I’ve been looking at HSBC’s accounts today.
Using my method of unitary taxation and applying my GRAPIST, I conclude that HSBC should have paid at least £2bn pounds more tax in the UK.
Look, here’s a picture from their accounts:
Now, let’s look at that a different way. Let’s apply the unitary apportionment formula to group profits.
Why do we do this? Because it is unarguably the only fair way top decide tax liabilities.
I know the company had 48,000 employees in the UK out of 270,000 in all.
That’s assuming that they aren’t treating their employees like nannies and employing them through personal service companies.
I can get that $9,149 of income out of $68,330 was in the UK, whilst $18,391m of assets out of $79,935 were in the UK.
The classic unitary apportionment formula says that profit should be weighted to a country in proportion with one third of the weighting applying to income, assets and staff.
In passing, this is why we need country-by-country reporting: these accounts have told me nothing.
Anyway, I make it about £500m more on what they paid (ignoring all the adjustments and things you’d do for tax purposes – that always confuses things).
But it is now important to remember that unitary taxation isn’t actually anything but an arbitrary measure of what somebody might want the law to be. So we have to then apply our expectation gap to our workings which reproduces the effect of a sensible anti avoidance principle.
From this, I calculate that HSBC should have paid £2bn pounds. Therefore I can say with absolute certainty and without worry of misleading the public that I expect HSBC’s UK tax to be £2 bn more.
You have been reading another well-researched and logical post from Murphy Richards.