Powered by Guardian.co.ukThis article titled “Big business disputes £25bn in tax – equivalent to a year’s spending cuts” was written by Rob Evans and Ian Griffiths, for The Guardian on Wednesday 22nd June 2011 18.03 Europe/London

Britain’s largest companies are in dispute with HM Revenue & Customs over paying £25bn worth of tax, according to the latest official figures.

The money, if collected, would go a long way to helping the government’s parlous financial state and is, for example, roughly equivalent to the size of a year’s cuts to public spending.

The new figures have been disclosed as the Whitehall watchdog, the National Audit Office, is scrutinising controversial tax deals struck by HMRC with multi-nationals following the row over Vodafone’s £ 1.2bn settlement with the taxman.

The Revenue is involved in 2,721 disputes with the country’s biggest businesses, according to the figures disclosed under the freedom of information legislation. They cover all taxes ranging from corporation tax to specific taxes such as the petroleum revenue tax and insurance premium tax. The oldest dispute goes back to 1990, although most are recent, according to the Revenue.

The figures cover cases in which the specialist division within the Revenue responsible for collecting tax from the 770 largest firms in Britain has challenged those companies over the accuracy of their tax returns. Some of these disputes between big business and the division known as the Large Business Service (LBS) are likely to develop into full-scale lawsuits that could drag on for years and be settled in the European courts.

HMRC said that the latest figures are “a snapshot as at 31 March” and added that around half of the sums are eventually paid. It said the figure of £25.5bn “is not tax owed or unpaid – it is a tool which helps LBS managers to better direct resources in order to produce the best results.”

The figures have been disclosed against the background of criticism that the Revenue, led by David Hartnett, has been too soft on multinationals and fails to make them pay their fair share of tax. The Revenue argues that its conciliatory approach of persuasion, rather than confrontation, produces better results and larger payments.

Anti-cuts campaigners focused their anger in particular on Vodafone, accusing the Revenue of letting the multinational forgo £4.8bn of tax when settling a long-running legal battle. This figure is denied by both the Revenue and the firm which paid £1.2bn to end the dispute over its acquisition of German phone operator Mannesmann in 2000.The heart of the dispute was over the appropriate taxation of profits made overseas by British companies. Although an arcane area, it is a major source of friction between the Revenue and multinationals, prompting a small number of them to shift their headquarters overseas.

guardian.co.uk © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

Comments
%d bloggers like this: