Investigations into big businesses’ tax affairs are yielding almost twice as much as five years ago, according to the latest data on Revenue & Customs’ handling of disputes with big business.
The yield from inquiries by the Revenue’s large business service was £4.06bn in 2010-11, according to a response to a freedom of information request, compared with £2.2bn raised by the services’ compliance activity in 2005-06, according to its annual report for that period.
The extra money raised from settling disputes, such as the record Vodafone settlement in July 2010, is unlikely to pacify critics who believe the Revenue fails to extract enough money from the companies it settles disputes with.
The Revenue came under fire from MPs in December, who said governance procedures were insufficiently transparent and independent and that relationships with big business appeared too cosy. The National Audit Office is now examining the “reasonableness” of five large settlements.
But Jason Collins, of McGrigor, a law firm, said the average yield per company investigated had doubled over the past four years in a sign that the Revenue was squeezing more revenue from investigations.
He said: “Several tax lobbying groups, such as UK Uncut, claim the government has gone soft on big businesses, but these figures are stark proof that this simply is not the case.”
The Revenue’s yield from large business disputes has risen since 2006 when it set up a high-risk corporate programme to speed up the resolution of longstanding cases, reduce avoidance and improve relationships by requiring high level engagement between senior officials and directors.
In response to a separate FOI request, the Revenue said that £25bn of large business tax issues were “under consideration” in June 2011, down from £31.3bn in June 2010.
It said initial estimates were not based on full facts, any legal issues, reliefs or allowances and included inquiries that might have been open for several years.
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