HMRC to target UK companies it suspects of underpaying £16.4 billion in tax

HM Revenue & Customs (HMRC) is shifting its focus away from foreign companies which it suspects have underpaid tax, onto UK companies instead.

Data provided by HMRC to Pinsent Masons, the international law firm, shows the Revenue is shifting the focus of its investigations onto UK businesses, which is now the target of 66 per cent of all suspected underpaid tax, up from 61 per cent in 2012.

UK businesses are suspected of underpaying £16.4 billion in tax, up 36 per cent from £12.1 billion in 2012. Figures also show that HMRC suspects foreign companies of £8.4 billion in tax underpayments (known as “tax under consideration”) in 2017, up 9 per cent from £7.7 billion in 2012.

Steven Porter, Partner at Pinsent Masons, comments: “The idea that foreign companies are getting out of their UK tax obligations has been a highly contentious topic over the last five years. However, the figures suggest that HMRC now sees British businesses as a far richer seam for investigations.

“The introduction of diverted profits tax (DPT) has been a game changer for HMRC. It may be that a large part of the increase in tax under consideration in 2016 and 2017 relates to DPT.

“Although DPT was badged as a tax that would affect multinationals, it is being much more widely deployed by HMRC. It may be UK groups, rather than foreign owned multinationals, which are suffering most of the DPT challenges and this could be feeding into the figures.”

Whether you are in business as an individual or as a corporate, you will want to ensure that you pay no more tax than you are legally bound to do. Our experts at Beavis Morgan can ensure your tax affairs are as efficient as possible to fit your circumstances, and we can look ahead to retirement and inheritance tax planning.

In addition, if you are concerned about a tax enquiry into your affairs, worried that you may have possibly under declared or, worse still, you are already under enquiry, our tax specialists, some of whom are former HMRC Inspector of Taxes, are well versed in dealing with all types of tax issues.

We are also readily available to oversee HMRC disputes on your behalf, as well as to represent clients in appeal proceedings before the Tax Tribunal. In some situations, we can also offer professional fee protection insurance, so the costs are covered in whole or in part.

For more information and to discuss your tax affairs in further detail, contact your usual Beavis Morgan Partner.