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Corporation tax collected through HMRC probes drops

CORPORATION TAX collected via HM Revenue & Customs investigations fell to its lowest point in six years last year.

The fall in revenues collected by HMRC’s large business division – which deals with FTSE350 companies – owes much to a drop in the rate of tax and less aggressive tax schemes employed by big business.

The large business division opened 405 investigations last year, down marginally from 444 in 2011. In total cash obtained via tax investigations fell to £3.2bn for 2012/13, the lowest level since 2006/07, according to figures from law firm Pinsent Masons.

Extra revenue gained from challenging large businesses over how much corporation tax they pay peaked at £4.1bn in 2010/11.

Pinsent Masons head of tax Jason Collins said: “It is frequently argued that lower taxes and simpler taxes should lead to lower levels of tax evasion and avoidance activity and inevitably that means lower tax investigation yields.

He added: “When the corporation tax rate was 30% many businesses were going to great lengths to work around what was seen as an unfairly onerous tax bill. However, as the rate has been lowered, the tax simplified, and lower tax rates promised for the future, the need to avoid this tax has been reduced.”

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