WPP’s Sir Martin Sorrell will be worried about UK protests against corporate tax avoiders

‘Flash mob’ UK protest group UK Uncut has already mounted a series of protests against companies it sees as avoiding (as opposed to evading, which is illegal) UK tax.

So far Sir Philip Green’s Arcadia Group has been targeted, with protests outside and inside his flagship Topshop Oxford Circus store, as has Vodafone, which has denied it owes the UK tax authorities £6bn.

Today (Sunday) the hitherto whiter-than-white (in most people’s eyes) Marks & Spencer was added to the list.

There is also an ongoing row with Kraft which is planning to make massive purchase Cadbury a subsidiary of its Zurich-based European business, thereby depriving the UK exchequer of hundreds of millions of pounds of tax.

Kraft says its European business has always been based in Zurich and therefore so what? It clearly sees itself as a bigger fish than any of the countries it operates in, apart from the US.

But at a time when voters in hitherto prosperous Western countries are being forced to cut back (and in many cases lose their jobs) because of the failures of companies (chiefly banks) then tax avoidance has become deeply unpopular. And governments and bodies like the International Monetary Fund can’t seem to find any alternative to visiting the pain on ordinary people while big companies shunt their money around the world to dodge tax.

One such is Sir Martin Sorrell’s WPP which shifted its tax domicile to Ireland last year to cut its tax bill, even though Ireland plays the slightest of roles in its activities. WPP is, therefore, technically an Irish company.

The move is estimated to have saved WPP £80m to date, its cost to the UK tax authorities of course.

This is (perfectly legal) tax avoidance but that’s hardly likely to sway the protesters when they get around to targeting big companies following the same agenda as Arcadia and Vodafone (which is also in trouble with the Indian tax authorities).

The situation is particularly piquant as Sorrell, clearly foreseeing the troubles that subsequently destroyed the Irish banks, switched his own debts out of Allied Irish Bank a couple of months ago, a move which seems to have been overlooked or ignored by the British financial press.

Companies are legally entitled to reduce their tax bills (there are probably more companies registered in Luxembourg than there are citizens). But students of history will recall that Louis XV1 was the legal king of France and he got his head chopped off in 1793. Every now and again the peasants revolt and they are doing so all over Europe against big and incompetent government and big companies.

The directors of WPP and others like it might do well to review their tax arrangements.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.