Big businesses paid less than £0.5m in penalties last year

BIG BUSINESSES WERE subject to only six penalties worth just over £400,000 for understating taxes payable last year, the HM Revenue and Customs permanent secretary has admitted.

Conservative MP Jesse Norman questioned Dave Hartnett on figures showing that big businesses were charged £442,000 in penalties for undeclared tax payable - 1% of 1% of all underclared tax last year. Small businesses were charged an equivalent of 200 times the penalties given to big businesses taking into account their market share, he added.

"We are not less tough on big business than small business," Hartnett told the Treasury select committee. "We have more evasion in small business than we do in big business. I cannot remember seeing a case of tax evasion by big business in the recent past. It has been avoidance, not evasion."

He said the "crucial issue" was that a penalty can only be charged when there is "at the very least a failure to take reasonable care". HMRC "cannot charge a penny" when there are differences of opinion about technical details.

Norman said that the Public Accounts Committee was critical of the Revenue's failure to charge penalties to big businesses when they understated their tax payable in 2008. The amount collected that year was £15m, a much higher figure than had been collected last year.

Hartnett said that a large part of this £15m was from one case, which showed that when HMRC does charge penalties, they are high enough to act as a deterrent.