By John Donovan
Shell has resorted to taking tax breaks intended for redundant employees in order to help maintain its dividend and ensure that senior managers involved in the BG merger vanity project keep THEIR jobs.
Employees in the UK are taxed on redundancy payments over £30k. However, HMRC provides an exemption for employees who have worked abroad allowing them to reclaim some or all of the tax. Despite the fact that Shell UK redundancy terms have deteriorated over recent years and are now significantly less generous than their Dutch colleagues receive, Shell UK has decided that it is entitled to the overseas employment tax breaks not the employee.
Let’s be clear – the British Government and the UK taxpayer does not lose out; they will receive the same amount of tax regardless. Furthermore, other companies in similar positions allow or even facilitate their redundant employees claiming the tax back. So the question boils down to this – who is most deserving of the tax break? Is it the employee being made redundant due to circumstances beyond their control or the multinational oil company?
Shell has attempted to justify its stance by saying that staff who have worked overseas should not enjoy more benefits than locals in the same situation but then undermines its argument by taking the money for itself. Shell also says that it does not want tax policy to become an incentive for international mobility. It is highly unlikely that any Shell employee was motivated to work abroad in order to secure a tax break on future redundancy payments but if they did have the foresight to predict an oil price crash and loss of their livelihood, Shell should probably consider retaining them.
One returning expat who did not want to be named said ‘We are at a disadvantage coming back to the UK. Most returning expats are put straight on gardening leave and are more likely to be made redundant. Management say we are not at a disadvantage compared to local staff but if you aren’t in the office you don’t have the profile when it comes to getting a job. Out of sight is out of mind’.
He went on to say ‘I knew about the tax exemption for overseas service and am angry that Shell has decided to take it for itself. I will lose about £70k. However, I don’t feel I can challenge it. They have made it clear that most of our redundancy payment is ex gratia. I am worried that if I challenge the decision, it will be used as an excuse to reduce my payout’.
Despite this, it is understood that a number of staff are considering legal advice on Shell’s immoral tax grab.
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