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Britain's biggest corporations avoid paying tax



A third of UK's 700 biggest businesses pay no corporation tax

Nearly a third of the UK's 700 biggest businesses paid no corporation tax in the 2005-2006 financial year, an official study has revealed. [Furthermore, even companies that do pay corporation tax are able to avoid it to some extent.]

A further 30 per cent paid less than 10 million each in tax.

And of the tax paid by these businesses, two-thirds came from just three industries - banking, insurance and oil and gas - while the alcohol, tobacco, car and real estate sectors paid only a few hundred million pounds.

Altogether, these large companies paid 24.4 billion in tax in 2005-2006 - just more than half of all the corporation tax, according to a National Audit Office analysis of 700 companies handled by the large business service of Revenue & Customs.

Just 50 of the companies paid 67 per cent of the tax, while about 220 paid none at all.

Another 210 each paid less than 10 million, according to figures that left financial experts taken aback.

Mr Michael Devereux of the Oxford University Centre for Business Taxation said: "It is certainly surprising."

The figures have also sparked questions about the strategies used by large public and private companies to reduce their tax bills.

But as corporation tax is only paid on company profits, it is thought that poor performances and low profitability may have been responsible for the low amounts of tax paid.

Some companies have also paid heavily into pension funds - cutting their profit margin - or have had to deal with high financing costs or the availability of tax losses from previous years.

The figures have also sparked concern over whether the Treasury relies too heavily on a minority of industries for its money and the impact this has upon small businesses.

Mr Bill Dodwell, of Deloitte, the professional service firm, said: "That 700 of the largest companies and groups are only paying 54 per cent of corporation tax shows the giant contribution of small companies." One large company which has recently avoided paying corporation tax is J Sainsbury, the supermarket group.

It put 110 million into its pension fund in 2005 - 2006, meaning that instead of paying corporation tax it received a credit of 3 million.

And in 2006 - 2007, it paid 240 million into its pension fund, resulting in a 9 million tax credit.


SOURCE

Daily Mail, "A third of UK's 700 biggest businesses pay no corporation tax", 28 August 2007.
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=478146&in_page_id=1770

"The Insider" mailing list article, 28 August 2007.

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Tags: Britain, corporation tax, evasion, taxes, avoid, tax, top companies, big business, capitalism, , conspiracy theories.

 
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