First we had Ptolemy, who worked out that planets revolve around the Earth in perfect circles. Only his model – being based on a simplified view of the universe that didn’t accord at all well with what actually happened – gave strange results, so he had to add in more and more epicycles to compensate. The basic model would work if the world were as simple as Ptolemy thought it ought to be, but he was unlucky in the facts he was presented with.
Then we got Copernicus, who worked out that planets revolve around the sun, and Kepler refined this to point out they did so in ellipses rather than circles. This was a much better model requiring no epicycles, but isn’t quite perfect as it doesn’t really account for the interaction of planets with one another.
So we moved on to proper Newtonian physics, which adds in interplanetary interactions, though it accepts that it’s really complicated and you can’t expect to calculate things precisely so you’re probably going to have to fudge something (but it makes no practical difference).
Unitary Taxation, to me, is Ptolemaic. Starting with a vision of the universe in which groups are discrete entities (whose activities revolve around tax), it provides a beautiful theoretical model for taxing such entities. But unfortunately the world is a bit more complicated that it ought to be – groups and companies are not discrete entities, for example – and so to make it work we’d have to start creating epicycles.
The arm’s length principle at the moment seems somewhere between Copernicus and Newton. You treat companies individually, but you recognise that there is an underlying principle which governs the interactions of any two bodies and use that as a guide when looking at their activities.
BEPS seems to be wanting to move towards a full Newtonian model. It suggests that you have to look at more than the two bodies directly involved when working out the tax position: other companies in the vicinity will have an impact.
Given that we want to get tax working properly, why should we say that Newtonian mechanics are too hard to use precisely so we should go back to Ptolemy?