Managing costs

19th February 2011
It is incumbent upon all business leaders/owners to manage the costs in their organisations in order to maximise shareholder value ... it is a very clear prime responsibility no matter what size the business.
One of these costs is tax ...like it or not if the business pays "too much" tax it is not maximising shareholder value.
Why is it then that the bank Barclays is being chastised in the news this morning for what appears on the face of it to be good tax management?  It seems that the whole bank bashing state of mind is simply getting out of control ... Barclays did not even get Government bail out money so why should they be penalised just for being a bank and the things their competitors got wrong?
My real rant though is the statement made on BBC news this morning. In the same breath it was stated that "people" will get upset by Barclays actions as they have paid only £113m in Corporation Tax yet paid many billions out in bonuses!  I am no tax expert (far from it!) but surely the Exchequer have gained through this position?  The main rate of Corporation Tax in 2009 (the year in question) was 28% ...however the bonuses paid would have been subject to potentially 50% Income Tax, 1% employees National Insurance, and 12.8% employers National Insurance. A total bill of 63.8% ...more than double the Corporation Tax the bank might have paid on the extra profits had it not paid the bonuses??
I am happy to be proved wrong ...but to my mind this is just journalistic nonsense!




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