Facebook caught in controversy over earnings exported to Cayman Islands

Irish government collected £4.4m last year from world's largest social media company that earned estimated £645m in UK

Facebook is facing a fresh controversy over its tax contributions after company filings revealed the social network exported an estimated £645m earned in the UK and other overseas markets to the Cayman Islands tax haven last year.

Facebook uses a subsidiary in Ireland to collect advertising revenue from around the world. Accounts filed in Dublin this week show that business is booming, with international earnings rising to £1.5bn in 2012, up from £840m in 2011. But the Irish government collected just £4.4m in tax from the world's largest social media company last year.

Using a complex web of subsidiaries in a tax structure known as the "double Irish", employed by a number of American multinationals, Facebook shelters much of the money it earns outside its home market from governments around the world.

Facebook and Google account for around half of the £6bn expected to have been spent on advertising on the internet in Britain this year, according to eMarketer. But Facebook has put most of this income out of reach of the taxman.

The company paid no tax in Britain last year, despite earning an estimated £223m in one of the Europe's biggest advertising markets. Facebook takes full advantage of London's status as a hub for European advertisers. Its European vice president, Nicola Mendelsohn, formerly chair of the well-respected Karmarama ad agency, is based in the capital, near to the headquarters of WPP, the world's largest buyer of advertising space.

A Facebook spokesman said: "Facebook complies with all relevant corporate regulations including those related to filing company reports and taxation. We have our international headquarters in Ireland that employs almost 400 people and a series of smaller local offices providing support services all over Europe. Dublin was selected as the best location to hire staff with the right skills to run a multilingual hi-tech operation serving the whole of Europe."

Facebook's UK operating company employs more than 120 staff, many in advertising sales, but advertisers are actually billed via the Dublin-based subsidiary, Facebook Ireland Ltd. Accounts show the business employed 382 staff last year, some of them in Ireland and some abroad.

The subsidiary collected revenues of £1.5bn last year, but this was wiped out by two items – the cost of sales and payments made to other group companies. Large sums go directly to the US, with £670m being paid to the listed parent company last year. But £645m was paid to Facebook Ireland Holdings for use of the platform.

This second subsidiary is based in Ireland but does not file full public accounts. This means the final destination of any payments out of Facebook Ireland Holdings is untraceable. However, there are clues to its ownership – filings show Facebook Ireland Holdings is owned by a number of Facebook subsidiaries based in the Caymans, a jurisdiction that does not levy corporation tax.

The ownership structure suggests Facebook may be diverting much of its international income to the tax haven. The company declined to comment on this aspect of its accounts.Margaret Hodge, who chairs Parliament's influential Public Accounts Committee, has criticised Facebook's tax record, accusing the company of apparently "deliberate manipulation of accounts of economic activity to deprive the British taxpayer of a rightful tax contribution".

Political leaders around Europe have urged Dublin to do more to tackle tax avoidance scheme. The G20 group of countries and the OECD are working to close loopholes, while prosecutors in Italy have initiated proceedings against Apple for similar arrangements to those being used by Facebook.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

Economic recovery is based on repeating the sins of the past

Pick-up in the economy is not the result of sticking to austerity as chancellor claims – it's what you get when you keep interest rates low

The growth numbers were revised higher. Public borrowing figures look less atrocious than they did at the time of the March Budget. Hard-pressed households will welcome having a pound a week knocked off their domestic energy bills as winter sets in.

For George Osborne, it was a blessed relief to be able to upgrade his forecasts, something he has not been able to do since moving in to the Treasury in 2010. But he was pushing his luck when he claimed that the pick-up in the economy was the reward for sticking to austerity.

For a start, the government has not stuck to the plan but has eased the squeeze in response to an under-performing economy. Nor is it the case that growth has resulted from virtue, a very Germanic view in which economics is a branch of moral philosophy in which countries that behave in an upright fashion get their just deserts.

Britain's recovery, by contrast, relies on repeating the sins of the past. Growth is not the result of the government's belt-tightening; rather, it is what you get if you keep interest rates at 0.5% for five years, then top things up with incentives for banks to lend for property purchase and state-backed incentives for people to take out home loans. Austerity ensured this bog-standard UK economic recovery was delayed and is weaker than it normally would have been. The chancellor was keen to point out that net borrowing was lower than forecast in March 2013, but forgot to mention that at £111bn it will be a lot higher than the £60bn estimate made in June 2010.

Osborne also skated over the lop-sided nature of the recovery. The main reason the independent Office for Budget Responsibility is now expecting national output to grow by 1.4% in 2013 rather than the 0.6% predicted in the Budget is that consumers are spending more. Projections for business investment and exports – the two sectors that were supposed to lead to a rebalancing of the economy – have been cut since the spring.

This pattern of growth can be sustained in the short term. With the pound at its highest level in five years, imports become cheaper and inflation falls. That means that household budgets stretch a bit further and the Bank of England is under no immediate pressure to raise the cost of borrowing. The housing market will be cooking with gas from now until the general election in 2015.

There has, though, been no underlying improvement in the economy. Growth has been brought forward from future years, helping to cut borrowing in the short-term but leaving the structural budget deficit – the bit unaffected by the ups and downs of the economic cycle – unchanged. Balancing the books will take until 2019, four years later than Osborne promised in 2015. Austerity will continue deep into the next parliament.

Osborne sketched out the message the government will be delivering week in week out between now and the election: don't be tempted to hand control of the economy back to the people who made such a mess of things in the first place. The chancellor's narrative is potentially a powerful one given that opinion polls suggest the public believes that the deep recession of 2008-09 was caused by Labour profligacy.

But it only works if three conditions are met. The first is that consumers keep spending at a reasonable lick despite the fact that prices will continue to rise faster than wages deep into 2014. Lower inflation should help but there is a risk that consumers will be more cautious than the OBR expects.

The second condition is that business investment kicks in to give the recovery a second wind. The OBR says companies will increase spending on new plant and machinery by 5% in 2014 and 9% in each of the three subsequent years. This looks like an heroic assumption. Likewise, the UK's share of world trade fell steadily even when exports were boosted by a fall in the value of the pound. Sterling's rise spells bad news for the balance of payments and for growth.

Finally, there's the assumption that at some point in the next year or so, rising living standards will boost Government popularity. At some point in 2014, earnings should start to rise more quickly than prices but probably not until the second half of the year. But voters may be slow to show any gratitude. In 2010, Osborne said it would take until 2013 for real wages to return to their pre-recession 2008 levels. He now says it will take until 2018. Truly a lost decade for living standards.

George Osborne kicked off his statement by boasting that Britain is the fastest growing major economy in the world. This lasted less than two hours. No sooner had the chancellor sat down than Washington announced that revisions to America's output data meant that Uncle Sam led the way in the third quarter of 2013.

The chancellor will be hoping that the rest of his package stands the test of time a little better. It may not.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

EasyJet's McCall doubles pay to £6.44m in 2013 after revenues surge

Earnings for budget airline boss among first to be published under new government clear language guidelines

The boss of EasyJet, Carolyn McCall, almost doubled her pay to £6.44m in 2013.

Her total remuneration was reported by the budget airline under new rules introduced by the business secretary in September that require publication of chief executive earnings in simple terms.

Around £4.2m of her overall pay was in shares that will vest in March 2014, under a long-term incentive plan. McCall, a former chief executive of the Guardian Media Group, also was paid a £1.15m bonus.

EasyJet's chief financial officer Chris Kennedy more than doubled his rewards to £3.74m, including £2.74m in long-term incentive payments.

Pilots in France recently called a one-day strike claiming that management was not sharing record profits with its employees.

A spokesman for EasyJet said McCall's rewards reflected a surging share price and performance over the last three years. He said average salary across the airline was £62,000 and that pay was designed with "a clear link between the value created for shareholders and the amount paid to EasyJet's directors."

"Shareholders have shared in this success through a 120% rise in the share price during the financial year. Dividends of £85m were paid during the year and EasyJet has recently recommended to shareholders the payment of dividends totalling £308m to be paid in March 2014.

"EasyJet's pay strategy is constantly reviewed to ensure it is in line with companies of similar size and turnover in the FTSE 100 and is based on investors' best practice guidance and reflects consultation with our major shareholders. EasyJet is committed to maintaining an open and transparent dialogue with shareholders."

Profits rose 51% to £478m over the 12 months to September 30, as revenues went up 10% to £4.3bn.

The pay at EasyJet is one of the first to be published under new accounting rules brought in by the business secretary, Vince Cable, requiring FTSE companies to include a single total pay figure for top executives, rather than obscuring rewards in incentive schemes.

A report earlier this month showed that while directors have curbed bonuses, rewards diverted into so-called long-term plans have rocketedand pushed top executive pay up by 14% in a year.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

JP Morgan paid £7m by Co-op Bank for recommending Britannia deal

Regulators should investigate how banks are paid for takeover advice, says Treasury select committee chairman

Regulators should investigate how investment banks are paid for takeover advice, according to the head of the Treasury select committee, after JP Morgan revealedit received £7m for advising the Co-op Bank on its disastrous merger with Britannia Building Society.

The US bank would have received nothing if the deal had not gone ahead, the bank revealed to MPs.

Members of the Treasury select committee said the investment bank had given "a green light" to Co-op'smanagement to do the deal which generated a multimillion pound fee for the US bank.

Tim Wise, one of JP Morgan's top bankers, admitted that the Britannia merger had worked out badly but insisted his bank's advice was sound at the time and that he would never be swayed by the prospect of a large fee.

However, the committee's chair, Andrew Tyrie, said after the hearing that regulators should scrutinise how investment banks are paid for orchestrating takeovers. "A fee structure for the provision of independent advice that heavily incentivises one outcome over others strikes me as inherently problematic. The industry and the regulators will need to look closely at the way such advice is remunerated," he said.

JP Morgan was the financial adviser on the Britannia deal which was announced in early 2009 when the financial system was on the brink of breakdown. Hailed at the time as creating a "super-mutual" to take on the big banks, the deal nearly wrecked the Co-op Bank this year when problem loans surged in Britannia's corporate loan book. Faced with a £1.5bn capital shortfall, the bank is undergoing a restructuring that will see 70% of the business handed to bondholders including US hedge funds.

The investment bank was paid £2m when the Britannia merger was announced and another £5m when the deal completed. Wise admitted the fee was "very significant" but he said clients preferred to pay investment banks success fees instead of smaller guaranteed amounts.

Tyrie told Wise it was "a shed load of money" and added: "It is asking for the objectivity of a saint not to be biased in thinking, as you prepare this advice, that you would like to see one outcome over another."

Stewart Hosie, a Scottish Nationalist member of the committee, read out a letter from JP Morgan to the Co-op board that said: "The terms of the proposed transaction are fair from a financial point of view for the Co-op."

Hosie said: "That is effectively giving the Co-op a green light to proceed."

Wise said it was up to the Co-op's management to use its own commercial judgment in deciding to do the deal.

Under repeated questioning about how large fees might skew investment bankers' advice, Wise said: "I'm afraid I have complete confidence in my own integrity and the impartiality of my advice."

He admitted the public might not agree and said there should be a debate about how investment banks are paid.

Wise said: "I don't think JP Morgan will suffer any reputational damage. Whether we will suffer personal reputational damage … time will tell."

Wise and Conor Hillery of JP Morgan said Co-op's merger with Britannia was undone by the prolonged economic downturn, which hit Britannia's commercial property borrowers, and by the City regulator's decision to tighten its capital rules.

The result was a £1.5bn hole in the Co-op Bank's finances that forced it to raise new cash from its bondholders and to scrap a second proposed deal to buy 631 branches from Lloyds. The group has cleared out its management and its former chairman has been exposed for alleged use of Class A drugs.

Wise admitted JP Morgan "undercooked" its assessment of the Britannia deal's riskiness but he said its tests included stressed scenarios devised by the Bank of England.

Separately, partners from KPMG told the MPs they were paid £1.3m for their work on the Britannia merger.

KPMG's early "due diligence" of Britannia for the Co-op did not include the corporate loans because the information was not available, they said.

KPMG partner Andrew Walker said he told the Co-op to scrutinise the corporate loans in its "phase two" work on Britannia, which the bank carried out itself.

Tyrie said the committee had been subjected to a "straight bat" by KPMG, which has audited the Co-op for 30 years.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

Banks braced for huge EU fines over Libor rate-rigging scandal

UK's RBS believed to be among at least six banks facing record fines for manipulating European and Asian interest rates

The interest rate-rigging scandal that has damaged the reputation of the banking sector looks likely to be reignited as Brussels is expected to impose multimillion-pound fines on a number of major firms for manipulating crucial benchmarks.

The action by Joaquín Almunia, the EU competition commissioner, will pile further pressure on Royal Bank of Scotland, the bailed-out bank already dealing with the fallout from a major systems meltdownthat left millions of customers without access to cash and allegations – which it denies – of mistreating its small business customers.

The 81% taxpayer-owned bank is reported to be among at least six major players in the financial markets, including Deutsche Bank in Germany and Citigroup in the US, caught up in the cartel investigation. The EU is said to be ready to impose record-breaking fines for alleged collusion for rigging key benchmark rates.

Brussels is thought to have focused on yen Libor, based on Japanese interest rates and priced out of London; Euribor, the Brussels equivalent to Libor; and the Tokyo rate known as Tibor. Almunia has been in discussions with banks for weeks and the resulting penalty is expected to surpass the record €1.5bn (£1.24bn) imposed on a cartel.

Each cartel could face combined fines of as much as €800m, although it was unclear on Tuesday nightwhat the exact penalties would be and how the sums would be divided. Penaltiesfor breaches of antitrust rules can theoretically be as much as 10% of turnover.

The fines are the latest to be levied on banks and financial firms for manipulating key benchmark rates. Five firms have already been fined by market regulators on both sides of Atlantic in an ongoing investigation into the manpulation of the rates, used to set interest rates on loans granted around the world.

Barclays was fined £290m in June 2012 in a move that led to the resignation of its chairman, Sir Marcus Agius, chief executive, Bob Diamond, and other senior managers. Other banks who have since been fined by US or UK regulators RBS, UBS of Switzerland and the Dutch bank Rabobank. The money broker Icap has also been fined and the FCA's investigations are ongoing.

The Libor investigation has sparked interest in a number of other benchmarks used to price financial products, particularly the foreign exchange markets, which are now being investigated by a number of regulators around the world, including the UK's Financial Conduct Authority.

Reuters reported that UBS had alerted the European Commission to the yen interest rate manipulation and would not be penalised. The Financial Times said Barclays would avoid a fine for Euribor rigging for similar reasons.

Between six and ten banks are reported to befacing fines, including Citigroup, which would be the first US bank to become embroiled in such high-profile penalties for manipulation of key rates.

Deutsche Bank and RBS will be penalised for rigging the benchmark eurozone interest rates known as Euribor. French bank Société Générale is also part of the group facing sanctions for alleged Euribor rigging, according to Reuters.

The news agency said HSBC and the French bank Crédit Agricole had not reached a settlement, while the FT said the US bank JPMorgan had also failed to do. They may face fines later.

Reuters said Barclays, Deutsche Bank, Société Générale, RBS, JPMorgan and Citigroup declined to comment and HSBC and Crédit Agricole were not immediately available to comment.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

Christmas shopping begins with bumper buildup to Cyber Monday

The Christmas shopping season got off to a bumper start over the weekend, with record takings recorded as a result of last week's American-style "Black Friday" promotions, and a further £450m expected to go through the online tills today, which has been dubbed "Mega Monday".

John Lewis said its online sales on Friday smashed its previous record for a single day's internet trading by more than 100%, with thousands of orders coming in the middle of the night from customers who preferred shopping to sleeping.

The figures suggest that Black Friday, a US retailing gimmick where stores offer big discounts to kickstart the shopping season, could now become a permanent fixture on the UK shopping calendar.

Today, the buying frenzy is expected to move up another notch. The first Monday of December, which in recent years has become known as Cyber Monday, or Mega Monday, is the busiest day of the year for online sales, as shoppers order early to ensure pre-Christmas delivery.

Nearly half a billion pounds is expected to be spent online on Monday – the equivalent of £312,500 every minute – as more than 7m transactions take place. It is likely to be the busiest day ever for online shopping in the UK, with more than 113m visits to virtual stores as shoppers use their last pay cheque before the big day.

Online retailers expect to have raked in more than £1bn between Saturday and Monday night.

Jeremy Nicholds, Visa Europe's director of commercial development, said: "UK consumers' love affair with online shopping will reach its peak on Mega Monday, when we predict that we will process 7.7m transactions – a 16% rise on last year."

Total Christmas sales are expected to be a staggering £72.2bn – or £351 per person – an increase of more than 2% on last year, according to the Centre for Retail Research. Of that, one third will be spent online.

Catalogue and internet retailer Argos is braced for its busiest online shopping day of the year, and is expecting 3m hits on its website. It is prepared to dispatch 2m packages a day in the runup to Christmas from its 11 regional distribution centres.

Last week's Black Friday promotions – established in the US on the day after Thanksgiving, but new to the UK – have led to an exceptionally strong start to Christmas spending. John Lewis, the only retailer to give a detailed trading update, said that last week's Black Friday event conclusively signalled the start of Christmas trading. It recorded sales of £147m for the whole week, up 18.4% on last year and up 31.4% week-on-week. Online trade was up 35.7% on the year and ended 19.4% higher than its previous biggest week.

Mark Lewis, online director of John Lewis, said: "Any doubt over whether UK consumers are interested in Black Friday has been cast aside as record sales were notched up online and via mobile devices for John Lewis. Looking ahead to this week, we predict that today [Sunday] will see customers go online to continue their Christmas shopping."

Sales from mobile phones rose significantly compared with last year. On Friday mobile orders climbed to more than three times the record for a single day, with huge demand from consumers shopping in the early hours. Between midnight and 8am, sales from mobile devices were up more than fourfold on a normal Friday in November, and breakfast-time buyers – placing orders between 7am and 8am – were up 1,340% .

Many were buying iPads, televisions and PS4s, with one selling every four seconds in the early hours of Friday morning.

In unprecedented scenes, shoppers desperate for bargains caused chaos in Asda stores on Friday as the supermarket – owned by US group Walmart – brought the Black Friday experience to Britain. Customers scrambled to snatch cut-price electrical goods after queueing for several hours outside Asda stores around the country.

Asda said it had sold out of virtually everything: "Black Friday exceeded our expectations and was hugely successful. We sold over 11,000 tablets and 12,000 TVs in the first hour."

But traditional shops and retail centres will not necessarily lose out to the boom in mobile shopping. The rise in the popularity of click-and-collect will see footfall to high streets, retail parks and shopping centres boosted by double digits on Mega Monday, retail expert Springboard has predicted. It expects to see week-on-week footfall increase by 15% across all retail locations on 2 December, and by 2.6% year on year.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

British wage-earners have taken £5,000 pay cut in five years, figures show

Government figures will fuel debate about living standards before 2015 general election

Britain's wage-earners have taken a £5,000 pay cut in the past five years, according to government figures, suggesting ministers will struggle to engender a feelgood factor before the 2015 general election.

The figures published by the Office for National Statistics show wages and salaries for the middle fifth of non-retired households fell from £33,100 in 2007-08 to £28,300 in 2011-12. Over the same period original income, which is the income households get from employment and investments, fell from £37,900 to £32,600, while cash benefits rose from £3,100 to £4,600.

The figures will fuel the debate about living standards before the general election, and about whether the government has done enough to protect the typical wage-earner.

The figures confirm that the earnings squeeze pre-dates the 2007 recession, appearing to endorse Ed Miliband's claim that the link between wages and growth has been broken, one of his chief justifications for his willingness to intervene in the market. The report says: "While GDP per person continued to grow at similar rates between 2004-5 and 2007-8, growth of median household income slowed to a fifth of its previous rate in the years immediately before the start of the economic downturn."

The Treasury will be fervently hoping that it will be able to show the link has been restored in 2014, either because economic growth is so strong or because it has taken steps to make work pay with its welfare reforms.

But the figures also show that despite the big rise in personal allowances due to budget decisions by the Liberal Democrats and the Conservatives, median household income for the overall population has fallen by 3.8%, after adjusting for inflation, since the start of the downturn.

However, while the median income for non-retired households fell by 6.4% between 2007-08 and 2011-12, the median income for retired households grew by 5.1%.

Between 2007-08 and 2011-12, average income from employment and investments for the middle fifth of non-retired households fell from £37,900 to £32,600.

Cash benefits for the middle fifth of non-retired households rose from £3,100 to £4,600 between 2007-08 and 2011-12. As a result, the average proportion of gross income coming from cash benefits increased from 7.6% to 12.3% for this group.

Average direct taxes paid by the middle fifth of non-retired households have fallen from £8,700 in 2007-08 to £6,800 in 2011-12. As a percentage of gross income, this is equivalent to a fall from 21.1% to 18.3%.

Looking over a longer period between 1977 and 2011-12, the middle fifth of households saw an increase in unequivalised gross income from £18,500 to £30,100, after taking inflation into account.

The report confirms the extent to which the reforms have hit middle incomes, but also the way in which the retired have been relatively immunised, confirming there is an issue of inter-generational fairness to be addressed. The retired median household income is still much lower in absolute terms than non-retired income.

The Treasury countered the figures with its own report showing wage growth had followed GDP growth in the previous two recessions. It says that although wages have shrunk, this disguises the extent to which workers have been subsidised by higher company pension contributions or higher national insurance contributions.

The Resolution Foundation, a thinktank that specialises in this policy field, said: "It is striking that there was a pronounced slowing in the growth of median household incomes even before the years of economic downturn. It confirms that between 2004 and 2008 income growth slowed to a fifth of its previous rate, even as GDP growth kept up a consistent pace. This underlines Resolution Foundation work highlighting the major slowdown in wages and incomes that occurred well before the great recession.

"The figures also reveal a dramatic generational difference – with the incomes of working-age households falling by more than 6% since 2008 while those of retired households have continued to rise. The pre-crisis slowdown is likely to have been even starker if we looked only at working-age households."

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook