Saturday 30 June 2012

Boyle hits back over tax claims


Comedian Frankie Boyle has come out fighting over his tax arrangements after they were called into question.
The Daily Mail said the entertainer "could have avoided paying nearly £900,000 tax through the voluntary liquidation of his firm last year".
Noting that Boyle had lampooned fellow comic Jimmy Carr after Carr hit the headlines recently for using a complex scheme to reduce his tax payments, the newspaper said Boyle may also be the beneficiary of sharp - but entirely legal - accountancy practices on the millions he has earned through TV shows, tours, DVDs and book sales.
It said that by winding up Traskor Productions Limited, of which he was sole director and shareholder, he may have been able to pay a tax rate of just 10%, rather than 50% if he had taken money out as dividends or income.
This is because he could have been entitled to 'entrepreneur' tax relief, saving him £880,762, the newspaper said.
Boyle has responded with a statement on Twitter in which he said he was certain he paid more tax than most people in showbusiness and the Cabinet.
He wrote: "From 2007 I have paid £2.7 million in tax and this equates to just under 40% of my income. There's a lot of things people do to avoid paying tax and I don't do any of them.
"I wound my company up for legal reasons separate from tax and my accountant applied for tax relief on this. This tax relief is approximately half of the tax saving the Mail quoted in its article today. I am certain I pay more tax than most people in show business and the cabinet."
Boyle was critical of Carr in the wake of the row over his tax affairs, tweeting: "It's ok to avoid tax providing every time you do a joke about a town being s*** you add 'Partly down to me I'm afraid' under your breath."
Carr's tax arrangements, which were disclosed in The Times, were criticised by Prime Minister David Cameron, who described them as "straightforward tax avoidance". Carr issued a statement apologising for his actions, saying he had "made a terrible error of judgment".

©Press Association

PM willing to hold EU referendum


David Cameron has sought to reassure eurosceptics he is prepared to hold a referendum on Britain's relationship with Brussels - but only when there is a "real choice" for voters.
The Prime Minister insisted that an immediate in/out referendum - which he is under mounting pressure from within his own party to deliver - was not what the vast majority of people wanted.
But, in an article for The Sunday Telegraph, he acknowledged the need to ensure the UK's position within an evolving European Union has "the full-hearted support of the British people".
"There is more to come - further moves, probably further treaties - where we can take forward our interests, safeguard the single market and stay out of a federal Europe," he said.
"How do we take the British people with us on this difficult and complicated journey? How do we avoid the wrong paths of either meekly accepting the status quo or giving up altogether and preparing to leave? It will undoubtedly be hard going, but taking the right path in politics often is. As we get closer to the end point we will need to consider how best to get the full-hearted support of the British people, whether it is in a general election or a referendum.
"As I have said, for me the two words 'Europe' and 'referendum' can go together, particularly if we really are proposing a change in how our country is governed, but let us get the people a real choice first."
Mr Cameron said he agrees with the "vast majority of the British people" who he said were not happy with the UK's relationship with the EU.
There were large amounts of EU legislation that should be scrapped, he said.
"Put simply, for those of us outside the eurozone, far from being too little Europe, there is too much of it. Too much cost, too much bureaucracy, too much meddling in issues that belong to nation states or civil society or, indeed, individuals," he said. "Whole swathes of legislation covering social issues, working time and home affairs should, in my view, be scrapped."
Nearly 100 Conservative MPs have written to Mr Cameron urging him to make it a legal commitment to hold a poll on the UK's relationship with the EU during the next parliament.

©Press Association

Country Celebrates Troops On Armed Forces Day


Communities across the UK will make a show of support for servicemen and women today as the country celebrates Armed Forces Day.
More than 100 events, ranging from veterans' parades and bands to barbecues and fairs, will be held at the culmination of a week of tributes to British troops and their families.
The day is marked to raise awareness of the contribution made by the Army, Navy and RAF, and to allow the public to demonstrate their appreciation.
Prime Minister David Cameron said: "Today is an opportunity for everyone up and down the country to clearly show how grateful we are to all our brave servicemen and women for all that they do.
"It's also vitally important that we remember the sacrifices that the armed forces and their families make every day for the safety of our country."
The celebration comes as military charities report a 26% increase in donations since the beginning of the economic crisis in 2008.
Help for Heroes saw a 181% gain in income, while Support Our Soldiers, which sends care parcels to the frontline, saw an 87% increase, according to The Sun.
A national event will be held in Plymouth, where there will be a parade through the city by members of all three services, joined by military bands and veterans.
The parade will finish on the Plymouth Hoe with a drumhead service, although entertainment will continue throughout the day.
Deputy Prime Minister Nick Clegg said: "Today I'm joining the rest of the country in saying thank you to our armed forces.
"We owe our servicemen and women a huge debt of gratitude for their dedication, resilience and sacrifices.
"For their incredible work, for putting their lives at risk so we can live in safety, for being prepared to leave their loved ones behind when they serve our country, from cooks, to medics, to volunteers, to troops on the front line in Afghanistan - every single contribution deserves recognition and celebration - as do those of our reservists, veterans and cadets."
Mr Clegg said the celebrations should "go some way to showing how grateful we are for the work of all our armed forces and how much we recognise their contribution".
"I also want to thank their families - who are parted from their loved ones for long periods of time, who live with uncertainty, and whose patience and bravery is recognised by us all."

Thursday 28 June 2012

BMA Calls For Andrew Lansley To Resign


Doctors have called for Andrew Lansley to resign, saying they have "no confidence" in the Health Secretary.
Medics went head to head with Mr Lansley last week over the Government's controversial pension reforms.
They took industrial action for the first time in almost 40 years to voice their anger at the proposals.
The BMA accused Mr Lansley of "breaching doctors' trust" by tearing up the pension deal which was only agreed four years ago.
Delegates at the British Medical Association's (BMA) annual conference in Bournemouth agreed on a motion calling for Mr Lansley's resignation.
Delegates at the conference voted on the motion "This meeting has no confidence in Andrew Lansley, the Secretary of State for Health, and calls for him to resign".
The motion won by a slight majority, with 158 delegates voting in favour and 124 against.
Dr Gary Marlowe, who presented the motion, told the conference: "I do not trust this man."
He accused Mr Lansley misleading doctors and the public during the election over his plans for the Health and Social Care Act, which became law in March after a difficult passage through Parliament.
He said: "I understand that Mr Lansley is quite a nice man and can on occasion be quite charming.
"If only this was enough to be Health Secretary overseeing the biggest reorganisation of the NHS since its inception.
"It is clear that we have a Health Secretary who is ideologically-bound, thinks he knows best, is disingenuous and sticks his fingers in his ears 'la la la la'.
"I know there will be the argument that we should not call for someone to resign with whom we might have to negotiate tomorrow but he doesn't listen anyway so that is no argument.
"As every doctor knows, trust lies at the heart of everything we do. We expect a similar degree of trust with the Health Secretary. I do not trust this man."
 
Dr Peter Holden said: "I should declare an interest, I am a card-carrying Tory. Resignation is too good for Lansley - Cameron should sack him."
 
However, the BMA's outgoing chair of council Dr Hamish Meldrum urged doctors not to pass the motion, saying that it was about policies, not personality.
 
Also speaking against the motion, Dr Glynn Evans said: "Imagine our ongoing negotiations: 'Dear Secretary of State, officially I have no trust in you, officially I want you to resign, but can I put that aside and negotiate with you?' It's not going to work."

1,292 sent to prison after riots


More than 1,200 people have been jailed for an average of almost 18 months following last summer's riots, figures show.
Some 3,051 people had appeared before the courts by June 8 following the looting and violence which spread across English cities last August, the Ministry of Justice said.
A total of 1,292 of the 1,968 found guilty and sentenced for their role in the riots were jailed immediately, with an average sentence of 16.8 months.
This was much higher than the average 3.7-month sentence handed down to those convicted by magistrates but sentenced at any court for similar offences in England and Wales in 2010, the figures showed.
As of two weeks ago, some 692 offenders involved in the riots were behind bars, with a further 710 having served their jail term and been released.
Overall, more than half (53%) of those before the courts over the riots were aged under 20, and only one in 16 (6%) was over 40.
One in two (50%) faced burglary charges, while a fifth (22%) were accused of violent disorder and one in six (16%) were accused of theft.

©Press Association

Recession Deeper Than First Feared, GDP Figures Show


The double-dip recession is deeper than originally feared as revised figures today showed a sharper decline in the economy in the final quarter of last year.
Gross domestic product (GDP) shrank by 0.4% between October and December, compared with a previous estimate of 0.3%, while the economy contracted by an unchanged 0.3% in the first quarter of this year, the Office for National Statistics (ONS) said.
The figures mean the current recession - defined as two or more quarters of declining GDP in a row - is more severe than first thought.
The impact of the weak economy was underlined by household spending figures, which showed expenditure falling by 0.1% compared with a previous estimate of 0.1% growth.
The downward revision will heap more pressure on the Government and fuel criticism that Chancellor George Osborne's austerity measures are choking off the recovery.
And in a further sign that the Chancellor's deficit-busting plans are struggling, Government spending grew at its fastest rate in nearly seven years between January and March, the ONS said.
The 1.9% surge in Government expenditure was driven by higher spending on public administration, health and defence.
Meanwhile, the decline in household expenditure in the first quarter was driven by a fall in spending on financial services and social protection.
The decreases were partially offset by spending on food and drink and recreation and culture.
The construction sector declined by a larger than previously estimated 4.9%, its worst performance since the first quarter of 2009.
Industrial production sector output, which includes manufacturing, was also revised downwards to a fall of 0.5% from a 0.4% decline.
Despite the overall decline in GDP, growth in the powerhouse service sector, which makes up 75% of the economy, was revised upwards from 0.1% to 0.2% in the first quarter.
Economists and business leaders have warned that a technical recession will hit confidence and could cause businesses to rein in spending at a time when they are being encouraged to invest to stimulate growth.
But the current downturn is expected to be nothing like as severe as the previous recession of 2008/09, which spanned more than a year.

©Press Association

MoD 'has £4bn of unwanted supplies'


The Ministry of Defence is wasting billions of pounds of taxpayers' money on military supplies it does not need, according to a public spending watchdog.
An investigation by the National Audit Office found 54 years' worth of bomb dropping equipment from an old model of the Nimrod aircraft was being held in stock despite it being retired from service in 2010.
It also discovered a 10-year supply, excluding war reserve contingencies, of a particular size of fire-resistant coveralls even though just under 200 a year are being issued. The MoD stopped buying the garment in 2008.
Overall, the critical report found £4.2 billion worth of non-explosive stock, excluding VAT, was being held despite no demand being shown for it over the last two financial years.
Supplies and equipment are increasing and the MoD is failing to dispose of the stock it does not need, the NAO added.
Storing the supplies and spares, known as inventory, which covers everything from ammunition and missiles to clothing and medical supplies, costs £277 million in one year.
Plans to bring back the armed forces from Afghanistan by 2015 and from Germany by 2020 will heap further pressure on storage, the NAO warned. It criticised the MoD for spending money on "unnecessary" stock when the cash could be used elsewhere in government.
The NAO report found £2.9 billion went on supplies in 2010/11 and the MoD is expected to spend between £1.5 billion and £2 billion each year for the next five years.
Amyas Morse, head of the National Audit Office, said: "In the current economic climate where the department is striving to make savings, it can ill-afford to use resources to buy and hold unnecessary levels of stock, and it clearly does so.
"The root cause of excess stock, which the department is seeking to address, is that management and accountability structures currently fail to provide the incentives for cost-effective inventory management."

Parents Get Say On Shielding Kids From Porn


Parents are to be asked whether internet pornography should be automatically blocked on computers and smartphones, ministers have said.
Campaigners have argued it is too easy for children to access explicit adult content.
Children's minister Tim Loughton said the internet industry, which is worth an estimated £3bn a year, needed to do more to help families control what their children saw online.
More than 100,000 people have signed-up to a Safetynet campaign calling for the Government to introduce legislation to ensure internet service providers filtered pornography at source.
Mr Loughton said: "We have always been clear we would turn up the heat on industry if it did not make fast enough progress."
But he warned an automatic filter risks "lulling parents into a false sense of security" and could never be "100% foolproof".
"There can never be any substitute for parents taking responsibility for how, when and where their children use the internet," he said.
A 10-week consultation will ask parents and businesses for their views on the best way to shield children from internet pornography and other potentially harmful sites, such as those which promote suicide, anorexia and self-harm.
Views on preventing online sexual grooming and cyber-bullying will also be sought.
Parents will be asked for their views on three possible systems - one where users have to "opt in" to see adult sites, or one where customers are presented with an unavoidable choice about whether or not they want filters and blocks installed.
The third option would combine the two systems, enabling customers to block some content automatically and then be given a choice to unblock them as they wish.
One in five 11 to 16-year-olds have seen potentially harmful user-generated content online, rising to a third of 14 to 16-year-old girls, figures from Ofcom's Children's Media Literacy Tracker 2010 and EU Kids Online II survey showed.
Andrew Flanagan, chief executive of the NSPCC, said: "Long-term we back the next step which is the introduction of an opt-in filtering system for all internet accounts in the UK, if necessary, supported by Government regulation.
"This will mean all new internet accounts will default automatically to a setting that blocks access to adult content.
"Over-18s can then request for this to be removed if they wish."

©SKYNEWS

Wednesday 27 June 2012

Barclays scandal engulfs industry


The banking industry has been engulfed in a fresh scandal after Barclays paid £290 million to settle claims that it used underhand tactics to try to rig financial markets.
The penalties from UK and US regulators, including a record £59.5 million fine from the Financial Services Authority (FSA), followed allegations it manipulated Libor and Euribor interbank lending, which govern the rates at which banks are prepared to lend to each other in the wholesale money markets.
In the depths of the financial crisis, Barclays gave false information about the interest rates it had to pay to borrow money in an effort to paint a false picture of its health to markets.
Chief executive Bob Diamond, who was in charge of Barclays Capital at the time the breaches occurred between 2005 and 2009, apologised and said he and three other key executives would waive their bonuses for this year.
A trail of emails and messages disclosed by the FSA showed how traders broke so-called Chinese Walls, which are designed to avoid conflicts of interest within financial firms, as they requested Barclays make changes to the Libor rate in a bid to boost their profits.
In one request for a change to the Libor rate, a trader said: "Coffees will be coming your way either way, just to say thank you for your help in the past few weeks". To which the Barclays submitter responded: "Done, for you big boy."
After one submitter of information responded favourably to a trader's request to lower a closely-watched interest rate, the trader came back: "When I retire and write a book about this business your name will be written in golden letters."
The scandal is another blow to the beleaguered banking sector as it battles to restore its tarnished image in the wake of the financial crisis, the scandal of mis-sold PPI and the computer problems at RBS which froze millions out of their accounts.
Barclays is the first major financial institution to settle with regulators following a wide-ranging probe that has spanned North America and Europe.
Mr Diamond said: "I am sorry that some people acted in a manner not consistent with our culture and values. The events which gave rise to today's resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business. Nothing is more important to me than having a strong culture at Barclays."

Reformed Lords may cost £153m more


The House of Lords will cost £153 million more per five-year parliament under the Government's reform plans, it has been revealed.
The annual runnings costs of the new-look mainly elected second chamber would rise by £13.6 million by 2025, when the changes are due to be fully-implemented.
Elections at the start of each parliament, beginning in 2015, would cost an additional £85.7 million a time, according to official estimates. There would also be a £3.8 million publicity drive ahead of the first elections.
Deputy Prime Minister Nick Clegg said that the costs would be covered by savings made from reducing the size of the House of Commons.
"If you take account of all the other changes we are making in the Houses of Parliament over this parliament the reform will lead to less expenses to the taxpayer," he said.
"From a taxpayers' point of view what is important is the subsidy they are giving to politicians and that will be less not more."
Mr Clegg said the Government was also taking "quite tough" measures to keep costs down, with members of the reformed chamber having no pensions or constituency offices and fewer staff.
"What I'm saying is the cost of politics goes down," he said.
The costs were published alongside the long-awaited and highly divisive House of Lords Reform Bill.
In a concession to critics, ministers have scrapped plans for a salary of about £60,000 for members of the new Upper House. The Government instead wants them to be paid £300 for each day they attend - a maximum of about £45,000 a year.

©Press Association

Vaccine Could Take Pleasure Out Of Smoking


Scientists have developed an anti-nicotine vaccine that could take the pleasure out of smoking a cigarette.
A single dose of the vaccine was able to protect mice against nicotine addiction for life.
Further tests are needed before starting human trials, which would take several years, but Professor Ronald Crystal of Weill Cornell Medical College in New York said the early signs are good.
He said: "We are very hopeful that this kind of vaccine strategy can finally help the millions of smokers who have tried to stop, exhausting all the methods on the market today, but find their nicotine addiction to be strong enough to overcome these current approaches."
The new vaccine contains a harmless virus that has been engineered to carry the genetic information to make anti-nicotine antibodies. The virus selectively infects liver cells, which then start to make a steady stream of the antibodies. 
These hunt down any nicotine molecules in the bloodstream, neutralising them before they reached the brain, preventing a smoker from getting a nicotine hit.
In tests, vaccinated mice who were subsequently given nicotine continued with their normal activity. But mice who had not been given the vaccine "chilled out", say the researchers, a sign that the nicotine had reached their brains.
The experiments are described in the journal Science Translational Medicine.
Previous tobacco vaccines failed because they contained antibodies. The jabs had to be given so frequently to keep antibody levels topped up that they proved expensive and impractical.
But the cost of the new vaccine is likely to be far lower, because it  turns liver cells into antibody factories.
Professor Crystal said that if a future human vaccine was completely safe it could be given to children before they were tempted to try a cigarette, preventing nicotine addiction. But more likely it would be used by smokers to quit.
"They will know if they start smoking again, they will receive no pleasure from it due to the nicotine vaccine, and that can help them kick the habit," he said.
British scientists said the results were interesting but warned far more research was needed.
Professor Anthony Dayan, the former head of the Department ogf Health and social Security Toxicology Department at St Bartholomew’s Hospital, said: "Nicotine addiction via smoking is harmful but is it ethical to produce a major and enduring change in someone’s body to prevent it when other less major types of treatment are feasible?
"The clinical testing of this gene therapy would also be extremely difficult, lengthy and costly because of the need to show safety and retained efficacy in man over a very long period, certainly many months or more likely several years. 
"Who could support such trials other than government agencies and is it politically and financially conceivable they would attack so directly the popular habit of smoking?"

©Sky News

Lords reform Bill to be tabled


A Lords reform Bill that is set to strain the Coalition to its limits is due to be tabled amid threats of a Tory rebellion and a Labour attempt to derail the timetable for pushing it through.
Labour wants more days allotted to debating the legislation, which would introduce an 80% elected Upper House and slim membership down from 800 to 450, and confirmed it will join with Conservative rebels to vote down a motion setting out its passage through parliament.
Ministers aim to make the Bill law by the spring but a defeat on the timetable would pave the way for as much as four or five weeks of debate in the autumn, which would swallow up time needed by for other business.
Conservative opponents of reform - of whom there are thought to be as many as 100 in the Commons - would also seek to use the opportunity to "talk out" the legislation.
Labour leader Ed Miliband announced his party will back the reforms in the Commons but is expected to table an amendment demanding that any change is subject to a national referendum - something which the Government has firmly ruled out.
The Bill, approved by Cabinet with "strong support" from ministers on Tuesday, is being driven by Deputy Prime Minister Nick Clegg and forms the remaining centrepiece of Liberal Democrat constitutional reform plans, following defeat in last year's referendum on voting reform.
It would finally complete the removal of hereditary peers from the Second Chamber and introduce the first elected members in tranches of 120 at each of the next three general elections, with the process of change completed by 2025. Elected members would serve for a single 15-year term.
In a concession to critics, ministers have scrapped plans for a salary of about £60,000 for members of the new Upper House. Members will instead receive £300 for each day they attend - a maximum of about £45,000 a year - and this sum will be taxed, unlike the attendance allowances currently paid to peers.
Ministers insist that the reforms will maintain the primacy of the House of Commons within Parliament. But critics warn that this will be under threat once the Upper House has the added clout of democratic legitimacy.
After publication, the Bill will have its second reading in the Commons, followed by the crucial vote on the timetable motion before Parliament rises for its summer break on July 17.

©Press Association

Tuesday 26 June 2012

Communities unite for Queen's visit


Protestant and Catholics from a Northern Ireland town devastated by an IRA bombing have shown their unity by joining forces to host a Diamond Jubilee visit by the Queen.
Clergy from both communities marked the Queen's 60-year reign by staging events in Enniskillen - where an explosion in 1987 killed 11 people on Remembrance Day.
In an Anglican Cathedral a service of thanksgiving for the Diamond Jubilee was staged while a few metres across the street the Queen made history by visiting a Roman Catholic church for the first time in either Northern Ireland or the Republic.
The move was an advancement in Anglo-Irish relations which will take a huge step forward when the Queen shakes hands with former IRA commander Martin McGuinness in Belfast.
Speaking about the planned meeting with the Queen, Mr McGuinness, Stormont's deputy first minister, has said: "This is about stretching-out the hand of peace and reconciliation to Queen Elizabeth who represents hundreds of thousands of unionists in the north."
Canon Peter O'Reilly, from St Michael's Roman Catholic Church, and the Very Rev Kenny Hall, Dean of St Macartin's Cathedral, co-operated to deliver the historic cross-community event at their neighbouring churches.
Canon O'Reilly said: "My reading of the significance of today is that it is an expression of the unity that there is in this place - a Fermanagh welcome, a gracious Queen, a lovely lady."
The Rt Rev Hall said: "We have worked together to make this a success. And what we are really sending out is a message that we really are one community."
In his thanksgiving service sermon the Archbishop of Armagh, the Most Rev Alan Harper, praised the Queen's groundbreaking visit to the Republic of Ireland last year, which has done much to build bridges on both sides of the Irish border.
Her conciliatory words and gestures had allowed many to throw off the "shackles" that had been loosening since 1998's Good Friday Agreement, and to "positively" be themselves, he said.

©Press Association

Vodafone in new £1Billion UK tax 'scandal'


The world's largest mobile phone company, Vodafone Group, has shaved 1 billion pounds, and possibly more, off the taxes its UK operating unit might have paid in the past decade, thanks to accounting factors not seen at other European units.

A Reuters examination of statutory filings made by Vodafone across Europe over the past 16 years shows the UK taxman has often gone empty handed, while tax authorities in Germany, Spain and elsewhere have raked in billions of euros.

Indeed, rather than incurring UK tax in recent years, Vodafone has racked up tax credits such that it may not have to pay any tax on its UK operations for the foreseeable future.

Vodafone's low UK tax bill is in spite of soaring revenues here and the fact that Chief Executive Vittorio Colao has repeatedly told investors that Britain was one of the group's stronger performing markets.

"This is yet another tax scandal," said Member of Parliament Margaret Hodge, chair of the parliamentary Public Accounts Committee, which scrutinises public expenditure and revenue-raising.

"It may be legal, but it's completely immoral. They make money out of Britain, and they should put money back into Britain."

Vodafone declined to answer most questions about its accounts, citing commercial sensitivity. It said it was committed to acting with integrity and transparency in all tax matters, while also having a responsibility to shareholders to control tax costs.

There is no suggestion the company has behaved unlawfully, and arranging its affairs in a tax-efficient manner within the law is standard business practice.

"Paying more than was required would be a dereliction of duty to shareholders," said Robin Bienenstock, research analyst at Sanford C Bernstein in London.

The British tax authorities, which lawmakers last year accused of being "too cosy" with big business, the Treasury and Vodafone Limited's auditor Deloitte said they could not comment on individual companies' tax affairs.

Tax avoidance is already at the top of the political agenda in the UK; last week Prime Minister David Cameron said popular comedian Jimmy Carr was "morally wrong" to shelter 3.3 million pounds of income from tax by using an apparently legal tax avoidance scheme.

Tax campaigners say the tough approach to individuals avoiding tax contrasts with a lax approach toward corporations doing the same.

HOW DO THEY DO IT?

Between 1998 and 2003, Vodafone's UK unit, Vodafone Ltd, made annual profits of around 530 million pounds and paid taxes of around 170 million each year, its accounts show.

While revenues have soared since 2003, reported profits have plunged. In the past three years, the UK unit has racked up losses in excess of 100 million pounds each year.

The profit collapse is tied to two factors, the accounts show.

In 2001, Vodafone limited began making large interest payments on money it borrowed from companies within the Vodafone group.

In the 10 most recent years for which accounts have been published, Vodafone Ltd paid associated companies 3.3 billion pounds in interest.

This reduced the UK unit's taxable profits by a commensurate amount because interest payments are tax deductible.

Using the prevailing corporation tax rates at the time, this translated to savings worth 961 million pounds to Vodafone Ltd, either in reduced taxes, or by generating tax credits that could be used to offset future profits.

Tax experts say there have been cases where UK companies have established units in Luxembourg, which then lend the money back to UK units, as a tax avoidance mechanism.

This reduces profit in the UK, where corporate profits are taxed at 24 percent - down from 30 percent a few years ago - while generating profits in Luxembourg, where financial profits can be taxed at rates under 1 percent.

Vodafone has a Luxembourg-based unit, Vodafone Investments Luxembourg S.a.r.l., which it says on its website was "established as the main financing company for our many operations around the world".

A spokesman said Vodafone Limited's interest payments were to other UK-based units of Vodafone but declined to say whether these units had in turn borrowed the money from Vodafone Investments Luxembourg.

The dramatic rise in inter-company interest payments seen at the UK unit is not reflected at other Vodafone units in Europe.

Vodafone D2 GmbH, the phone giant's Duesseldorf-based German unit, paid less than 2 million euros in interest to affiliated companies in the year to March 2011, the most recent year for which accounts are available. Vodafone Espana paid 43 million euros in interest to group companies in that year.

Accounts for the holding company for the Italian operations do not break down interest payments between affiliated and non-affiliated companies but do not show any significant rise in overall interest payments since 2007.


SOARING COSTS OF GOODS

The other main reason behind Vodafone Limited's swing to reported losses was an increase in the price its UK unit pays for the mobile phones and connection services it sells on to consumers. In 2002-2004, the 'costs of goods sold' represented around 55 percent of turnover.

In the past three years, reported costs of goods sold have averaged 76 percent of turnover, squeezing Vodafone's income.

Vodafone said in an emailed statement that the "extremely competitive commercial environment in the UK" had affected margins.

A narrowing gap between revenues and cost of goods sold can reflect increased competition, whereby companies struggle to pass on cost increases to consumers via higher prices.

However, transcripts of conference calls with analysts, that CEO Colao or Chief Financial Officer Andy Halford host each quarter on the release of earnings results shows the company has warned for several years that its margins across all European markets were under constant pressure.

The UK was not singled out as a market that suffered an exceptional increase in margin pressure.

In Germany, where Vodafone says call costs are at the European average or below, the cost of goods sold has not risen dramatically as a percentage of turnover, and averaged 57 percent in the two most recent years for which accounts are available.

"This suggests there is some very odd pricing going on into Vodafone UK," tax campaigner Richard Murphy said.

At Spanish group Telefonica's UK division, O2, cost of goods sold has remained constant at around 58 percent in financial statements for 2007 to 2010, the last four years for which accounts are available.

This allowed O2 to generate profits of 788 million pounds in 2010, on which it paid tax of 189 million pounds.

Had Vodafone's cost of goods sold in the UK since 2003 averaged the same level as the German unit experienced in recent years, the unit's profits could have been 4.7 billion pounds higher, and it could have incurred an additional 1.4 billion pounds in tax, according to Reuters calculations based on the company accounts.

By massaging the prices group companies charge each other for goods and services, multinationals can shift profits from high-tax to low-tax jurisdictions.

This technique, known as "transfer pricing", typically involves a group company in a low-tax regime selling goods above market price to an affiliate in a higher tax regime.

Tax authorities around the world keep a sharp eye out for transfer pricing abuses, but it can be hard to spot.

Vodafone declined to say why costs of goods sold as a percentage of UK turnover rose so sharply.

It said the absence of a UK income tax charge for Vodafone Group in the year to March 2012, was due to high capital allowances and high external interest charges rather than transfer pricing adjustments.

It also cited the high cost of purchasing a UK 3G phone licence in 2000. UK profits were indeed hit by a depreciation charge on licences of 333 million pounds last year. However, in the profitable German unit, the charge was 519 million pounds.

At Vodafone Germany and Spain, the lower cost of goods sold and absence of big inter-company interest payments explain their high profitability - and the high taxes paid in those countries.

Vodafone's German unit incurred corporate taxes of 3.14 billion euros from 2007 to 2011. Between 2008 and 2010, the Spanish unit paid almost 900 million euros. In 2011 alone, corporate income taxes payable by the holding company for the Italian unit were 721 million euros.


A VIBRANT LOSS-MAKER

Vodafone Limited has racked up so many losses in recent years and its reported profitability has declined so much that it has even written off previously accrued tax losses, as it no longer expects to have enough future profits to absorb them.

Yet the ostensibly parlous state of the UK unit's finances is in sharp contrast to comments from the company to investors and analysts over the past few years.

The company's most recent annual report said the UK "performed well" last year.

"(Group) Service revenue declined by 0.4%, reflecting reductions in most markets offset by growth in Germany, the UK, the Netherlands and Turkey," the report said.

In every quarterly analyst call bar one since May 2010, Colao and Halford have praised the UK as one of the group's stronger markets.

Another factor of which they regularly boast in these calls is Vodafone's proactive approach to managing its tax affairs.

In 2002 and 2003 the company paid an effective tax rate of 36 percent. It said it brought this down to 25 percent last year, a level it has told analysts it expects to maintain in the coming years.

This drop came about even before the UK began cutting corporate taxes, and rather reflects diligent planning.

"Without further tax planning ... over the next few years, the underlying adjusted effective tax rate will be in the mid-30s," then-Finance Director Ken Hydon told analysts in 2005.

Vodafone boosted its tax team in 2007 by hiring the head of the HMRC unit that dealt with large corporations, John Connors. Connors is now Vodafone's head of tax, according to its website.

Connors, Colao and Halford declined requests for interviews.

Around 2008, Vodafone even changed its top management bonus scheme to ensure that bosses would have a strong incentive for aggressive tax planning.

Payouts under the group's Global Long Term Incentive Plan (GLTI) are tied to the company's cash flow. However, large one-off payments to settle tax disputes are excluded from the cashflow measure used to compute the bonus.

This means that if the company doesn't pay taxes for years, cashflow is higher than it should be, facilitating a higher payout under the bonus scheme. But if the tax authority comes back and forces the company to pay back taxes, the payment doesn't diminish cashflow for bonus purposes.

HMRC has challenged Vodafone's tax planning in the courts. In 2010, the company agreed to pay the authority 1.25 billion pounds to settle a claim related to its 2000 takeover of Germany's Mannesmann, which later became Vodafone Deutschland.

The taxman viewed Vodafone's decision to structure the acquisition via Vodafone Investments Luxembourg S.a.r.l. (VIL) as a tax avoidance tactic, and sought to tax interest payments to VIL that were payable out of the profits of the German unit.

The settlement - which was criticised by the Public Accounts Committee last year for potentially costing the taxpayer millions of pounds - allowed Vodafone to continue to channel interest payments into Luxembourg.

Though this fact received little press attention at the time, Vodafone considered it a major coup.

"This agreement preserves the very significant benefits of our efficient Group tax structure, which we have benefited from for many years," CFO Halford said on a conference call to analysts at the time.


UK A SOFT TOUCH ON TAX?

Multinational corporations pay most of their taxes in the individual countries where they have a bricks and mortar presence, tax experts say.

Hence, Vodafone's base in Berkshire, to the west of London, means Britain should enjoy a double dip into the company's earnings - on income from its UK phone business and from some overseas income not taxed at the local level.

But tax lawyers said the UK can suffer financially because of a willingness to allow structures that might be challenged as tax avoidance by overseas tax collectors.

"The German system is very rigid and constrained. There seems less appetite for tax planning and tax-efficient structuring in Germany than in the UK," said Ben Jones, tax lawyer at Eversheds. "In France there is currently a greater capacity for the authorities to clamp down on structures they don't like," he added.

The system may be about to become even more conducive to tax avoidance.

Chancellor of the Exchequer George Osborne, who has said aggressive tax avoidance schemes are "morally repugnant", has published planned changes to the tax treatment of overseas subsidiaries that campaigners say will make it easier for big companies to shield profits from the tax man.

As part of a drive to attract more international businesses to set up headquarters in the UK, Osborne has broadened the definition of what could be construed as legitimate use of controlled foreign subsidiaries.

Campaigners including Murphy say this will make it harder for HMRC to challenge movements of cash to low tax jurisdictions.

The Treasury has estimated the measures could cost the Exchequer 805 million pounds a year by 2016, according to documents on the HMRC website.

Osborne hopes any direct revenue hit will be outweighed by increased job creation.

But Vodafone's experience challenges the link between tax rates and jobs.

Despite the UK's low headline corporate tax rate and the absence of actual tax charges on Vodafone's activities here, the mobile phone giant has cut jobs here by 23 percent since 2007, while increasing employment by 21 percent in Germany, where corporate taxes are over 30 percent.

Also Vodafone's investment in Germany has risen 34 percent since 2007, against 11 percent in the UK.

The UK's relaxing of tax rules is at odds with moves overseas, and Vodafone is feeling the heat. It faces a major tax challenge from the Indian government and believes rising fiscal deficits internationally could spell trouble.

"The temptation of taxation that some governments, if not all governments, are feeling these days - this is really what I would put under the number one cloud (Vodafone faces)," CEO Colao said last month.

©Reuters 2012

Academy move for failing primaries


Every failing primary school is to be turned into an academy, Michael Gove has announced.
The Education Secretary said it was time to "accelerate" their school improvement programme. It would be "morally reprehensible" to allow children to continue to be taught in poor schools, he suggested.
Under the plans, every primary school in England that has been put in special measures, or been given a notice to improve by Ofsted, will become a sponsored academy.
Giving a speech in central London, Mr Gove said that 220 of the worst performing primaries in the country now have agreements in place to take on academy status.
He said: "It seems to me that having reached that milestone, now is the time to accelerate - and in particular to increase our ambition for those areas of our country where concentrations of poor schools are failing communities of poor children.
"So in the next year I want to extend our academies programme to tackle the entrenched culture of under-achievement in parts of the country where children are being failed. We will seek sponsors for every primary school in the country which is in special measures or the Ofsted category notice to improve."
Mr Gove said that he was inviting new academy sponsors to come forward and creating a fund to help charities, schools, colleges and others to sponsor schools.
"They are the engine of school improvement - and we want to take off the brakes, so they can go further, faster. We will also identify the areas with the highest concentration of underperforming schools.
"These are parts of the country where children are being let down, year after year after year - and where the alternative options available to parents are poor, or non-existent.
"It would be morally reprehensible to allow this situation to continue any longer, and we will not allow it. We need to intervene at every point to help those children."

©Press Association

Richard Branson Attacks Global Governments For Creating HIV Crisis After Failing In War On Drugs


Governments around the world have failed in their war on drugs and fuelled a pandemic in HIV, a leading think tank has said.
The Global Commission on Drug Policy criticised nations for imprisoning non-violent drug users and for driving them away from public health services.
In its report, The War On Drugs And HIV/AIDS - How The Criminalisation Of Drug Use Fuels The Global Pandemic, the commission condemns "the remarkable failure of drug law enforcement policies" in cutting the world drug supply.
The global supply of illicit opiates, such as heroin, has risen by more than 380% in recent decades, the commission said.
The report's authors praise countries where "addiction is treated as a health issue" such as Australia, Portugal and Switzerland, where newly diagnosed HIV infections have been nearly eliminated among drug users.
pa12311463
The flow of drugs continues unabated into the US and UK
But the authors criticised nations including the United States, China, Russia and Thailand, which have "ignored scientific evidence and resisted the implementation of evidence-based HIV prevention programmes - with devastating consequences," they said.

The commissioners also stressed the drug war's contribution to the growth of organised crime and spelt out how the drug war fuelled the HIV pandemic:
:: Fear of arrest driving drug users underground, away from HIV testing and HIV prevention services and into high-risk environments.
:: Restrictions on provision of sterile syringes to drug users result in increased syringe sharing.
:: Prohibitions or restrictions on opioid substitution therapy and other evidence-based treatment resulting in untreated addiction and avoidable HIV risk behaviour.
:: Deficient conditions and lack of HIV prevention measures in prison lead to HIV outbreaks among incarcerated drug 
users.
:: Disruptions of HIV antiretroviral therapy result in elevated HIV viral load (the concentration of the disease in blood) and subsequent HIV transmission and increased antiretroviral resistance.
:: Limited public funds are wasted on harmful and ineffective drug law enforcement efforts instead of being invested in proven HIV prevention strategies.
The report will be released at a press conference in London at midday.

©Press Association