Corporation Tax Yield From Investigations Falls

The FT reports that HMRC's large-business service, which deals with the 770 largest UK  businesses, collected an extra £3.17bn in tax in 2012-13 from its investigations, an 8% drop from £3.44bn the year before – and a 25% drop on 2010-11. 

 

HMRC quite rightly have pointed out that the yield fluctuated because it involved a relatively small number of cases that were responsible for a large proportion of revenues and the time to resolve issues was uncertain, particularly if litigation was involved.

“HMRC’s job is to enforce the large-business tax rules as passed by parliament. We do this extremely effectively, bringing in £23bn additional revenues from large businesses since 2010 alone. 

HMRC exceeded its target for additional revenue raised from large businesses as a whole in 2012/13 and we have year-on-year increases in our targets for the next two years. The actual amount of yield will naturally fluctuate from year to year, depending particularly on major cases where inquiries are ongoing.”

Naturally the yield will vary from year to year, HMRC is not a commercial enterprise that seeks to increase its revenue each year.

Sadly, thanks to the ongoing political campaign waged by those who should know better about companies paying a mythical "fair share" of tax and the general hysteria in the media whipped up by those who know nothing about corporation tax, HMRC will doubtlessly be unfairly and wrongly criticised for the fall in yield.

The reality is that as tax is reduced, as corporation tax has been, so is the incentive for companies to engage in "aggressive tax planning".

Tax does have to be taxing.

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