Tax Avoidance
All is fair in love, war and tax evasion.
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Start here with …
… What is tax avoidance?
Listening Activity
Vocabulary
Writing Activity
Check your Prepositions
Click Above
Area of law: Tax
The subject of the lecture is corporate tax avoidance.
Listening task: Fill in the gaps. Answer form here.
Timing: This listening is 5 minutes and 5 seconds long.
Lawyer: Good morning, everyone. This morning’s business law lecture is on the subject of tax (1) _____. This is of course, a very different matter from tax (2) _____ , which is illegal. Tax avoidance on the other hand, minimises the (3) _____ by using legal means. As you’re all aware, there’ve been a number of high-profile tax avoidance cases in the news lately and these have caused the general public, many of whom feel they are paying an unfair percentage of (4) _____ tax, to be both shocked and angry. As a result, the Chancellor of the Exchequer promised in November 2012 to look into large-scale tax avoidance and (5) _____ on those huge international companies who are perceived to be failing to pay their fair share of tax in what are undoubtedly hard economic times.
As a case study, I would like (6) _____ your attention to the tax avoidance strategy used by a company you are all familiar with, and may even have visited on your way to your lectures this morning. I refer of course, to the US coffee giant, Starbucks. The company, which has paid just £8.6 million in corporation tax in the UK over 14 years, and none at all in the last 3 years, is now attempting to (7) _____ a consumer boycott and increased (8) _____ by the UK tax authorities by voluntarily increasing the amount of tax it pays. The move comes (9) _____ of anger surrounding the low levels of UK tax paid by Google, Amazon and other major international corporations. (10) _____, Parliament’s Public Accounts Committee area about to release a report criticising the tax avoidance schemes US multinationals such as Starbucks use and you should all read that immediately upon publication.
So. How does the Starbucks tax avoidance scheme work? Currently the company pays a (11) _____ fee to a sister company in the Netherlands for the right to use Starbucks’ intellectual property, namely its (12) _____ and recipes, thus allowing it to benefit from that country’s tax regime. This legal (13) _____ tactic helped Starbucks sidestep an estimated £5 million corporation tax bill last year. I’d like to read you a statement from a spokesperson for Starbucks. She said, in November 2012: Starbucks is committed to the UK for the long term and we have invested more than £200 million in our UK business over the past 12 years. Starbucks has (14) _____ all the tax laws in this country but has regretfully not been as profitable as we would have liked. We have listened to feedback from our customers and employees, and understand that to maintain and further build public trust we need to do more. As part of this we are looking at our tax approach in the UK. The company has been in discussions with HMRC for some time and is also in talks with the Treasury. Last month it emerged that Starbucks has been able to pay generous salaries to its most senior (15) _____ over the past 3 years. It’s been reported that the corporation’s finance chief, Troy Alstead, who owns shares to the value of £6.8 million, has been paid £5.7 million, and founder Howard Schultz received £33 million.
The senior management of Google, Amazon and Starbucks were recently questioned by (16) _____ as to how they managed to pay little or no corporation tax on their UK operations. All three denied they were (17) _____ aggressive tax avoidance. At the time, a Starbucks spokesman said: ‘Corporation tax is a tax on profits and although we would very much like to and are moving in the right direction, we just don’t make a profit in the UK yet. Starbucks does however pay (18) _____ other taxes in the UK. For example, we directly contribute more than £25 million to £30 million per year to the Exchequer in various taxes, including Employers’ National Insurance Contributions and business rates. However, now that the general public have been made aware of the (19) _____ legal tax avoidance in the UK by big multi-national companies I am left in little doubt that the government will take steps to close a few legal (20) _____ and lawyers will have to think again when advising corporate clients on tax matters.
Section 1
avoidance
evasion
payment of tax
income
clamp down
Section 2
to draw
to deflect
scrutiny
amid a storm
Indeed
Section 3
royalty
trademark
accounting
complied with
staff
Section 4
MPs
engaged in
a number of
extent of
loopholes
Listening Activity
Area of law: Tax
Additional Resources
General Vocabulary
to squeeze in
a sum
to dismiss
full and final
to win a case
a small fortune
business premises
a bit shabby
a deposit
new competition
specific performance
to waive
to put a charge
bits and pieces
to lead to
to show up
a stamp duty
maternity leave
to deal with
to struggle
the case
the facts
to harm
to add fuel to the fire
a fee
reasonable legal fees
to cover
to add insult to injury
just bear with me
to settle
to sue
to invoice / an invoice
a tenant
a landlord
self-employed
substandard work
breach of contract
to turn up
to earn a living
a Charging Order
to award
to enforce a judgment
interest and costs
bankrupt
a bailiff
to draw a line under
a battle
a solicitor
a bill
conveyancing
a mortgage lender
to borrow
to blame
to purchase
a signature
to draw a line under something
a formal written warning
foreseeable future
to sign and date
wrongful
to sack / to fire
straight away
to take to court
small claims court
to take out a loan
an installment
legal interest in an asset
a claim
to hold by a third party
to seize
outcome of a case
hasn’t paid a penny
sold at auction
to complain
to follow up
to go ahead
to carry out
to chase up
a matter
to draw up
ownership
to threaten
a total sum
damages or losses
Writing Activity
Area of Law: Tax
a. Conference Summary
b. Email advising client
c. Opinion
Length: 400 words
Area of Law: Tax
a. Conference Summary
b. Email advising client
c. Opinion
Length: 400 words
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About the Author
Eric Froiland
Eric is a legal English teacher from the United States and has been based out of Bogota, Colombia for the last 10 years. He is the owner and founder of Legal English Innovation SAS, which is recognized as the top legal English academy in Colombia and is an official Test of Legal English Skills (TOLES) examination center.
