Oxford and HMRC data proves that the corporate tax gap is £12 billion – as I said, three years ago

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I have referred already to the Oxford report on corporation tax, just published, and Robert Peston's reaction to it.

There is however another important point to pick up, and that is that the data confirms I was right all along on the scale of the corporate tax gap.

As Oxford note:

Within each sector there is evidence that, as a proportion of trading profit, the tax liabilities of the largest 100 companies are generally lower than for other companies.

So, on average large companies are paying tax at less than the 21% at which small companies pay tax.

Then note:

Independent companies pay just over 10 percent of UK corporation tax. By far the largest share of corporation tax is paid by companies that are part of multinational groups, with a similar proportion from UK-owned and foreign-owned groups.

By 'independent companies' they mean companies that are not part of groups - which means UK small companies in other words.


The top 1 percent of all companies pays 81 percent of UK corporation tax.

In fact, based on graphs in the report it seems 90% of tax is paid by 10% of companies.

Corporation tax paid in all in 2009/10 was £36bn. It was £43bn in 2006 when I did my research for The Missing Billions for the TUC.

Now let's pull this data together. 90% of companies paying 90% of all corporation tax do not pay at the expected rate of 28% but instead probably pay at a rate less than 21%. Of course that's an extrapolation of what Oxford say, but it seems a fair one based on what they say. So, currently £32.4bn of corporation tax paid is the result of tax charged on large companies at a rate of less than 21% (let's call it 20.5% - we don't want to over-egg this) when as Oxford note (and they would not note this unless they thought it reasonable to surmise this) a rate of 28% was expected, irrespective of allowances and reliefs.

So let's gross up £32.4 billion and see how much tax would have been paid if settlement had been at 28% and not 20.5%, and the answer is £44.3billion. Take off the sum we first thought of - i.e. £32.4 billion - and the difference is £11.9 billion. Which give or take is near enough £12 billion. In fact if I'd assumed the rate was 20% and not 20.5% the gap would have been £13 billion.

In the Missing Billions I said the expectation gap - the difference between the sum we'd expect large companies to pay and the amount they actually pay - was £12 billion a year at the time. And now it's near enough almost exactly £12 billion.

The fact is the Missing Billions was right all along. And those who have used my data as the basis of their tax protests - saying we're not all in this together as ordinary people and small business are paying for the abuse big business and banks in particular have unleashed on our economy - can take considerable comfort from the fact that they now have the backing of Oxford University and H M Revenue & Customs data to show that the number they have been using on corporate tax avoidance - the activity that ensures they're not in this altogether with the rest of us - was right all along.

Thanks Oxford. I appreciate your support.

The question now is - what is anyone going to do about it - because I suspect this will only reinforce demands for action. £12 billion would

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