NEARLY HALF of underpaid corporation tax could be attributed to foreign-owned companies.
Research conducted by law firm Pinsent Masons shows that 44% of all the large companies the taxman is investigating for underpayment of taxes are controlled from overseas.
This accounts for about £11bn of the £25bn HM Revenue & Customs has identified as tax revenues – up to 31 March 2011 – that could be at risk from all large companies in the UK.
Taxes due from the £11bn under consideration will be paid through the Revenue’s Large Business Service, which is responsible for taxes paid by the 770 largest businesses in the UK.
Jason Collins, head of tax at Pinsent Masons, said the figures show HMRC is taking a tougher stance than suggested by recent controversies over the amount of corporation tax paid by large companies such as Amazon and Apple.
He said: “There is a popular myth that HMRC and the Treasury are so easily charmed by the presence of foreign companies in the UK that they are happy to accept any tax payment that they get. That could hardly be further from the truth.
“The reality is that only a fraction of that £11bn is actually owed to HMRC for the simple reason that aggressive tax avoidance amongst large companies just isn’t as widespread as some would have us believe.”
He added that there is a feeling that a tough taxman can be off-putting for businesses looking to trade in the UK.
“We might be heading towards a more competitive corporation tax rate but the UK will only fully benefit from that if we can prove to overseas companies that the compliance work of HMRC is not an unreasonable burden,” he said.
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states