Almost half of Britain’s leading companies failed to comply with the law and disclose subsidiaries that can be used as an offshore means to avoid tax, it can be revealed.
More than 100 firms on the FTSE 350 index were accused of “systematic and widespread” failures to comply with the “most basic” requirements of the law. A Companies House investigation, triggered by claims that dozens of leading firms were hiding profits offshore to avoid paying UK tax, led to a demand for 290 of the top 350 index to disclose details of their subsidiaries.
Previous disclosures by the leading 100 companies in Britain had “not been consistent”, Companies House said, and following a demand from the Business Secretary Vince Cable it reviewed the affairs of all the top 350 firms. The results showed that 124 companies “appeared to have failed to provide a full list of subsidiaries”. Most had since provided the information, Companies House added, but five firms were yet to do so.
Yesterday, the Department for Business, Innovation and Skills said it would not name the five, citing “commercial sensitivity”. Companies House said the five had “committed” to providing the information.
While multinational corporations have been savaged by the Commons’ Public Accounts Committee over their tax avoidance strategies in the UK, companies based in Britain had previously escaped unscathed.
Chris Jordan, the tax campaigns manager of Action Aid – the charity that has campaigned for the figures to be revealed – said yesterday: “This review has revealed a shocking failure by FTSE350 companies to comply with the most basic requirements of the law. Almost half of the companies examined had failed to fully reveal their subsidiaries and appear only to have done so after being investigated by the Government.”
He added: “These lists are often the only way tax authorities in developing countries can find out about tax havens and the connection to UK multinationals. If the lists are not complete then developing countries are kept in the dark.
“Tax havens are frequently used by big companies to deprive developing countries of vital tax revenue that could be used to build badly needed schools, hospitals and roads.”
Mr Jordan added the Government would need to “step up its game” if it wanted to be viewed as committed to an agenda of tax transparency.
Speaking in 2011, Mr Cable said: “We must do the maximum possible to stop tax avoidance using powers that haven’t yet been invoked.”
Under the Companies Act 2006, firms must confirm the location of any subsidiaries to Companies House and failure to comply risks a fine. At the G8 summit in June, David Cameron called for a new global system of “multilateral automatic exchange of information” to tackle abuse of tax systems.
Labour’s shadow Business Secretary, Chuka Umunna, told The Independent: “It’s no good the Prime Minister boasting about a new registry of company owners if he is not enforcing the disclosure rules on the existence of those companies. Companies House has now begun investigating the worrying scale of non-compliance on declarations of overseas subsidiaries and is in the process of getting its house in order.
“It is crucial that those firms which have still not complied do so immediately – that’s why I have put in a Parliamentary question to Vince Cable requesting that they are set a firm deadline.”
A Department of Business, Innovation and Skills spokesman said the 124 companies which failed to provide the information were subsequently “reminded of their responsibility to do so”. He added: “We’re now just waiting on the final five companies to file this information which we are expecting shortly.”