Large companies paying less tax despite big increase in profits
Britain's biggest companies pay less tax now than they did 12 years ago, it was revealed today, while their profitability over that period has jumped.
With corporations such as Amazon, Starbucks and Google under fire for the amount of tax they pay in the UK, it emerged that large companies (defined as those with an annual profit of more than £1.5m) paid a total of £21bn of corporation tax in the year to 31 March, according to analysis by Reuters. This is £5bn less – a decline of just over a fifth – than in the year to 31 March 2001, HMRC data shows.
Meanwhile, the gross operating surplus for all companies in the UK – a key measure of profitability – has risen by 65 per cent to £329bn. The economy has grown by 55 per cent, and the amount of personal income and small company taxes has increased, according to the analysis.
HMRC and the Treasury denied the figures showed that there had been an increase in tax avoidance tactics. They said the decline was the result of recent economic weakness and a cut in the corporation tax rate, which has gradually come down from 30 per cent in 2007 to 26 per cent now.
Reuters found that the lower tax rate and the weak economy account for just under half the fall, leaving £2.6bn of the decline unaccounted for.
John Christensen of the Tax Justice Network campaigning group, said attempts to create a more business-friendly administration have encouraged companies to use tactics that reduce their tax bills. "These figures tell a more powerful story than I have seen so far," he said, adding that HMRC staff had told him in recent years that they were "alarmed" at the drop in payments from large companies.
Prem Sikka, a professor of accounting at Essex University, said that, even allowing for the tax cut, the figures were "paradoxical".
"How are they managing to reconcile higher profits with lower taxes? It can't be done … unless they are booking these profits somewhere else," Mr Sikka said. Companies reporting for tax purposes are increasingly diverting UK profits to lower-tax jurisdictions, he added.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israelis to hide facts
- 4 Danish TV reporter is all business up top, all party down below
- 5 Denmark bans kosher and halal slaughter as minister says ‘animal rights come before religion’
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Israel-Gaza conflict: The children were playing in the street with toy guns. The air strikes were tragically real
Danish TV reporter is all business up top, all party down below
Syria conflict: Syrian and Turkish Kurds unite to battle Isis threat - ‘We shoot them like sheep, but next day double the number return’
Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...