John Ward July 13, 2010 BP, Gulf oil leak, tax deductible.

Guess who’s really paying for the BP disaster?

Oh to be a corporate entity.

It transpires that money spent plugging the BP well leak, cleaning up the oil, and compensating people who have lost out because of the spill, can be written off against tax.

BP is forecast to pay about $10bn (£6.7bn) less tax over the next four years as a result of this.

Do you remember ordering a leak, an incompetent drilling partner, a dangerous cleanup policy and the use of toxic agents? I don’t.

And yet somehow, it always seems to come down to us.

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John Ward on July 15, 2010 at 8:19 am

ChristieTaking your points in turn:1.Most people (probably not you) confuse the CBI bollocks about tax liabilities with what actually got paid. The CBI often uses a figure before allowances and cross-border charges. The latter, as the name sounds, are a terrific scam whereby subsidiary companies bill head office and thus reduce the national tax bill.2. I too loathe the Guardian, but I try not to let it colour my judgement. Their figures are entirely valid: I've checked them out via several methods – and anyway, there is no arguing with the simple ONS fact that big business in the UK pays only 10.5% of the total tax bill. That's a risible amount.3. That a company has the right to understand the regime they're operating in is spot-on: retrospective legislation is the bane of our times, and a practice beloved of Harridan Harman. At the same time, while you're entitled to call my view on BP's liabilities muddled, I'm equally entitled to point out that liability is another way of saying responsibility. See my comment earlier to the astonishing assertion that BP has 'done nothing wrong'. I find the ability to write-off gung-ho negligence against tax to be obscene.4. There is far too much selective obtuseness in this thread. If £10 billion the Treasury was expecting isn't there any more, there is a target shortfall. History shows that the people picking up that negative number will not be those of an institutional or corporate nature. I think that's enough input from the IoD: this thread is now closed. Ed.

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Christie Malry on July 14, 2010 at 7:38 pm

"And don't forget the figure is gross – allowance and subsidiary cross-payments yet to come off."Eh? What are allowance and subsidiary cross-payments when they're at home?I took a look in the cash flow statement and BP actually paid cash of $6,324 million in 2009. [OK the source is me, but it provides references to BP's report and accounts, not the BBC or the even ropier Guardian Tax Gap nonsense].I think your argument about taxpayers paying for cleanup is woefully confused. BP is paying for the cleanup. The tax authorities only have rights to tax BP's profits, which will always be after deducting appropriate business costs, which include clean-up.While I have some sympathy with punitive fines to discourage companies from playing fast and loose with safety, I would add that these should always be introduced prospectively, not retrospectively. A company has the right to understand the regime they're operating in.

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John Ward on July 14, 2010 at 5:43 pm

pjtpjt'A punishment, like a fine, is naturally justified if corporations do wrong 'Give me strength. (1) Ignoring three safety warnings from drilling staff (2) Switching off the pressure alarm (3) Cutting corners on drill maintenance (4) using banned toxic agents in the clean-up this putting over 80 workers in hospital.Thanks for the insult at Tim Worstall's site by the way – very good for hits.Your service, I believe.TimSincere apologies for that cockup….it should of course have read £10 billion. Seem like a lot? Not really when you aggregate the FTSE 100 profits. And don't forget the figure is gross – allowance and subsidiary cross-payments yet to come off.Please don't use the BBC as a source as it might cause offence.Scale of the problem very well covered however athttp://www.guardian.co.uk/business/2009/feb/02/tax-gap-avoidance

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Tim Worstall on July 14, 2010 at 3:52 pm

"In f2008/9 in the UK, not a single FTSE 100 company paid more than £10m in tax. "Eh? Where did you get that piece of bollocks from? BP alone paid nearly £1 billion.http://www.bbc.co.uk/news/10282777"BP paid £930m in UK tax on its profits in 2009, which was well down on the £1.7bn it had paid in each of the previous three years. "Or this TUC report.http://www.tuc.org.uk/touchstone/Missingbillions/1missingbillions.pdf"In 2006the companies in this survey declared UK current tax liabilities of £11.5 billion"And that's just the top 50.

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pjt on July 14, 2010 at 3:14 pm

Cost of fighting an oil spill is no loophole. It is a very genuine and very justified business cost. The cost is directly paid out by the company, and of course it is "deductible", although that as a term is a bit misleading. It's simply a part of doing the business, and the profits are correspondingly smaller. I don't get your comment about a one-off ecological tax. A punishment, like a fine, is naturally justified if corporations do wrong (e.g. ignore environmental safety laws), but calling that a tax just messes things up. There's this thing called rule of law. Same rules for all companies in similar position. Making up arbitrary "taxes" afterwards is just populist.

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John Ward on July 14, 2010 at 11:34 am

michaeldenExactly. Fewer loopholes and bigger prison treadmills for those who abuse them. And a big-business sector paying a tad more than 10.5% of all UK taxes.

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michaelden on July 14, 2010 at 8:46 am

I'd rather see a lower tax with no exemptions so no one can escape. There are too many loop holes in the current system because it is too complex. It is a process, in its current guise, whereby lawyers and accountants ensure the ongoing demand for their services.

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John Ward on July 14, 2010 at 5:46 am

pjt No, still deconstructing.'Of course the company pays less taxes if it makes less profits'True. Shame it doesn't work the other way round. In f2008/9 in the UK, not a single FTSE 100 company paid more than £10m in tax. The last thing I think is that tax monies are the right of governments. I just think that, if they're being paid, I'd like someone to explain why small business at 9.7% of the UK economy coughs up 27% of the total, whereas large outfits at 71% cough up 15%.Whichever way you cut it, tax is no longer paid by individuals and small concerns to help pay for the infrastructure of society: it's paid to clear up the mess after global business and banking have finished screwing everyone else.I think any company should pay less tax if it makes smaller profits….and a whopping great one-off ecological tax if it makes the Gulf of Mexico completely unusable largely because it cut corners and hired incompetent staff…all for the shareholders.

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pjt on July 14, 2010 at 4:20 am

Have you come from "deconstructing bollocks" to "constructing bollocks"?Of course the company pays less taxes if it makes less profits. But do you think that a steady flow of tax money from BP to governments somehow is a right and property of the governments, and then if the corporation fails to make a profit that could be taxed, then someone else is "paying" for it?In my opinion, it's a loss to the BP shareholders, and consequently a smaller loss to the taxman.

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