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Large businesses adopt a ‘low risk’ approach to tax


LARGE businesses are increasingly ‘low risk’ when it comes to tax planning, says Pinsent Masons, the international law firm.

A survey from HMRC revealed 78% of large businesses have a ‘low appetite for risk’ in relation to tax planning and 65% of large businesses are now “always open to legally reduce” their tax payments, down from 74% last year. More than a third of large businesses said that their appetite towards risks in tax planning was ‘very low’ and just 3% said that they had a ‘high appetite’ for risk. The percentage that deem tax avoidance to be “acceptable” fell from 26% to 21%.

Andrew Scott, Legal Director at Pinsent Masons says, “Political pressure and high profile scandals seem to have encouraged a lower risk, more compliant mindset amongst the UK’s largest businesses when it comes to tax planning.”

The figures are confirmation of a more reserved approach to tax planning, in the wake of several high-profile corporate tax scandals, and related public and political pressure. HMRC is increasingly focused on technical issues as large businesses need to ensure compliance processes are robust.

Andre Scott continued, “HMRC is focusing its attention on more complex, technical issues. This has led to more lengthy disputes- often to a formal tribunal. The approach means that businesses need to seek advice and be prepared.”

The percentage of large businesses which said that they were confident that they understood how to avoid challenge from HMRC fell to 88% this year, down from 93% last year.

The 2015 Large Business Survey is the first since HMRC’s expanded Large Business Directorate began operating in 2014. The Large Business Directorate was formed to oversee the tax affairs of the UK’s 2,100 largest and most complex businesses. It replaced the Large Business Service, which performed a similar role in relation to the 770 largest and most complex businesses.

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