News Column

Tax Bills Fall for UK Corporate Giants While Small Businesses Pay More

Dec. 28, 2012

Scott MacNab

Big companies in the UK are paying less tax than they did 12 years ago, despite a big jump in profits, while smaller firms have seen their tax bill almost treble.

Campaigners say it the clearest signal yet that tax avoidance has blossomed under a more business- friendly strategy at tax authority Her Majesty's Revenue and Customs (HMRC).

Opposition parties in Scotland say it heaps more pressure on First Minister Alex Salmond, who has "hailed" firms such as Amazon which, along with Google and Starbucks, have been at the centre of tax avoidance claims.

The SNP also wants control of corporation tax in Scotland so it can be cut below the UK level in a bid to attract more firms north of the Border.But ministers say they have been "very clear" firms should not shift profits across national borders to escape tax, while HMRC insists it has been successful in tackling avoidance.

HMRC figures analysed by Reuters show large companies' corporation tax payments were GBP21 billion in 2011-12, down GBP5bn, or 21 per cent, since 2000-01, when the UK Labour government embarked on a more collaborative approach to big business. At the same time, the gross operating surplus for all UK companies - a measure of profitability compiled by the Office of National Statistics - rose 65 per cent, to GBP329bn.The tax bill for smaller firms nearly trebled, from GBP4.4bn billion to GBP12.1bn, over the same period.

Scottish Greens co-leader Patrick Harvie said: "These figures support what Greens have long argued - true prosperity cannot be achieved by sucking up to corporate interests. Sadly, in Scotland, we've seen our First Minister hail companies like Amazon when they clearly don't pay their way and, in fact, push independent Scottish businesses to the wall.

"The Greens have been urging finance secretary John Swinney to use the proposed new Revenue Scotland tax body to tackle tax avoidance, which he has pledged to do.

But Mr Harvie said: "His SNP colleagues have yet to show any sign of giving up on their dream of slashing tax for big business and aviation."A Scottish Government spokeswoman said: "We are very clear that measures should be put in place to make sure that multinational companies do not shift their profits from one jurisdiction to another for tax avoidance purposes.

"It is important all companies operating in Scotland should be transparent and accountable for the tax due on their economic activity, and, with independence, the Scottish Government would be in a strong position to ensure that this happens.

"HMRC and the finance ministry denied the figures showed an increase in tax avoidance - legal tactics used by multinationals such as Google, Amazon and Starbucks.But John Christensen, of campaign group Tax Justice Network, said the figures showed successive governments' attempts to create a more business- friendly administration - including a policy known as "enhanced relationship", based on mutual trust - had encouraged companies to use such tactics.

"These figures tell a more powerful story than any figures I have seen so far," he said, adding senior HMRC staff had told him in recent years they were "alarmed" at the drop in payments from large companies. HMRC defines these as firms with an annual profit of more than GBP1.5 million.

A spokeswoman for HMRC said GBP29bn in "additional" revenues from big firms had been recovered in the past six years.

"We have been very successful in reducing tax avoidance by large businesses in recent years.

"We relentlessly challenge those that persist in avoiding tax and have recovered GBP29bn additional revenues from large businesses in the last six years.

"Corporation tax receipts are dependent on the wider economy and the corporation tax rate, which was reduced by two percentage points for 2011-12."

Source: (C) 2012 The Scotsman via ProQuest Information and Learning Company; All Rights Reserved

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