HM Revenue & Customs’ specialist unit targeting the UK’s largest businesses has seen its yield fall around 13% to £3.5bn despite a substantial increase in the number of companies covered, according to research from law firm Pinsent Masons.
The fall in yield means HMRC may have tackled much of the most obvious abuse among large businesses over the last few years, leaving them to clamp down on more complex cases, which may take longer to resolve and yield lower amounts, Pinsent Masons suggests.
The haul relates to enquiries undertaken by HMRC’s large business directorate, which was formed in April 2014 to manage the tax compliance of the UK’s 2,100 largest and most complex businesses. The body replaced the large business service, which covered the 800 largest and most complex businesses.
In 2013/14, HMRC’s large business service collected around £4bn in additional tax.
Pinsent Masons partner Heather Self said: “The fall in the amount of additional tax collected could indicate that HMRC has now tackled much of the ‘low hanging fruit’. It may now be trying to squeeze blood out of a stone.
“The fact that the rate of corporation tax has been falling will also, of course, be having an impact on overall yield.”
An HMRC spokesman said: “Our Large Business directorate secured an extra £7.3bn in tax last year. Yield from individual taxes naturally fluctuates from year to year as a relatively small number of cases is responsible for a large proportion of the additional tax.
“HMRC allocates resources according to risk and this has seen us focus on VAT with large business in recent years. The Large Business directorate brought in around £3.4 billion in extra VAT last year, more than double the amount collected by the former Large Business Service in 2013-14.”