Company Tax Receipts Plummet By GBP576m In One Year

by Carla Johnson, Investors Offshore.com, London

26 September 2007

Capital markets face a possible cash crisis as the the government's income from corporate tax drops a sensational GBP£576M in one year alone.

According to a study carried out by the Office of National Statistics (ONS), in August 2006 the total sum received by the government in corporation tax receipts was GBP£1.28bn, compared to GBP£704m at the close of August this year.

Further statistics from the ONS also revealed that borrowing topped GBP9.1bn in August.

A predicted decline in the bouyancy of the UK economy in the coming months is also expected to hit tax revenues.

Speaking to the UK media, Howard Archer, the chief UK economist for Global Insight commented: “The public finances could be significantly hit over the coming months if the current financial market turmoil increasingly weighs down on economic activity, the housing market and City bonuses, thereby undermining tax revenues.”

The ONS revelation of the corporate income tax revenue drop comes in the wake of last month's Audit Office report highlighting the fact that one third of large businesses paid no corporate tax whatsoever.

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