Foreign-owned companies in Britain owe about £5.5 billion to the taxman, new figures suggest.
Revenue & Customs has identified 258 large multinationals believed to have outstanding tax bills.
British businesses owned by foreign parent companies make up 44 per cent of all potential tax lost through underpayments by the country’s 770 largest companies, according to figures released under the Freedom of Information Act.
In total, 551 large companies, both foreign and domestic, are estimated by the Revenue to owe £12.5 billion in tax.
Book \’em Danny!
The Revenue revealed the figures on foreign tax loss in response to a Freedom of Information request made by law firm Pinsent Masons this summer.
A total of £25 billion in tax receipts was “under consideration”, the Revenue said. This is an estimate of how much extra tax companies might owe before an investigation into their tax affairs begins.
The Revenue calculates that “about half of this estimate … is tax actually chargeable”.
The information request revealed that 258 foreign-owned businesses had tax under consideration of £11.1 billion, translating into actual unpaid tax of about £5.5 billion, which the Revenue is seeking to recoup.
The types of tax outstanding are grouped into 30 categories, ranging from capital gains tax to VAT underpayments.
Companies based in Britain are estimated to owe about £7 billion.
Ah. This isn\’t actually tax owed is it? This is the amount which is in dispute over whether it is owed and the Revenue is applying a rule of thumb as to what will eventually be owed after the dispute process has been run through.
This isn\’t therefore tax outstanding at all.
Let us take an example: the famed Vodafone. At one point, according to Richard Brooks and UK Uncut, there was £ 6 billion outstanding. That was the amount that they said was in dispute (note that there wasn\’t that amount in dispute but they did say there was). There was a serious legal principle behind why this was in dispute too. Does EU law over rule UK? And on the international taxation of corporations yes, it does. So the amount in dispute went from £6 billion to zero (the actual settlement was that Vodafone brought some of that money into the UK to pay dividends and everyone agrees that that is taxable and so taxed it was. But tax on money in Luxembourg was there none.).
Or say that some fool of an inspector transposes some figures and presents you with a bill for £squiddelybillion while you actually only owe £1? The £squiddelybillion will be in that \”under dispute\” number until the transposition is corrected.
Or VAT: M&S and Jaffa Cakes (or am I confusing two cases there?). At the beginning HMRC said that lots of loot was owed in tax. The courts ruled in the end that nothing was owed. The \”lots of loot\” would have been in this disputed tax number. But there wasn\’t any tax to recover, was there?
The truth of this number is that it\’s a result of having a country under the rule of law. HMRC might decide that you owe some amount. You might think them wrong. It will be the courts, using the law of the land, who decide. And given the complexity of the law of the land on taxation there will always be some amounts in dispute. And yes, some will end up owing what HMRC says they do and others will end up not.
This isn\’t therefore tax unpaid. It\’s the delay in determining what tax should be paid coming from two things: having a complex tax system and running the place under the rule of law. Make the tax system simpler and you\’ll reduce this number. Ignore the rule of law and you will too: but let\’s not go down that road into slavery and helotry to the State, eh?