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HMRC’s tax avoidance suspicions toward huge multinational companies will be recurring, as long as lack of tax treatment transparency remains. TaxWatch’s latest scrutiny shows that the UK has a total missing revenue of £11.5bn in 2023, added on top of previous years’ underpaid amounts.
This is not the first accusation made, as missing revenues are reported each year and every time, “toughened” reforms are tossed aside; suspicions remain as is. Multinational companies are usually not proven otherwise despite aggressive tax planning and exploitation of UK tax loopholes.
To recall the case of seven big tech US companies in 2022 that paid only £750m on UK corporation and digital sales taxes instead of the estimated £2.8bn, a 2 billion shortfall. Applying global profit margins on the given data, TaxWatch calculations revealed these companies earned a sum of £14.8bn UK profits; a 19 per cent tax deduction arrives at £2.8bn.
The lack of country-by-country reports on profits and taxes, which former Chancellor Rishi Sunak repealed in 2020, played a huge role in the prevalent tax deficits. If only multinational companies were proactively compelled to announce their data publicly, it would not take the UK intricate efforts to dig into their meagre information and retrieve billions of underpaid taxes.
Several multinational companies reroute their profits through transfer pricing practices, redirecting their UK earnings to jurisdictions that impose lower taxes. This involves one company redirecting profits from their goods or services to another foreign company from the same group.
There are no specific companies yet disclosed, but HMRC pledges to unveil the names and recover any unpaid tax, aligning with the requests of advocacy and tax expert groups to implement transparency and accountability.
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Reference:
US multinationals underpaid £5.6bn in tax in UK last year, HMRC believes. 11 December 2023. Retrieved from The Guardian:
https://www.theguardian.com/business/
2023/dec/11/us-multinationals-underpaid-56bn-in-tax-in-uk-last-year-hmrc-believes
US Multinationals Accused of Underpaying £5.6 Billion in UK Taxes. 12 December 2023. Retrieved from International Business Times: https://www.ibtimes.co.uk/us-multinationals-accused-underpaying-56-billion-uk-taxes-1722112
US multinationals underpaid at least £5.6bn in tax in UK last year, HMRC believes. 11 December 2023. Retrieved from BM Magazine: https://bmmagazine.co.uk/news/us-multinationals-underpaid-at-least-5-6bn-in-tax-in-uk-last-year-hmrc-believes/
