Business and Personal taxation

Critical analysis of Business and Personal taxation

Introduction to Business and Personal taxation

The concept of personal income tax is referred as payment of tax on one's personal income and it is differ from the tax which is paid on the earnings of organization. In case of incorporated business, payment of tax is done by owner on both their income as well as profits earned by the business. Income tax can be defined as the tax that is being imposed by the government on the financial income produced by different businesses in their jurisdiction. In the present study, personal and business taxation have been discussed in context of Google. The report entails to make analysis of the behavior of Google in relation to UK tax environment. Further, it takes into account UK tax law and international aspects of tax regulation.

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Critical analysis of Behavior of Google in context of UK tax environment

As per the case scenario provided, it has been stated by Her Majesty Revenue and Customs (HMRC) rules that firm needs to make payment of tax where the organization booked rather than the place where transactions are actually being carried out. It has been argued by Google that it is predominantly based in US and Ireland for the purpose of tax. However, it is being investing hundreds of million pounds in purchasing property in the UK for its business. This has been examined that behavior of Google towards paying UK corporation tax is immoral.

For the purpose of avoiding UK corporation tax, Google to a greater extend depends on an unconvincing argument which presents that sales of UK clients occur at Ireland. There is clear evidence which demonstrates that majority of sales activity of Google takes place in the UK. Various accountancy organizations sell tax advice that encourages artificial structure of tax. Such is being used by Google and other multinationals that aims at avoiding UK taxes. It has examined that tax is regarded as compulsory contribution which is being imposed by the regulatory authority. However, tax payers might attain nothing identifiable in return of the contribution made. In UK, these taxes are categorized in three different ways. This includes taxation on income, capital as well as expenditure. In the present tax system within UK, there are three major tax bases utilized.

UK tax law

As per the UK tax law, corporation tax is considered as tax that is paid on the profit earned by limited firms and other concerns that include clubs, societies, associations, charities as well as other unincorporated bodies. Tax system in the UK does not make differentiation among incorporated and unincorporated organizations. Both kinds of firms are eligible to make payment of income tax on their earnings. It has been stated that as per the law, if firm is based in the UK then it has to make payment of tax. In case, firm is not based in the UK but carries out operations in the UK, then it just has to pay corporation tax on the taxable profits that arise from the activities carried out within United Kingdom. In accordance with the case, it has been reported by Google that its employees based in UK are closely engaged in selling advertising. Revenues to this are made through Irish business. As per the rules of HMRC, companies needs to pay tax within the nation where it has been booked. It has been agreed by Her Majesty Revenue and Customs that Google does not reside permanently in the UK. In addition to this, firm's European operations are carried out in Ireland and will be there only.

International aspects of tax regulation

It is referred to as determining the tax on business subject to the tax laws of various countries or international aspects relating with individual country's tax laws. Taxation systems might vary among governments. This makes generalization more difficult. Tax regulation as per the international aspects presents that different countries make the use of two systems to generate tax income. This includes territorial and residential. In case of territorial system, local income is being taxed within the country. However, in case of residential system, residents of the nations are taxed across the globe whereas, nonresidents are being taxed on their local income. As per the case scenario of Google, it has been examined that company is not resident in the UK but there is greater importance of it to make payment of tax in the UK as well because it is making huge amount of profitability from the activities that are being carried out in that particular nation. There is increasing necessity that Google needs to recognize that it has slightly more revenues in the United Kingdom in comparison with Ireland. It is hardly to know the reason behind little amount tax that is being paid by Google in the UK. Software that is being used by firm is American based but it is evident that company possess 2500 employees in the UK which implies that lot of activities are being conducted within the nation itself. A major success lies when tax system of multinationals becomes more transparent and fair. Thus, settlement of Google has to bear failure.

Contemporary tax planning cases

Research, planning and strategies have changed the manner in which tax is being imposed on the organizations that are operating in several countries. Users need to gain knowledge regarding tax issues so that they can overcome them in an effective manner. In the present era, there are number of strategies that are being adopted by the firm in order to carry out planning regarding tax. This can be related with the use of derivatives in order to plan taxation. This has assisted greatly to the firm in determining the correct amount of tax to be paid. This results in making fair and transparent dealing with the regulatory authority of nation. There is greater importance of Google to comply with the same in order to examine the amount to be paid to the government of UK and Ireland. This can be helpful in resolving issues that arise from ineffective payment of tax amount.

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Professional ethics for tax accountants and Ethics in wider business community

Ethics is considered as one of the critical aspects for the tax accountants. Several ethical values as well as standards have been developed by the authorities in order to engage the accountants in accounting services with greater responsibilities. Further, this has significance in reviewing sensitive financial information. There is unique duty which is being possessed by accountants. This presents that they need to offer professional services to the clients and also presents truthful assessment of the organization. Professional ethics of tax accountant includes the elements such as integrity and due care. Such elements have been enumerated in the manner stated as under:


It is considered as a fundamental element of the accounting profession. This ethical value requires the accountant to be honest and candid with the client. There is greater requirement that accountant restricts themselves for gaining personal advantage by utilization of form's confidential information. Developed ethical values present that accountant needs to perform in a consistent way. In case, there is absence of particular rules then accountant needs to carry out review of their actions in order to make sure that they are complying with principles that are commonly accepted.

Due care

It is another ethical value that requires accountant to pay attention towards all the technical as well as ethical accounting standards. It is important for the tax accountant to review the standards and apply them within the organization. This presents that principle of due care is applied in the firm and organization is performing its function in a smooth manner. In accordance with the case scenario of Google, there is greater importance for the tax accounts to comply with the ethical values as this would result in the attainment of firm’s goals with greater effectiveness.

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Another major principle of ethics relates with confidentiality of information. This guides tax accountant in terms of not misusing crucial information of the company. Such needs to be complied with in order to ensure effectiveness in dealing with the firm.

There are certain more ethics for business to operate in the community. This relates with disclosing of fair and accurate information to the public. This is because the relationship between firm and its customers can be build when there is sense of trust. This can be built only when firm complies with ethical values and standards while dealing with customers. Same is applied to Google when it operates its business in the different communities.


It can be concluded from the study that there is greater importance for Google to comply with ethical values in order to demonstrate fairness in carrying out operations of firm effectively. In addition to this, tax laws that have been developed need to be taken into account by Google in order to operate efficiently in the present competitive environment.


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