As the FT notes this morning:
The amount of additional corporation tax collected through investigations into Britain's largest businesses has fallen to its lowest level since 2006-07, according to data which show that inquiries into some of the UK's 770 biggest companies yielded just over £3bn in the year to March.
All the usual excuses are rolled out from HMRC before it is noted that:
The large-business service, which deals with the 770 largest businesses, collected an extra £3.17bn in tax in 2012-13, an 8 per cent drop from £3.44bn the year before — and a 25 per cent drop on 2010-11. Extra revenue gained from challenging large businesses over how much corporation tax they pay peaked at £4.1bn in 2010-11.
Let me suggest the two real reasons for the change.
The first is a lack of resources.
The second is a lack of political will: you can't run a tax haven and then frighten business away by being aggressive.
Oddly, neither are mentioned by HM Revenue & Customs in the explanations they provided to the FT. And so the tax gap will keep on growing.
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A Third reason might be fear of one’s political masters?
Given the lag between account year endings, filing of returns and the length of time enquiries take, I doubt that much additional tax collected by HMRC in 2012-13 has anything to do with the period that the coalition has been in power. Being ex-HMRC I’d guess there’s a 3-5 year lag, which chimes with the peak of collection 2010-11, well after the recession hit but probably collecting the additional tax relating to the pre-banking collapse period.
Seems to me the fall has as much to do with the recession as anything else.
Have you noticed average investigation times now?
Your ‘ex-Revenue’ status shows
A tax return needn’t be filed until a year after the y/e. The enquiry need not even start until a year later. But I’m interested, what average investigation time are you relying on, do they relate to large enquiries, does the information indicate which period is under enquiry and where did you get your information from?
And I’m still involved with plenty of enquiries on a day to day basis, just from the other side of the desk. Are you?
Yes
I have said it before several times – it is because they no longer carry out as many in depth challenging audits partly due to a reduction in staff, but also due to the culture of the LBS in HMRC where the philosophy is one of “customer facilitation” and fear of “upsetting the customer”
I am sure that is right