Some people think we’re cosying up to big businesses and cutting deals on the tax they
owe. They also think we crack down on the little
guy at the same time. But last year we brought in more than £8
billion in extra tax from the UK’s largest businesses last year – tax that
would have gone unpaid without our action. The important thing is that we’re even-handed
with all our customers, but we have to take a slightly different approach to each of them,
and here’s why… Large corporations don’t appear overnight.
They might start off as a sole trader or a partnership – maybe selling a gadget they
designed in their garage. At the start, they do Self Assessment tax
returns. They might need a bit of extra help from HMRC,
but otherwise it’s pretty simple. The business grows and registers for VAT.
It moves out of the garage and rents an office. It registers for Corporation Tax.
Then the company starts employing people and has to think about PAYE and the National
Minimum Wage – now it has to make sure its employees’ tax affairs are correct too.
It starts to get a bit more complicated so the company hires an accountant to sort out
the tax. Again the company grows and buys an office.
It hires a contractor to clean the office… …employs an advertising agency.
…imports specialist components. All of this has tax implications.
As the company gets even bigger, it creates a Research & Development department
…divisions for Finance, Sales and Marketing. …and creates incentive schemes for its staff.
The company is floated on the stock market and uses the money to expand overseas.
Share options are given to the staff. Again, all of this has tax implications.
Over time, the company opens offices in the US, India, France and China, selling software
developed in London, Delhi and Paris to customers worldwide – via servers in the US and Europe.
Now it has thousands of people around the world working for it.
Global expansion means it has to deal with dozens of different tax systems, not just
one. All of this has tax implications, too.
The company is now the very definition of a modern multinational.
Because the UK’s largest businesses are really complicated, their tax affairs tend
to be, too. Each of these companies has an HMRC tax expert
who makes sure they pay everything they owe, when it’s due.
Last year, these companies were responsible for four out of every ten pounds we collected.
So if you’re counting – and we are – that was £225 billion.
It’s far from cosy. Our agents leave no stone unturned.
We have criminal investigators, data specialists, lawyers and forensic accountants to help them.
In fact, we investigate half of the UK’s large businesses at any one time, to ensure
they pay the tax due under the law. And we’ve taken big companies to court to
collect the tax they owe. Some household names have tried to use tax
avoidance schemes – but we’ve successfully challenged them – and collected billions
for the UK economy that would otherwise have been lost.
We have a duty of taxpayer confidentiality, so we can’t give out information about your
tax affairs, or your local trader’s. And we can’t talk about a large company’s
tax affairs either. But all UK companies lodge their accounts
with Companies House, and this information is available online. And – thanks to 2016
legislation – all large businesses in the UK now have to publish details of their tax
strategy too. We’ve been working with partners around
the world to make things more transparent. By introducing new initiatives like the Diverted
Profits Tax, we’re leading the way on making sure companies can’t use accounting tricks
to avoid paying what they owe in the UK. We’re already seeing them change their behaviour,
and we’re on target to bring in more than £1.3 billion from this policy by 2020.
But back to the little guy. Yes, it’s true we take a different approach.
We step in where we think there’s a risk of things going wrong – intentionally or
otherwise – but we actually only do that for about one in ten small businesses.
Remember by cheating the taxpayer, rogue traders can undercut those who do play by the rules.
And we think you’d agree that’s not fair. It’s all about making sure everyone pays
the tax that is due.