INVESTIGATIONS into the tax affairs of multinational businesses have brought approximately £4.7bn into the public purse over the last five years, MPs heard.
HM Revenue & Customs chief executive Lin Homer (pictured) said the department performs “reasonably well” by international standards as she defended its record on dealing with tax avoidance, particularly by big corporations.
She added that the public does not “get” the tax rules relating to international companies, reports the Financial Times.
“One of the challenges for people to understand is that, in broad terms, companies are required to pay corporate tax in the country where they carry on the economic activity, not necessarily where the customers are located,” she said.
HMRC director-general of business tax Jim Harra would not be drawn on the cases of Facebook, Google, Starbucks and Amazon, despite the criticism they have faced over their UK tax bills, citing the principle of taxpayer confidentiality.
While he was keen to emphasise there is both a legal and social responsibility for companies to pay a fair share, Harra conceded “there can be a whole variety of reasons why a business, large or small, may pay less than the business next to them”.
He added that transfer pricing – intra-group purchase of goods and services – can allow multinationals to augment their profits. That practice, he said, is subject to internationally recognised regulations administered by the Organisation for Economic Co-operation and Development (OECD).
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year
Lord Howard Leigh of Hurley discusses the government’s initiatives to mitigate tax avoidance and evasion
Top 50+50: Demand for tax advisory services remains high, but fee pressure is expected in relation to compliance services
The demand for tax advisory services remains high and this looks to continue; but fee pressure is expected in relation to compliance services as the “Making Tax Digital” initiative is rolled out,
While some resistance to change is to be expected, the degree of controversy surrounding HMRC's Making Tax Digital proposals has surprised the government