practice on taxation designed to reduce tax avoidance.

Ingrid Simler, for UK Uncut, said Hartnett’s email showed he was worried by the prospect of embarrassing the chancellor. “There was a risk to the chancellor, that is admitted my lord, and it is disclosed in Dave Hartnett’s witness statement,” she said.

Hartnett says in his statement that Goldman’s threat to withdraw from the government’s code of practice for banks, which was published in December 2009, worried him.

“I was concerned that withdrawal would have embarrassed the chancellor, who had announced on 30 November 2010 that the top 15 banks including Goldman’s had signed up to the code,” Hartnett’s witness statement reads.

Hartnett stood down as head of tax last summer, following stinging criticisms from the public accounts committee over the Goldman deal.

Murray Worthy, director of UK Uncut Legal Action, said the case had exposed a cover-up at the heart of government by HMRC and Hartnett to avoid political embarrassment for Osborne.

“George Osborne announced the bankers’ code for tax avoidance with great fanfare, claiming that he was forcing banks to pay their fair share. Yet on the same day Goldman Sachs were threatening to withdraw from the code if HMRC forced them to pay the tax they owed.

“HMRC waived millions of pounds owed by Goldman Sachs against legal advice and HMRC’s own guidelines to salvage Dave Hartnett’s personal reputation and George Osborne’s veneer of tough tax talk,” he said.

Anna Walker, campaigns director at UK Uncut Legal Action, said: “This case shows the lengths that the government will go to in order to preserve the public perception that government is getting tough on tax avoidance. HMRC have tried tirelessly to cover up this deal. They have stonewalled the public accounts committee, whitewashed the NAO report, criminalised a whistleblower and have fought this legal case every step of the way.

“In the runup to the G8, where David Cameron and George Osborne will pronounce themselves as global leaders in tackling tax avoidance, this case shows what is going on behind closed doors and the headline-grabbing announcements – tax avoidance as usual, sweetheart deals to avoid red faces of ministers and giving in to threats from big business.”

UK Uncut Legal Action is seeking a ruling that the deal reached between Goldman Sachs and HMRC was unlawful because it was in direct contradiction of HMRC’s own statutory duty to collect tax properly, and its own guidance.

Simler said HMRC reached a settlement in a dispute over national insurance due on bonuses with Goldman Sachs in 2010 without requiring the payment of interest. The potential cost to the taxpayer is officially put at £8m but a whistleblower, Osita Mba, said the sum could be as high as £20m.

The bank was allowed to skip the interest bill after Hartnett was wrongly advised there was a “legal impediment” to collecting it, said Simler. The error was quickly noticed, but, despite legal advice that the agreement with the bank was not binding, HMRC unlawfully withdrew a county court claim for what was owed without seeking to renegotiate, she said.

This went against HMRC guidelines stating that taxpayers should be treated equally and no discounts or deals should be done. Simler said: “The issues in this case are of great importance both to taxpayers and HMRC as well.”

The case continues.

Triodos gives green light to two new ethical funds

But choosing ‘ethical’ firms to invest in is not always as simple as ‘good’ or ‘bad’

Ethical bank Triodos is branching out into green investment with the launch of two funds. People can choose between supporting companies doing innovative work in the field of sustainability – combating climate change, encouraging healthy living and so on – or household-name brands delivering “superior social and environmental performance”.

Both funds can be held within a stocks and shares Isa, and mean more choice for those looking to invest their cash in a socially responsible way. However, Triodos looks set to spark a debate over just how “ethical” some of these companies are after it emerged that one of the funds invests in several major names that have been sharply criticised for alleged tax avoidance, including Google and Starbucks.

Netherlands-based Triodos Bank has been operating in the UK for 18 years and describes itself as “a world leader in ethical and sustainable banking”. However, this is the first time it has offered stock market-linked investments to UK small investors.

Of Triodos’s two new funds, Sustainable Pioneer is the greenest – it is a global fund investing in smaller and medium-sized companies involved in sectors such as sustainable energy and medical technology. Only those companies deriving more than 50% of their revenue from climate protection, healthy people or clean earth themes are eligible. Firms that are way ahead of the pack on corporate social responsibility will also make it in. Companies in its portfolio include beauty products firm L’Occitane, US-based natural and organic food company Annie’s and Smith & Nephew – Europe’s leading maker of artificial hips and knees.

Triodos Sustainable Equity is arguably a more “mainstream” fund, investing in companies “that combine a strong financial position with solid social and environmental performance”.

It includes plenty of the sorts of companies you might expect – natural and organic food retailer Whole Foods Market, Japan-based bicycle parts manufacturer Shimano, Canadian National Railway and several solar firms – but also some that might raise eyebrows, such as sportswear brands Adidas and Nike, car manufacturers BMW and Volkswagen, drinks giant Diageo, and a couple of banks, including Dutch group ING and National Bank of Canada.

The fund’s biggest holding is Google, whose chairman Eric Schmidt was this week defending the search engine’s tax avoidance policies after it paid just £6m in corporation tax in the UK in 2011. The second and ninth largest holdings are telecoms giant Vodafone and coffee chain Starbucks, two of the most high-profile companies caught up in the tax avoidance accusations.

But Triodos says both funds operate strict minimum standards on a variety of issues, with zero tolerance on arms, nuclear power, hazardous materials and “unconventional” oil and gas.

The funds have been available in Europe for several years and, performance-wise, the Sustainable Equity fund has done well of late, delivering a return of 14.3% over the past year. It has outperformed its benchmark over one and three years. Sustainable Pioneer delivered a return of 9.2% over the past year, but has underperformed over one, three and five years (these figures relate to a euro share class that won’t be available to UK small investors).

Until 28 June, Triodos is offering a 1% discount on the funds’ initial fee, taking it down to 3%, after which it will revert to 4%. The annual management charge is estimated as 1.25% for Sustainable Pioneer and 1% for Sustainable Equity, and the minimum investment is £1,000 per fund (there is no monthly savings option).

However, some may be disappointed to learn that Triodos has decided to launch its funds on a “direct only” basis which means that, for the time being at least, they won’t be available via online fund supermarkets and platforms operated by companies such as Hargreaves Lansdown, where you can buy and manage funds at low cost. You can go on to the bank’s website and request an application pack.

The good news, though, is that you can invest tax-free in a Triodos ethical stocks and shares Isa. If you haven’t used your Isa allowance for this year, you can invest up to £11,520 in 2013/14.

There are dozens of ethical funds to choose from. If you are thinking of taking the plunge you need to decide on your personal priorities. Secondly, do you want to pay a financial adviser to help, or do you feel confident enough to do it yourself? The Ethical Investment Association website (ethicalinvestment.org.uk) allows you to find specialist advisers in your region.

Traditional ethical funds typically use a combination of negative screens (to eliminate arms manufacturers etc) and positive screens to favour businesses with a good record on corporate social responsibility or that are involved in environmentally friendly or low-carbon industries. But, as the ongoing tax avoidance debate has shown, some would say it is not always possible to put a company into a simple “good” or “bad” box.