As much as Brexit is causing the government multiple headaches, it seems there is a silver lining of distraction for the chancellor, Phillip Hammond.

Evidence has emerged that a company he is involved with, Chiswell (Moorgate) has played a clever game with losses. This is to avoid paying around £300k in Corporation Tax. 

How Corporation Tax Works

For those of you who are PAYE employees who don’t run a business, you may be understandably ignorant of how corporation tax works. So, I will explain it in the simplest form. 

Imagine a scenario where you have a Ltd company. Imagine that company has a recent trading period from the 30^th April 2017 to 30^th April 2018. During that period, the company generated £100k of business. 

Got that? 
 
During that period of business, you paid £60k in salaries, £20k on materials and £10k on office equipment and phone/heating/internet bills. You are now left with 10k. This is regarded as pre-tax profit and is liable to 19% corporation tax. 

So, this means that on January 31^st, 2019 (or before then if you are feeling generous) you would be due to pay corporation tax of £1.9k. 

Chiswell (Moorgate) Ltd

Since Chiswell was set up in 2010, it has posted total profits of £1.6 million. The tax it has paid on those profits equals £5,964.00 or 0.4%.  Remember, the corporation tax rate is supposed to be 19%.  

How Chiswell have avoided tax is far more complex. It is suggested that they do it by saving up the years where they make a loss and set them off against the years of profit. This not illegal but also not something, if I was chancellor, I would want to brag about. 

I certainly wouldn’t want to brag about it if I was claiming to be clamping down on companies who were aggressively avoiding corporation tax. 

Where this is galling for any of you like me who run a small business, is that we don’t get away with these things. We will be paying our corporation tax on the 31^st January. Personally, I take solace in the fact it proves I have had a decent year and I am doing my bit for public services. 

However, my patience does wear thin when it dawns on me that our chancellor is involved in a company that is taking the piss out of the system. 
 
Tell me how that is right? 
 
If you want to read more about this, go here. 
 
https://www.thisismoney.co.uk/money/news/article-6585187/Hypocrite-Chancellors-firm-pays-paltry-tax-bill-Hammond-tells-web-giants-pay-fair-share.html