Now this is a surprise, isn’t it?

A “Google tax” introduced by the coalition government to crack down on multinationals shifting profits overseas has been criticised as a “total failure”, as new documents show it is predicted to raise no money over the next six years.

The diverted profits tax, introduced in 2015, was hailed as a pioneering effort to tackle multinationals who were reducing their UK corporation tax by shifting profits overseas.

It was predicted by officials that the tax would raise up to £400m a year, but new figures published with the budget last week show revenues slumping to zero.

All that shouting from Ritchie and the TJN and UKUncut and….nowt. It’s like all that shouting was propelled by ignorance, isn’t it?

6 thoughts on “Now this is a surprise, isn’t it?”

  1. Nothing changes:

    The initial regulatory impact assessment for IR35 in 1999 stated that HMRC expected the measure to generate £220 million per year in National Insurance contributions, and a further £80 million in income tax.

    In May 2009 the Professional Contractors Group received a reply to a request under the Freedom of Information Act to HMRC, asking just how much tax revenue IR35 had in fact raised for the exchequer. The FOI reply revealed that in the tax years 2002/03 to 2007/08, IR35 directly raised just £9.2 million.

    In September 2011 a Freedom of Information Act request revealed that the number of cases reviewed had fallen from 158 (year ending April 2007) to 12 in year ending April 2010 and 23 in year ending April 2011. The same document also gives the “tax yield received for the requested years” as having fallen from £1,906,619 to £219,180. No details are given for the costs of the investigations or the costs of collecting the tax.

    Somewhat short of the £300m a year anticipated.

  2. The Original Jonathan

    It was there to stop companies shifting profits overseas. They responded by not shifting profits overseas, resulting in no “fines” being levied. So, it’s a success isn’t it.

    Last time I checked zero was raised from non-smokeless-fuel fines in my home town. Surely that’s a success.

  3. No Tim, you’ve failed Logic 101. The final paragraph explains:

    [the diverted profits tax is] successfully encouraging groups to change their behaviour so that they pay more corporation tax in the UK

    The DVP tax ranges from 25% to 55%, which is considerably higher than Corporation Tax at 20% or so. Seems plausible that companies will prefer to pay the latter.

  4. Somewhat short of the £300m a year

    Some personal liability for those responsible for the idea and its implementation to offest the cost to the taxpayer might not come amiss.

    Yes, I know – dream on.

  5. The Grauniad article manages to contradict both its headline and itself. Headline says “…*now* raises zero revenue”, but the article says “predicted to raise no revenue over *next* six years”; later: HMRC investigating £5.3bn of tax at March 2020 (excluding any settled before then or investigations started since) and HMRC “it has raised significant revenue” so Labour describes it as “a complete failure”.
    Who on earth can take the Grauniad seriously?

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