Strategy & Operations » Governance » IT companies underpaid tax by £800m, says Tory MP

A GROUP OF TEN technology companies with government contracts significantly underpay their corporation tax, according to a Conservative MP.

Charlie Elphicke, MP for Dover and former tax lawyer with law firm Hunton & Williams where he was partner, used parliamentary privilege to raise the issue of “tax avoidance on an industrial scale”.

In Commons debate, he said the group – which includes IBM, Microsoft, Symantec, Dell, Oracle and CSC Computer Sciences – paid a total of £78m to HM Revenue & Customs on earnings of £17.5bn. According to Elphicke, the firms should have paid £879m, meaning there is a shortfall of more than £800m.

The companies all hold government contracts through which they receive large sums of public money – at least £1.8bn in revenue last year, according to Elphicke.

There is no suggestion that what any of the companies have done in reducing their bills is illegal, but Elphicke branded the situation “irresponsible, unethical and unacceptable” in comments made to The Times.

“When awarding government contracts, we should weigh the amount of taxpayers’ money shelled out against the amount of corporation tax paid by government contractors. This would help level out the playing field between tax-paying UK companies and tax-avoiding companies from overseas,” he added.

Elphicke’s comments follow last year’s public distaste over corporate tax avoidance after several companies including Amazon, Google and Starbucks paid little or no corporation tax. The coffee house recently attempted to placate its critics by offering to pay £20m to HMRC over this year and next.