Mar 14 2011

Two thirds of UK companies paid no tax

Posted by: Nick Shaxson in: Thoughts

New research from Tax Research which notes, among many other things:

“Just 33.6% of companies in existence at the start of the year paid corporation tax – or just 915,000 out of some 2,723,000 companies existing in April 2009.”

This report, which estimates tax losses to the UK government at £16
billion, is reminiscent of a U.S. Government Accountability Office (GAO) report in 2008 which reported that in 2005-2008:

“two thirds of both American companies and foreign companies doing business in the United States end up avoiding all income tax obligations to the federal government despite corporate sales totaling $2.5 trillion.”

Plenty of this is because the companies in question genuinely aren’t profitable, of course. But plenty will reflect tax avoidance. The report also notes that half a million companies disappeared last year, in most cases without filing accounts. This prompted one comment from “Bob”, under a Tax Research blog on the subject, highlighting one of the things that’s going wrong:

“from my experience on the frontline -when those companies are chased for returns, they go into liquidation. Post liquidation HMRC just gives up. Phoenixism is rife and again HMRC does nothing.”

The full Tax Research report is  500,000 missing people: £16 billion of lost tax: how the UK mismanages its companies. This is reported in The Guardian and in supporting Tax Research blogs here and here.

one comment

garrilla 3th March, 2011 1.22 pm

Nick,

you should do a FoI request on this, asking for a summary of non-paying firms by turnover range.

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