Categorized | news, tax avoidance

Tax clampdown could have costly side effects

Tax clampdown could have costly side effects

HMRC has netted an extra £12.6bn from its investigations into large company’s corporation tax over the last 4 years.

This has prompted the UK media to speculate that the 69% increase helps to support claims made in the Lib Dem manifesto that a crackdown on tax avoidance can reap in yet more billions.

The Liberal Democrats want to see a general anti avoidance principle that would block any arrangements that are designed to sidestep the payment of tax liabilities.

Research from UHY Hacker Young suggests that HMRC raised an extra £39.5bn through crackdowns between 2005 and March 2009 and they believe that more companies are using offshore contractor accountants to escape the intensity of the revenue’s investigations in the UK.

Small businesses are also coming under increased pressure from HMRC. The revenue raised an additional £359 million in 2009 through its investigations into non-compliance by SMEs, limited company contractors and freelancers. The PCG ran a series of advertisements in the national press last week to highlight the issue of IR35, and what they define as an opaque and unfair tax measure.

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Image: Declare the pennies on your eyes by bcymet

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