Crisp Profit after Tax Evasion

Unfortunately for the Great British economy, currently going through a harsh recession, Walkers Crisps’ contribution to the UK tax coffers has been drastically reduced. In 1999 the owners of Walkers Snack Foods, US giant corporate Pepsico, restructured the company and transferred the ownership of the Walker brands into one of its Swiss subsidiaries. Switzerland is a tax haven so over the next eight years, the amount Pepsico paid in UK tax for Walkers Crisps shrunk from £28m to about £8m a year and it paid a lot less in Switzerland than it would have paid in the UK. This arrangement is based on the fiction that Walkers in the UK is simply making and distributing the crisps on behalf of its overseas owners.

This is tax avoidance which is completely legal, unlike tax evasion. Companies are complying with the letter of the law but completely ignoring the spirit of the law. It’s a huge business and, according to a recent report by the Guardian, it cost the UK between £3.7bn and £13.7bn in 2005. That represents a loss of between 9% and 34% on annual Corporation Tax receipts of £40bn that year! It’s done with the help of the big accountancy firms like KPMG who charge hundreds of thousands of pounds to devise tax-avoidance schemes for their clients.

After a long battle with the UK tax authorities, Pepsico begrudgingly agreed to pay back a sum of about £40m, less than a third of what it should have paid without the dodgy corporate restructuring. Pepsico told the Guardian, “Pepsico manages its tax affairs in a prudent and lawful manner.” Prudent and lawful maybe, but not made public without some good investigative journalism.

DO US A FLAVOUR!

Walkers Crisps is currently running a highly-advertised campaign inviting members of the public to suggest six new flavours and then to vote for one of them to become a part of its ongoing crisp range. You can choose between: builder’s breakfast, chilli & chocolate, crispy duck & hoi sin, fish & chips, onion bhaji and Cajun squirrel. All highly amusing but I wonder how many of the people who buy Walkers Crisps realise that most of the tax on the company’s profits will be ending up overseas so that the British taxpayer gets fleeced (again) and there’s more to share out between Pepsico’s stockholders, the majority of whom might not be able to find the UK on a map, let alone Leicester. So we’re suggesting a seventh entry into the competition, simply called UK Tax Evasion, with a bag that’s only about a third full in order to represent Pepsico’s great tax robbery. And the slogan could be, “next time you get stuck into a pack of Walkers crisps just remember that well over half of the tax will be travelling overseas to the best of the Swiss tax authorities and US stockholders”.

To be fair, we’ve chosen Walkers Crisps for the purposes of this article as its products will be recognised by most people in the UK, but there’s plenty of other big companies up to the same tricks. Check out the Guardian’s reports and see how the UK Treasury is being robbed by: Astra Zeneca, GlaxoSmithKline, Shell, Boots, WPP and Diageo (Johnnie Walker, J&B and Gilbey’s Gin). Most of the newspapers have given more column inches to the possibility of Cajun squirrel crisps than Walkers’ tax evasion. Unsurprising perhaps, when you consider that most of them are owned by people like Rupert Murdoch whose News Corporation hasn’t paid any net taxes in Britain for over a decade. Meanwhile, no doubt, the Daily Mail will continue banging on about benefits cheats in order to divert attention away from the real crooks........

LINKS

The Guardian Tax Avoidance Report

The Guardian Tax Gap Reports

Walkers Crisps

LINKED ARTICLES ON TAKE THE RED PILL

Beware False Profits

In Praise of Taxation

Where’s Your Money Going?

Where’s Your Money Going 2?