Call for corporate tax clampdown
3 Nov 08
HM Revenue and Customs should pursue companies that avoid paying tax on their profits more robustly, the Commons public accounts select committee says
It found that more than 25 per cent of Britain’s 700 largest businesses paid no corporation tax in 2005-6.
A spokesman said HMRC had "significantly improved" its targeting of corporation tax inquiries.
The committee found that 181 of the biggest firms paid no corporation tax in 2005-6.
Some 50 companies, mostly in oil, gas, banking and insurance, paid two-thirds of the £24 billion collected in 2006-7.
The committee said that investigations into the tax affairs of some firms were taking too long and yielding too little.
“The fact nearly 60 per cent of the department’s inquiries into compliance turn out to produce less than 1 per cent of the additional tax raised constitutes very poor targeting,” committee chairman Edward Leigh said.
Mr Leigh said HMRC must publicise plans for a new approach in which “high-risk businesses will be singled out for extensive investigation”.
“It should also robustly apply new penalties for those companies engaged in serious tax avoidance,” he added.
HMRC is calculating the amount of tax owed which has been “lost” to the economy. An initial report last year suggested the figure could be as high as £8.5 billion.