Well I work in tax and I'm chartered qualified so have an inkling of how it all works.

Tax laws are all political. The industry knows it, big business knows it, the government knows it. Every sector in tax has a forum between the government and industry which is effectively for the industry to lobby the government on behalf of their major clients. HMRC stand no chance.

The existing corporate tax rules are are still largely based around the time when the UK was a manufacturing economy producing actual phyiscal goods. It's never really moved on to cope with the big boys selling IP and intangibles.

First question - who will administer it?

The answer is (relatively) simple. You just abolish corporate tax completely and increase VAT. You could also increase employer NI and business rates but that would simply reduce jobs in the UK.

Large companies will of course still generally exploit VAT loopholes much more effectively than small ones but at least their sales are generally much easier to measure than their costs.

The problem is that it is politically unacceptable to reduce tax on faceless companies and burden johnny taxpayer with the cost.

Just because I don't care doesn't mean I don't understand!

My opinions may have changed, but not the fact that I am right.

(Member of the School of Optimism 1969-2016 inclusive)

Edited by Y Ddraig Goch (13 Feb 2016 12.04pm)

DanH: Really interesting contribution from you to this thread. Given your background or anybody else who works in Tax, how would you change the system to make it fairer for everybody?

No easy answer unfortunately. Even with transfer pricing rules multinationals are still able to shift profits around for certain types of sales so that they arise in lower tax jurisdictions. Agree that the simplification of the systems would go some way to helping. I work in personal rather than corporate tax though so can't profess to be the saviour of corporate tax avoidance.