Tax row could cost UK jobs, minister warns

The backlash against corporate tax avoidance could end up costing Britain jobs and investment, a treasury minister has warned, as David Cameron outlined plans for international action on closing loopholes at a meeting with Eric Schmidt, Google’s chairman, and other business leaders.

The warning came as retailer Marks & Spencer became the latest in a line of UK based companies to have the spot-light shone on its tax-practices.

Exchequer secretary David Gauke said the government was trying to attract investment by lowering the corporate tax rate, despite growing debate over whether multinationals such as Google and Starbucks pay enough UK tax.

The drive for greater tax competitiveness had so far attracted very little public opposition, he said, but this could change if anti-business sentiment hardened.

His comments came as Mr Schmidt attended a meeting of the prime minister’s business advisory group, of which he is a member, days after Google was accused by a parliamentary committee of “devious, calculating and unethical” behaviour in its UK tax arrangements.

People familiar with yesterday’s Downing Street talks said Mr Schmidt did not aleaders there that any action on tax avoidance should be multilateral.

Confederation of British Industry chairman Sir Roger Carr said the increasingly bitter debate about the taxes paid by businesses could harm the economy.

“Tax avoidance cannot be about morality,” he went on, “Tax payments should not be viewed as a down-payment on social acceptability. Tax should be calculated in keeping with the law of the land.”

He urged international co-operation rather than unilateral action in addressing perceived shortcomings in tax legislation.

Meanwhile the Guardian yesterday reported that Marks & Spencer is using its Irish operations to account for goods sold and shipped from the UK.

Orders made through its marksandspencer.eu site from France, Germany, Ireland or other countries are shipped from M&S’s UK warehouses, but the transactions are all made with, and charged to, Marks & Spencer (Ireland) Limited, a subsidiary in Ireland. – Additional reporting Financial Times Limited 2013/Reuters