Re: What Tony P could be paying for next

On 16 Jun, 17:31, Graeme Wall <R...@xxxxxxxxxxxxxxxxxxxx> wrote:
BP and RD-S would still have their head offices in London and London/
Hague respectively, but the economic substance of their UK oil
extraction business is in Aberdeen, Shetland, Orkney, etc, and that's
where the profits are made for tax law purposes.

That depends. There's been a lot of discussion, and complaints, on this
news-group that income 'that should be Scottish' (sic) is counted as English
because the companies have their head offices in London and the corporation
tax is paid in (or at least credited to) London.

But that's because corporation tax is administered on a UK-wide basis,
so the issue only arises in national income accounting (which only
statisticians care about) rather than tax accounting (which involves
very large amounts of real money).

If Scotland were to leave the UK, then the new Scottish government
would certainly levy a tax on profits made by Scottish companies,
including Scottish operations of non-Scottish firms. So Englishwelsh
firms' profits from their Scottish business would be taxed by the
Scottish government rather than the Englishwelsh government (this
would be true for Boots and Tesco just as much as for Shell and BP).

The issue would be determining whether a given oil extraction related
activity was Scottish enough to come under the Scottish authorities'
jurisdiction. There's an enormous amount of precedent in international
tax law that it relates to the economic substance of the business.
Given that the business in question would generally consist of pumping
Scottish oil out of Scottish fields and sending it to mainland
Scotland for processing, I'm willing to bet sizeable sums on how it
would be resolved...

--
John Band
john at johnband dot org
www.johnband.org
.

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