78% of UK corporates' tax planning in conflict with HMRC, says survey

NEARLY eight out ten (78%) UK corporates have confessed that their approach to tax planning conflicts with HMRC’s expectations.

That’s the stark message to emerge from legal outfit Allen & Overy research, conducted as the BEPS (Base Erosion and Profit Shifting) action plan looks set to reshape the global tax landscape.

Among its findings are that corporates face significant challenges in striking a balance when it comes to tax planning over the shifting global tax landscape.

Some 77% say that their investors have an increased influence on their tax strategy, with many demanding greater access to data and financial savings.

Other key findings revealed that 59% felt that tax was now “very important to their firm’s overall strategy”, compared to less than a quarter (22%) saying it was very important five years ago.

The OECD has estimated “conservatively” that there is $100bn to $240bn (£65.4bn to £157bn) of lost revenue from BEPS – or between 4% to 10% of global income tax revenues.

Earlier this month, the OECD published its ‘final’ reports on BEPS as a follow-up to its 2013 Action Plan, there has been much speculation as to whether its ambitious timelines and objectives would be met.

It follows a growing crescendo of sentiment from the public, media and some politicians to change the way multinationals engage in tax planning.

This led – in part – to the introduction of the Diverted Profit Tax – dubbed the ‘Google Tax’ – by the chancellor in the Budget as the government seeks to glean as much as £5bn from its clampdown on tax avoidance.

It took effect from 1 April 2015, despite calls from some quarters for a deferral and a consultation period.

The respondents, sampled in Q3 2015, were from a range of industries and were either CEOs, CFOs, General Counsel, Tax Directors or Heads of Audit Committees in big businesses across the globe.