Businesses to publish tax strategy under government proposals

LARGE COMPANIES will be compelled to publish their tax strategies under new government plans.

In a consultation document released this week, financial secretary to the Treasury David Gauke (pictured) has proposed a “legislative requirement” for all large businesses to publish their tax strategy, “enabling public scrutiny of their approach towards tax planning and tax compliance“.

A voluntary ‘Code of Practice on Taxation for Large Business‘ setting out the behaviours which HMRC expects from its large business taxpayers is also put forward alongside a narrowly-targeted ‘Special Measures’ regime to tackle the “small number” of large companies that persistently undertake aggressive tax planning or refuse to engage with HMRC in an “open and collaborative” manner.

In 2014/15, HMRC collected £7.3bn in additional compliance revenues from the largest 2,100 businesses. In total, HMRC’s large business taxpayers contributed £198.8bn to the Exchequer, representing around 38% of HMRC’s total receipts.

Several large businesses have drawn controversy over their tax arrangements, most recently HSBC, and infamously Google, Amazon and Starbucks.

In HSBC’s case, the bank was accused of facilitating tax evasion activities through its Swiss arm, while Google, Amazon and Starbucks channelled their profits out of the UK and through low-tax offshore jurisdictions.

“While increasing numbers of UK businesses are already being transparent about their approach to taxation, a number are still failing to do so,” Gauke wrote.

“In addition, there are still a small number of businesses which simply do not play by the rules – persistently engaging in tax avoidance or highly aggressive tax planning, or refusing to engage with HMRC in a full, open and proper way. It would be unfair to the vast majority of businesses not to do more to tackle this problem, and to level the playing field for all.”