Tax take from big business disputes up by 25% last year, according to HMRC figures

Out-Law News | 01 Dec 2014 | 5:28 pm | 1 min. read

The amount of additional tax collected from the UK's largest businesses as a result of investigations and compliance work by HM Revenue and Customs (HMRC) increased by 25% last year, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com.

The Large Business Service (LBS), which looks after the tax affairs of the UK's largest and most complex businesses, collected £4 billion that would otherwise have gone unpaid in the tax year ending 31 March 2014, up from £3.2bn in the previous year. The increase came despite the steady reduction in corporation tax since 2010 to its current rate of 21%, ahead of a final cut to 20% from April 2015

Tax expert Eloise Walker of Pinsent Masons said that the increased level of activity by the LBS was part of HMRC's on-going efforts to block tax avoidance and increase tax yields through more intensive site visits and investigations.

"HMRC is very conscious of the public perception, however misguided that might be, that big companies get away with underpaying corporation tax and HMRC is keen to disprove that and show that it is doing its job," she said.

"HMRC has been stung by some of the criticism that it has received about its approach to policing big businesses. It is not a soft touch and the big increase in compliance take reflects that," she said.

According to Walker, the relationship between HMRC and large businesses was changing as a result of the authority's more aggressive approach. Instead of a good working relationship between the two with regular meetings between an HMRC customer relationship manager and the company's head of tax, HMRC was now sending out larger teams of inspectors to interview the chief financial officer and directors, she said.

She added that HMRC was now beginning to target smaller firms for more intensive enquiries following the "impressive results" of its investigations into large businesses.

"Mid-tier firms should take note and ensure they have their houses in order," she said.