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HMRC Large Business Directorate Yield Falls

by Robert Lee,, London

24 November 2015

The amount of additional tax collected through investigations into underpaid UK corporation tax fell by 13 percent in 2014-15, according to international law firm Pinsent Masons.

Pinsent Masons said that inquiries undertaken by HM Revenue and Customs's (HMRC's) Large Business Directorate yielded GBP3.5bn (USD5.3bn) in additional revenue in the 2014-15 financial year.

According to Pinsent Masons, the fall in yield means that HMRC may have tackled much of the most obvious abuse among large businesses, leaving it to deal with more complex cases, which may take longer to resolve and bring in less revenue. The amount of corporation tax "under consideration" for inquiries by the Large Business Service (the body replaced by the Large Business Directorate in April 2014) was estimated at around GBP10bn at the end of 2013-14. The GBP3.5bn additional tax collected by the Directorate in 2014-15 represents approximately 35 percent of this figure, Pinsent Masons said.

Heather Self, Partner at Pinsent Masons, commented: "The fall in the amount of additional tax collected could indicate that HMRC has now tackled much of the 'low hanging fruit.' It may now be trying to squeeze blood out of a stone. The fact that the rate of corporation tax has been falling will also, of course, be having an impact on overall yield."

Self added: "The actual yield from Large Business Directorate inquiries is far lower than the amount that HMRC estimated it might be able to bring in. This suggests that although the Revenue wins a high proportion of cases at tribunal, there are still many technical disputes in which the taxpayer prevails. The gap between the amount 'under consideration' and the eventual sum yielded could also, of course, reflect the fact that disputes are taking a long time to resolve and the revenue, therefore, a longer time to come through."

TAGS: compliance | tax | business | tax compliance | law | corporation tax | United Kingdom | tax authority | tax planning | transfer pricing | HM Revenue and Customs (HMRC) | HM Revenue and Customs (HMRC)

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