UK Businesses Call For More Clarity Over Total Tax Bills

by Robert Lee, Tax-News.com, London

04 February 2005

A recent study has found that the overwhelming majority of businesses in the United Kingdom have no clear picture as to the total amount of taxes that they are required to pay.

According to a PricewaterhouseCoopers survey of 70 of some of the UK’s most well-known businesses, 99% stated that there was insufficient understanding among investors, employees and stakeholders about the level of taxation faced by the company, while three-quarters called for greater visibility over their aggregate tax bills.

“The simple fact is that, at present, there is no consistent, reliable data on the total contribution of business to the UK Exchequer by way of tax receipts. However, what is clear is that UK tax receipts from business are far greater than the 2.5% of GDP represented by corporation tax,” John Whiting, tax partner at PricewaterhouseCoopers, observed.

The PwC study sought to ascertain what information was available regarding the tax contribution made by UK businesses and their perceptions of the amount of tax that they are paying.

It found that 57% of respondents estimated that their total tax contribution equalled more than 40% of profit, while almost one-third (30%) estimated that their tax was in excess of 50% – far higher then the 30% headline rate of corporation tax rate widely discussed in public.

Whiting argued that a single measure should be formulated so that businesses can see at a glance the total amount of taxes they are contributing to the government’s coffers.

“There is room for confusion and misinterpretation over a business’s tax bill, particularly if you look only at corporation tax. Businesses face a huge array of taxes over and above the tax on their profits. Their contribution to the economy in taxes paid needs to be better understood,” he stated, concluding:

“There is a pressing need to report properly the company’s total tax contribution, not least to ensure that they manage all their taxes properly but also to ensure that decisions around tax changes are taken on the basis of an understanding of the full picture.”

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