Mortgage rates / interest etc

[johna.clements]

Isn't the problem with it all, that you are taxing in the wrong location...

Company A has outlets making £10m in the UK
Company B is parent company in Ireland where taxes are lower

Company B licences brand to Company A - who are you taxing in the UK?
You don't get to tax Company B who are in Ireland, and you don't get to tax the transaction which takes place in Ireland (or somewhere else in the world depending on the legislative framework of the agreement), so as the UK government, exactly what are you taxing?

The issue with all of these ways of moving the money out of your domain - i.e. in this example, out of the UK is that they are transactions held outside the UK - they are costs on Company A - and you don't get to tax costs!

So, Company A has £9m of costs elsewhere in the world, so now instead of making £10m it is making £1m, and its overheads in the UK are a further £950,000 - so it has only made £50,000 profit in the UK - it won't even be taxed at the higher rate of corporation tax!

Meanwhile £9m has moved to Ireland as valid expenses where it is taxed at 12.5% instead of the soon to be relevant 25% in the UK and the company saves over £1m. The UK has received tax on £50k at 19% which is £9,500.

If the UK instead encouraged those monies to stay in the UK - e.g. they reduced the corporation tax to match Ireland's 12.5%, they would receive tax of £1,131,250 or 120x as much tax


The fundamental flaw is that governments are geographically limited and therefore can not control what happens outside their boundaries.
Companies are not, and so can play games across those boundaries - and it is not possible to stop them without all governments agreeing to do the same - and where is the incentive there for smaller countries like Ireland who can simply choose to opt out and lower rates and make lots of money!

Company A, which is in the UK would be taxed by the UK. If Company A is paying a licence for the brand to Company B based in Ireland then Company A would have to pay tax at 10% of £10m or £1m. The location of Company B is irrelevant because it is not taxed.

Company A is in the UK.. The money it makes is in the UK. The transaction to transfer the money out of the UK is undertaken by Company A takes place in the UK. The transaction can therefore be taxed in the UK when the transfer takes place.

Why can't you get to tax costs. What do you think VAT is.

Company A should have to demonstrate that the costs are legitimate. If it could not demonstrate that the costs were legitimate then the directors of Company A would be prosecuted for the misuse of Company A funds. Company A would also be liable for the tax it had evaded.

In your example Company A transfers £9m but can not demonstrate that it was the cheapest place to get those services. The UK tax authorities decide that the services were worth £3m therefore Company A is liable for corporation tax on £6m.


The fundemental flaw in your argument is the ability of countries to enact laws to change the tax laws. It is perfecly possible to tax money that was produced in the UK when it is moved.

 

[deema]

@johna.clements As @akirk has highlighted, and I will try to expand further, the legal agreements may take place outside the UK, they are therefore governed by the laws of the country in which they take place. The UK has no legal jurisdiction over the agreements made.

The other issue, as I think you might come back on the above is what constitutes good value? Let’s take legals. A company employ a sole legal practitioner in some very small village in the UK. They are fully qualified, perfectly able to provide a legal service, and they may charge say £500 a day. But, the company chooses to use say Eversheds, one of the very big legal company’s, with offices around the world, a huge array of expertise in all sorts you are ever likely to get involved in. Now, they charge an awful lot more that £500 a day. So, the level of service is different, company’s often need legals that can span the world and ensure all of their entities in each geographic location is abiding by the local laws as well as intentional laws. Ie. If you are owned by an American company there is a lot of legal obligations on the company to ensure it’s subsidiaries around the world also are compliant in certain aspects with American rules. Something the sole practitioner cannot provide. Now who gets to decide what the company needs are, and what is good value for money. If we are talking about good value for money for the shareholders, then ensuring the overall company has minimised legally its tax burden, then they have fulfilled their obligations. It’s only illegal to over trade (trade when you have no idea how to pay your bills) there cannot be logically any law that requires a certain level of profit to be made.

 

[Jacob]

.....

Ultimately the ideal is low tax - encourage the wealthy in - and then compassion towards those at the poorer end -

and pigs will fly!

with a more rigorous understanding of whether they should or should not be getting support (ie try to tackle the abuse of the benefits system)...
.....

abuse at the benefits end is trivial compared to tax evasion/avoidance and in any case is already pursued very thoroughly. It's almost a non issue but is very popular with the Daily Mail. "Single mother's on benefits" used to be their favourite enemies of the state but its shifted to boat people in the channel. I wonder if they draw lots on who to hate most? Or just ring the changes perhaps.

 

[johna.clements]

@johna.clements As @akirk has highlighted, and I will try to expand further, the legal agreements may take place outside the UK, they are therefore governed by the laws of the country in which they take place. The UK has no legal jurisdiction over the agreements made.

The other issue, as I think you might come back on the above is what constitutes good value? Let’s take legals. A company employ a sole legal practitioner in some very small village in the UK. They are fully qualified, perfectly able to provide a legal service, and they may charge say £500 a day. But, the company chooses to use say Eversheds, one of the very big legal company’s, with offices around the world, a huge array of expertise in all sorts you are ever likely to get involved in. Now, they charge an awful lot more that £500 a day. So, the level of service is different, company’s often need legals that can span the world and ensure all of their entities in each geographic location is abiding by the local laws as well as intentional laws. Ie. If you are owned by an American company there is a lot of legal obligations on the company to ensure it’s subsidiaries around the world also are compliant in certain aspects with American rules. Something the sole practitioner cannot provide. Now who gets to decide what the company needs are, and what is good value for money. If we are talking about good value for money for the shareholders, then ensuring the overall company has minimised legally its tax burden, then they have fulfilled their obligations. It’s only illegal to over trade (trade when you have no idea how to pay your bills) there cannot be logically any law that requires a certain level of profit to be made.

The UK has and can enact laws that govern the actions actions taken by individuals and companies overseas. As you note "If you are owned by an American company there is a lot of legal obligations on the company to ensure it’s subsidiaries around the world also are compliant in certain aspects with American rules". Why do you think that the UK can not take similar actions.

If Eversheds has fees that a similar to other multi jurisdictional law firms then it would be good value. If Eversheds charged three times as much as similar companies (not Mr Straw who has an office in the high street) then an investigation would happen and the company would have to justify the expenditure.

I do not know why you can not logically have a law that imposes penalties when you incur costs that can not be justified.

 

[akirk]

Company A, which is in the UK would be taxed by the UK. If Company A is paying a licence for the brand to Company B based in Ireland then Company A would have to pay tax at 10% of £10m or £1m. The location of Company B is irrelevant because it is not taxed.

Company A is in the UK.. The money it makes is in the UK. The transaction to transfer the money out of the UK is undertaken by Company A takes place in the UK. The transaction can therefore be taxed in the UK when the transfer takes place.

Why can't you get to tax costs. What do you think VAT is.

Company A should have to demonstrate that the costs are legitimate. If it could not demonstrate that the costs were legitimate then the directors of Company A would be prosecuted for the misuse of Company A funds. Company A would also be liable for the tax it had evaded.

In your example Company A transfers £9m but can not demonstrate that it was the cheapest place to get those services. The UK tax authorities decide that the services were worth £3m therefore Company A is liable for corporation tax on £6m.


The fundemental flaw in your argument is the ability of countries to enact laws to change the tax laws. It is perfecly possible to tax money that was produced in the UK when it is moved.

Sorry, I think there is a misunderstanding here...

If Company B is licensing something to Company A - there is nothing on which you can tax Company A - it is an expense.
Fundamental of business taxation - you do not tax expenses - admittedly, a country could completely change the principles of business taxation, but they would probably lose all businesses...

Your concept is that you tax the business on gross income (the £10m they make) not on the current approach of nett income (the £50k they make after expenses) - no business would accept that and ultimately a government can not force a business to operate in it's territory.

The middle ground is that you can and governments do decide to make some things allowable / not for tax purposes - but underlying the tax regulations is that anything germain to the running of the business is allowable - so they might for example not allow entertaining / personal expenses above a certain level - effectively taxing it at gross not nett, but that is because it is argued to not be needed for the business...


your other argument that the government can prosecute directors for misuse of funds - not a chance of that ever happening!
who decides what is appropriate - for example brand value can easily be demonstrated to be worth a very high % of turnover - without the brand you licence the business might not even operate - for a government to arbitrarily decide that it is worth x not y would be government interference in the markets which would not be accepted. And ultimately the director's legal responsibility is to their shareholders - minimising tax is to the benefit of the shareholder - the direct opposite to your implication.

your comments seem to imply that government has full choice over what they can do and businesses will quietly comply - not a chance, and aptly displayed in the recent loss of Liz Truss as PM primarily because the markets did not accept what she wanted to do - that was totally driven by business / the markets - they have a lot more power than the public realise.

 

[Spectric]

Taxation should not be complicated, you just pay tax at the point where it is made so all the arguments are no longer.

 

[deema]

Taxation should not be complicated, you just pay tax at the point where it is made so all the arguments are no longer.

That’s exactly the principle that is used. It just that company’s can and do determine where the profit is actually made.
If this were an easy thing to ‘fix’ it would already be fixed.

 

[D_W]

Taxation should not be complicated, you just pay tax at the point where it is made so all the arguments are no longer.

This would be OK if every country did it, but the HQ location of the parent is going to want to tax the same item, too.

I don't have a great answer for all of this stuff, either, though.

 

[akirk]

Taxation should not be complicated, you just pay tax at the point where it is made so all the arguments are no longer.

And exactly what happens...
In my example above Company A in the UK has made £50k and is taxed on it... the UK gets its bit of tax.
The spare £9m for licensing the brand was a charge to Company B - so Company B has 'made' that piece of money and that is taxed in Company B's location - Ireland at half the tax.

I think a big issue is how media reports on company finances...
just because a company has a turnover of £10m does not mean it has 'made' £10m

the hoardes are whipped up into thinking that £10m is vanishing out of our country, but the company never made £10m...

perhaps the best answer is to legislate that no media can report on anything financial without having some evidence of financial training / understanding first?

 

[johna.clements]

Sorry, I think there is a misunderstanding here...

If Company B is licensing something to Company A - there is nothing on which you can tax Company A - it is an expense.
Fundamental of business taxation - you do not tax expenses - admittedly, a country could completely change the principles of business taxation, but they would probably lose all businesses...

Your concept is that you tax the business on gross income (the £10m they make) not on the current approach of nett income (the £50k they make after expenses) - no business would accept that and ultimately a government can not force a business to operate in it's territory.

The middle ground is that you can and governments do decide to make some things allowable / not for tax purposes - but underlying the tax regulations is that anything germain to the running of the business is allowable - so they might for example not allow entertaining / personal expenses above a certain level - effectively taxing it at gross not nett, but that is because it is argued to not be needed for the business...


your other argument that the government can prosecute directors for misuse of funds - not a chance of that ever happening!
who decides what is appropriate - for example brand value can easily be demonstrated to be worth a very high % of turnover - without the brand you licence the business might not even operate - for a government to arbitrarily decide that it is worth x not y would be government interference in the markets which would not be accepted. And ultimately the director's legal responsibility is to their shareholders - minimising tax is to the benefit of the shareholder - the direct opposite to your implication.

your comments seem to imply that government has full choice over what they can do and businesses will quietly comply - not a chance, and aptly displayed in the recent loss of Liz Truss as PM primarily because the markets did not accept what she wanted to do - that was totally driven by business / the markets - they have a lot more power than the public realise.

As I noted expenses are taxed in the UK by things like VAT. VAT is a fundamental part of the UK tax system. As you note "for example brand value can easily be demonstrated to be worth a very high % of turnover". There is no logical reason why you can not tax that value that is demonstrated in the licence.

As you state "but underlying the tax regulations is that anything germain to the running of the business is allowable". Charging inflated fees is not for the benefit of Company A. The directors of Company A should run it to make money for Company A. If the directors agree inflated fees for HR etc from Company B they are not working for the benefit of Company A but for Company B.

It is not unknown for directors to be prosecuted for the misuse of company funds.
Re City Build (London) Ltd (in liquidation) [2022] EWHC 364 (Ch)

You are correct that the government are not completely free to make laws. The markets want certainty. If multinationals have to pay the same amount of Tax as UK based companies they can live with that. What they do not like is an changes with no notice and unfunded changes.

 

[akirk]

As I noted expenses are taxed in the UK by things like VAT. VAT is a fundamental part of the UK tax system. As you note "for example brand value can easily be demonstrated to be worth a very high % of turnover". There is no logical reason why you can not tax that value that is demonstrated in the licence.

As you state "but underlying the tax regulations is that anything germain to the running of the business is allowable". Charging inflated fees is not for the benefit of Company A. The directors of Company A should run it to make money for Company A. If the directors agree inflated fees for HR etc from Company B they are not working for the benefit of Company A but for Company B.

It is not unknown for directors to be prosecuted for the misuse of company funds.
Re City Build (London) Ltd (in liquidation) [2022] EWHC 364 (Ch)

You are correct that the government are not completely free to make laws. The markets want certainty. If multinationals have to pay the same amount of Tax as UK based companies they can live with that. What they do not like is an changes with no notice and unfunded changes.

VAT is value added tax - it is only charged on the additional value added - where would that sit in the example of licensing a brand?
You can only charge VAT on items being sold within the scope of the geography you control - Company A is licensing brand from Company B in a contractual deal sat outside the UK - the UK government therefore has no control over any single aspect of that deal - it is all off-shore. The only thing they could do would be to somehow tax any funds leaving the country to make a purchase abroad - open to all sorts of issues...

If Company A buys something physical from Company B - e.g. a computer or a desk or some clothing - then the government can tax it on the basis of the physical import - but taxing the acquisition of IP is very difficult - it is non-tangible and therefore not easy to tax - equally, we have a reputation internationally around IP in the UK - starting to tax it could kill that and a lot of inward investment...

regarding misuse of funds - your implication is that the directors are serving shareholders of Company A - but in this example, Company A is owned by Company B (or even Company C somewhere else), and it is their shareholders they are serving - so by directors of Company A maximising the overall profit across Companies A & B they are correctly carrying out their duties to their shareholders...

Companies of this nature have an international outlook, not a regional one.

 

[Terry - Somerset]

There may be two issues:

VAT is basically a sales tax. It can be applied to all sales in the UK at whatever rates the UK government choses to charge.

One not so small gremlin - assume (for instance) as a UK resident you employ a New York company to do some legal work. It may be with a lot of bureaucracy and admin be possible to identify the payment made if it comes from the UK and tax it accordingly. Avoidance would be rife.

Taxes need to be easy and cheap to collect - taxes which are costly to collect and easily avoided are not a clever idea.

A sales tax does not deal with multinationals who manipulate transfer pricing etc to limit tax. As other posters have noted, the UK has no jurisdiction overseas. The only way to raise tax to offset their manipulation is by way of an import duty.

This can lead to reciprocal action - the general international consensus is that tariffs act as a drag on trade and should be avoided. We may not like Facebook or Microsoft offshoring profits - but neither would not we like (say) US imposing tariff barriers on UK businesses exporting to the US.

Conclusion - in the absence of a global agreement on taxation (an unlikely prospect) the best strategy may be to create a business, regulatory, legal and tax environment which encourages multinationals to the UK. It not only generates some tax income which would otherwise go offshore but provide local employment and boost local economies.

 

[Jameshow]

So does Baldkev fix his mortgage or not?!

 

[sploo]

With apologies to baldkev for being part of this thread swinging way off topic... this is quite an interesting discussion

On the whole "company A, company B" thing; there should be a ban on the dodge of being able to do business in one jurisdiction while pretending you don't make a profit there (due to - legally - manipulating costs via expenses and debts in the area where you're making the money).

I've previously come across Customs and Excise rules on the lines of "if we think you've lied about the value of an item for taxation purposes, we have the right to charge you based on what we think it's worth". There surely must be some level at which a tax office could look at a company's sales vs claimed profit (and realistic costs) and basically call BS on lowballed profit figures.

I assume there would then be a continued cat and mouse game of multinationals making up new "legitimate" costs (to reduce apparent profit), but it'd be a start at least.

 

[jcassidy]

I've snipped part of your reply, as i really feel that i need to focus on this point.

You mention bitcoin -

Bitcoin is a token. The £5 note in my pocket is a token. One is printed on a bit of plastic, and the other is not. That is the ONLY difference. They're both just tokens.

Cash is a token backed by a government.
Bitcoin is a token backed by no-one.

Exchange rates are a reflection on how likely it is that the government in question will devalue their token.

That pushes the question along one more step, but the question remains - why would anyone want any of the tokens, if they couldnt, at some point, be exchanged for real world items?

There is always "stuff" at the end of it all.

There is always "taxes" as the end of it all.

The ultimate use of a currency is to pay.... taxes!

Yes, you heard correctly! Taxes are the mechanism used by the government to enforce their particular token - the national currency.

You can invest in Yen, USD, Euros, Bitcoins, Non-fungible-assets, rare cars, fine wines, and expensive racehorses. You can think that STG is a mickey mouse currency, and walk around all day with gold bars in your pocket. But at the end of the day, His Majesty's Revenue want Pounds Sterling, and only Pounds Sterling will do, and you'd better convert some of those things into STG quickety-quick, or else another exclusive power comes into play - that of incarceration!!

 

[Richard_C]

BALDKEV

(Shouting I know, but much of what has gone before doesn't help with your question. I could go on for hours about tax, fairness, transfer pricing, brand licencing etc but I won't, I will try to bring it back to your question. Its a long post but hopefully moves you towards an answer)

I think there is a general assumption expressed in earlier replies that interest rates will go up in the short term and fall back in maybe 3 years ish - but there are so many variables none of us can really know. The Ukraine war, behind the oil and gas price increase, doesn't look to be ending soon and even if it does I doubt Russian gas will be back on the menu any time soon.

As background, I paid my mortgage off, but I am 70, never kept moving for a bigger and bigger house and once saw rates of 17% in the laten1970s. I don't think fixed rate was a thing back then - most lenders were mutuals and most were within 1/4% of each other. As part of my HR director job I also managed a big DB pension fund in the late 1990s/early 2000s. Our very wise and experienced trustee Chairman said "its not out job to be the smartest investors, its our job to make sure we can meet our liabilites and keep the promise to pensioners". That has stuck with me - always ask "what is my objective here?"

Retail fixed rate offers will be based on what the lenders' actuatries and economists think might happen, and they know more than we do. They will price in a bit of risk premium - overcharge if you like to call it that - and limit their own risk by rationing product and arranging finance at fixed rates from the wholesale market. They will vary a bit, some small mutuals might be more risk averse than multinational banks so will price up a bit because a mistake will cot them a lot so even though they don't have shareholders to satisfy they must look after the safety of their members depisits and pay their creditors. Rates are likley to be very similar though, a 'market rate'* emerges and if retail lender step too far away from it they won't get the business. Sometimes a silly high rate is deliberate - its less controverisal to overprice a product that you don't really want to sell than it is to withdraw the product.

The important part of this is the 'risk premium' they build in: chances are it may cost you more than sticking with standard variable rate if you are able to shop around and always get the best rates. BUT, and this is the important BUT, the rate fixers are taking all the market uncertainty risk, not you. Even if you pay a bit more over the 5 years, you can forget about it and sleep soundly at night. Unless you enjoy wheeling and dealing, its not a bad option. A parallel is the drawdown vs annuity argument when you take a DC pension: some people just want to take £xxx a month, guaranteed, and never have to think about it again. It's not about intelligence or ability with numbers - our research Director ("brain the size of 2 planets") retired and took the most conservative pension option he could, he said he didn't want to manage his money and worry about investment decsions every few weeks.

So whatever the markets may or may not do, your own preferences and situation play a big part in the decision. We will never know that, and we don't need to know. Just reflect on the fact any decsion has 2 sides to it - financial markets and your preferences.

If you can afford the fix and if you value certainty, that's fine. You may pay a bit more but may not, but you know where you are. You may kick yourself in 5 years time or give yourself a gold star, who knows. That certainty - £xxx a month come what may - has a value, not measured in £££ but in wellbeing/peace of mind. If you like the idea of a chance of getting the best deal you can and don't mind a bit of work and a bit of risk then variable rate might be the answer.

I am risk averse, I want to know I can meet my liabilities. I like to sleep at night. Someone I know locally, ex insurance sales manager, is a born wheeler dealer** who enjoys trading in all sorts. Neither of us is right or wrong, we are different.

Gather up the information then proudly then give yourself permission to take your own "its right for me" decision.n nDon't let anyone tell you that it was wrong.


* market rates can be a self fulfilling prophesy. I still do some freelance work in pay and reward advice. If the BoE, OBR and few independent forecasters say average earnings will go up by X% next year, they tend to, That's not prescient forecasting, its because all the big employers look at the same forecasts and plug X% into their budgets give or take half a percent. If the mortgage market is converging on rates over 5 years, its likley (but not certain) to come true.

** want to buy a very recent slightly used Mercedes 320 for a a few £k more than he paid for it new? He ordered it when it was clear there might be a new car shortage becsause of components. That sort of thing. Potential big return, potential big loss. That's him, the 'deal' is what he enjoys.

 

[akirk]

So does Baldkev fix his mortgage or not?!

no - set up an international company and make obscene profits and then he won't care about his mortgage!

With apologies to baldkev for being part of this thread swinging way off topic... this is quite an interesting discussion

On the whole "company A, company B" thing; there should be a ban on the dodge of being able to do business in one jurisdiction while pretending you don't make a profit there (due to - legally - manipulating costs via expenses and debts in the area where you're making the money).

I've previously come across Customs and Excise rules on the lines of "if we think you've lied about the value of an item for taxation purposes, we have the right to charge you based on what we think it's worth". There surely must be some level at which a tax office could look at a company's sales vs claimed profit (and realistic costs) and basically call BS on lowballed profit figures.

I assume there would then be a continued cat and mouse game of multinationals making up new "legitimate" costs (to reduce apparent profit), but it'd be a start at least.

I think your view - and that of many comes from an inherent Britishness or fairness where we want it to be fair, and therefore something must be possible -I agree it is not fair, but equally not much is possible - International corporations have more disposable money than governments - they could collapse governments if they wish! They employ brighter / more able people than the government - they will win this battle...

So, rather than going after them in a punitive fashion (i.e. back to the childhood cry of 'I want it to be fair' and 'he is being unfair, so should be punished') why not instead take a more open approach and make the climate good for corporations, and remove the issue - exactly what other nations have done...

the reason we don't is because much of our media and public voice - and many of our MPs driven by a chip on their shoulder of 'it is not fair' and therefore have this punitive approach against anything / anyone they disagree with - the wealthy have more money, punish them / take it off them (let's conveniently ignore that many of those people can't perform to the same level / have no desire to work so hard) - inequality -> tax them

there are two ways of looking at equality:
- everyone gets the same (communism)
- everyone gets the same opportunity (capitalism)

this well known image:

sums it up well

giving everyone the same doesn't lead to equality of result - communism doesn't work.
giving everyone the same opportunity - or removing barriers (equity / liberation) does work - capitalism.

If someone doesn't like Amazon running in the UK and exporting profits untaxed elsewhere - two options:
- communism says that is not fair, we will penalise them, even though it is legal (Amazon will simply move elsewhere)
- capitalism says start your own competitor and pay UK taxes on it.

Ultimately though (as your competitor will probably fail due to over-taxation) the issue is the government is not building a climate which is good for business - if they change that many of the issues will go

 

[D_W]

So does Baldkev fix his mortgage or not?!

coin flip

 

[Jacob]

............

there are two ways of looking at equality:
- everyone gets the same (communism)
- everyone gets the same opportunity (capitalism)

"Equality" isn't the issue and is just another red herring for the right.
"Fairness" isn't the issue either.
It's about problem solving and how to ensure that everybody has a reasonable quality of life

this well known image:

Never seen it before!

sums it up well

Sums what up?

giving everyone the same doesn't lead to equality of result - communism doesn't work.
giving everyone the same opportunity - or removing barriers (equity / liberation) does work - capitalism.

I guess by "capitalism" you mean free-market economics etc etc. It can mean many different things.
Non of them have much to do with equal opportunity. They tend more to be about desperately hanging on to privilege, wealth and the right to accumulate even more. Feeble attempts are made to justify it, such as the trickle-down ideology recently argued so persuasively by Truss and Kwazi wossisname.

 

[johna.clements]

VAT is value added tax - it is only charged on the additional value added - where would that sit in the example of licensing a brand?
You can only charge VAT on items being sold within the scope of the geography you control - Company A is licensing brand from Company B in a contractual deal sat outside the UK - the UK government therefore has no control over any single aspect of that deal - it is all off-shore. The only thing they could do would be to somehow tax any funds leaving the country to make a purchase abroad - open to all sorts of issues...

If Company A buys something physical from Company B - e.g. a computer or a desk or some clothing - then the government can tax it on the basis of the physical import - but taxing the acquisition of IP is very difficult - it is non-tangible and therefore not easy to tax - equally, we have a reputation internationally around IP in the UK - starting to tax it could kill that and a lot of inward investment...

regarding misuse of funds - your implication is that the directors are serving shareholders of Company A - but in this example, Company A is owned by Company B (or even Company C somewhere else), and it is their shareholders they are serving - so by directors of Company A maximising the overall profit across Companies A & B they are correctly carrying out their duties to their shareholders...

Companies of this nature have an international outlook, not a regional one.

You stated "you do not tax expenses". I noted expenses are taxed in the UK by things like VAT. I assume that you accept that taxes are paid on expences so it is quite possibe to introduce more taxes on expences.

I tax like VAT is not VAT, it would have its own rules on how it taxes expences.

If Company A pays Company B a fee the amount of IP is quantified for the taxman. it is no longer intangible, it is a line on the balance sheet.

If the directors are working for the benefit of another company than the one that employs them I think it is very dubious.