Tax Relief

It is not uncommon for taxpayers and revenue authorities to disagree over what constitutes a tax deductible business expense.

But Tax Relief feels that James Cavanaugh, CEO of US janitorial-services franchisor Jani-King International, may have gone a little too far with his claim.

During the 2002 Thanksgiving holiday, Cavanaugh decided to take his girlfriend Colony Robinson, their bodyguard and another female Jani-King employee on a jaunt to his Caribbean villa in St. Maarten.

And it seems they were happy to forgo the cold turkey.

After indulging in copious amounts of cocaine, Robinson suffered a fatal cardiac arrest.

Robinson's mother sued Cavanaugh and Jani-King for the wrongful death of her daughter in Texas state court.

Jani-King was named in the suit because Robinson's mother contended that the company contributed to her daughter's death through the actions of its employees, who were acting within the scope of their employment when they provided the cocaine to her daughter.

Jani-King paid a $2.3 million settlement to Robinson's mother. It then deducted the full amount in its 2005 and 2006 tax returns.

However, the IRS denied the deductions, arguing that the settlement was not a corporate business expense.

Cavanaugh brought the case to the US Tax Court.

The court refused to accept Jani-King's claim because its origin was the allegation made by Robinson's mother and the conduct of the Jani-King employees could not be said to have arisen from the company's profit-seeking activities.

The court concluded its ruling last month that the $2.3 million was not a business expense and was a personal expense of Cavanaugh's.

And since he is the CEO of one of the most successful janitor-services franchisors in the world, "delivering unrivalled cleaning services" to tens of thousands of customers, Tax Relief hopes Cavanaugh can manage to keep his own nose clean in future.

Source: Nick Christensen

On October 9 1967, the world's most famous revolutionary, Che Guevara, was summarily executed in the tiny Bolivian village of La Higuera. On the 45th anniversary of Guevara's death, John Christensen, director of the Tax Justice Network, was in the guerrilla's home country of Argentina attending a conference on tackling tax havens.

Like Guevara, Christensen's life journey began on a Norton motorcycle, which he rides to this day. It was on the young Guevara's 5,000 mile journey across Latin America, witnessing the brutal poverty and stark inequality of the continent, that he became the radical revolutionary history remembers him as. And it wasn't until Christensen left his Jersey home and visited northern England on his Norton in 1976 that he realised quite how divided social classes were in Britain.

On the back of a motorcycle, the two men were transformed. Guevara swapped his Norton for a Kalashnikov and helped Fidel Castro overthrow the Cuban dictator Fulgencio Batista; Christensen swapped his for a garden shed where he conducts his fight against the global tax havens which he argues are robbing from the poor. With Google, Amazon and Starbucks being hauled before the House of Commons Public Accounts Committee last month, and news emerging of a UK version of FATCA, Christensen's little band of guerrillas may be about to capture their tax Havana.

There may be no t-shirts or posters of Christensen's face, but if his campaign to end tax avoidance and financial opacity succeeds, he will have changed the world.

George Gideon Oliver Osborne was not a popular boy. Growing up, he was prone to making outrageous statements in autumn that no one liked. One tragic day that never actually happened, some bigger boys stole his lunch money and dumped him in a hole.

The hole was deep, but Gideon knew he could climb out of it if he just piled up enough earth in the right places. But up had never seemed the right way to go to Gideon; he had an ideological commitment to go down.

So Gideon got out his shovel and dug deeper and deeper, hoping he'd be able to see the light of Australia at the other end of his tunnel.

Many years later, Gideon emerged as the UK Chancellor of the Exchequer, but, if his latest gloomy Autumn Statement is anything to go by, he is still in a hole and every bit as unpopular.

With the Office for Budget Responsibility saying the economy will have contracted by 0.1% this year, and the government's deficit reduction targets widely missed, it is clear that Osborne's spending and tax cuts are not working as he'd hoped.

One might expect a sensible Chancellor to change course in the light of such evidence, for him to announce targeted VAT cuts and spending projects to boost the economy. But no, not Gideon: the only way is down.

Big businesses already established in Britain will welcome the surprise additional one percentage point corporate tax cut. But it will cost the UK almost £1 billion ($1.6 billion) a year. So unless it serves to stimulate the investment the government craves, little Gideon will only be digging his country into an even deeper hole.

"A lower statutory tax rate rewards investments made in the past. That's not a great trade-off if you are trying to encourage job-creating new investments."

"If the last debt ceiling discussion was playing with fire, this time they're playing with nitro-glycerine. It's important to recognise the stakes have gone up across the board when you combine the debt ceiling with the fiscal cliff."

"The sacred cow of transfer pricing: comparables."