ALMOST half of the UK’s largest quoted companies are paying less than the current effective rate of 20% in corporation tax, according to research by top 20 firm MHA MacIntyre Hudson.
The firm’s research had to exclude 34 FTSE 350 companies because companies had posted financial losses in their most recently published full year accounts. But out of the remaining 316 companies, 144 FTSE 350 companies eligible to pay corporation tax – around 46% – were paying below the current maximum 20% rate.
There were 36 FTSE 350 companies which posted profits before tax but had paid no corporation tax at all. Of these 36 companies, their combined untaxed profits totalled £6.243bn. If these profits had been taxed at 20%, it would have added an extra £1.25bn to the nation’s coffers.
Some 85 companies paid below 5% tax on profits, while a further eight companies paid less than 10% tax on their profits.
With corporation tax rates due to fall to 19% in 2017 and 18% in 2020 and with GDP growth inching back to 0.5% for the latest reported quarter, the chancellor is under enormous pressure to maximize receipts from across the whole tax spectrum.
MHA MacIntyre Hudson head of tax Patrick King said: “There is no absolutely no indication of any impropriety, companies can perfectly legally offset previous financial losses against their current year’s corporation tax bills.
But it is interesting to note just how many large companies are not actually paying corporation tax at the 20% rate. With details surrounding the current spending review being announced shortly and some departments looking at 30% cuts, one would have thought this would be a priority for the chancellor.”
“Smaller and owner managed business clients, which MHA MacIntyre Hudson typically caters for, would look to the chancellor to recognize their importance in his Autumn Statement in a few weeks’ time by helping out this important sector.”
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