Income from CT investigations at six-year low

Conservative MPs have blamed a "Dickensian" tax system for low CT receipts, as HMRC figures show that Revenue income from CT enquiries into 'big business' has fallen to its lowest for six years.

The amount of additional CT that HMRC has collected through tax investigations into large businesses has fallen to its lowest level since 2006-7, according to figures obtained by law firm Pinsent Masons.

It said the fall was because of a lower rate of CT and less companies using...

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Comments

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ireallyshouldkn... | | Permalink

Do they even undertake investigations for micro companies with sub £1mill t/os?

My clients are all fairly 'low risk' but the only investigation we ever get is for VAT. Never CT.  We have 80 odd Ltd co clients so you would have thought we would get one picked a year at least. 

Tax simplification    2 thanks

mikefleming3028 | | Permalink

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This year’s Finance Act runs out at 655 pages, does this give any one a clue as to the reasons for the low rate of recovery on CT enquiry cases? The Office of Tax Simplification should either be allowed to get on with their job or it should be scrapped on the basis that it`s not fit for purpose. As for MP`s being critical of HMRC`s results I think that they should acknowledge that they were the body that passed the Legislation in the first place. They should have taken a keener interest in the whole process at the debate stage rather than snipe from the sidelines after the event.

 

mr. mischief's picture

strategic management

mr. mischief | | Permalink

In my view HMRC is overstaffed, and also the staff they have is on the whole totally inappropriate for the task in hand.

Whilst the public sector mantra is that staffing levels are cut to the bone, in my experience they always have staff to pedantically pick up minor errors with things, generally delay things and this often means 4 or 5 calls or letters where 1 would have done.

I have three of these in progress right now for 2012-13 P35s for various different reasons.  In all 3 cases there have been 2 phone calls and two letters written.  In all three cases the same information has been given at least twice.  In all three cases one phone call has been denied and one letter lost.

Dealing with my local council is very similar.  I recently had to make 2 phone calls and write 2 letters - copying the second one to the Chief Exec. - to get them to stop hassling a client for an apparent £1 per WEEK discrepancy between what he'd told them he was paying someone and the payroll info. I'd given them.

So the first thing we need is a 'just get it done' approach.  Then we can start freeing up salaries which are being wasted on silly stuff, in order to hire folk with enough nouse to do proper tax work and get the tax take in.

Over the past 4 years I have had 4 enquiries on my client base.  One a complete blunder by HMRC who had not even done their homework, closed down within 2 days.  The other 3 VAT enquiries.

That's great for me, great for my tax insurance folk.  But pretty lax on HMRC's part.

 

johnjenkins's picture

HMRC also

johnjenkins | | Permalink

won't persue smaller Ltd Cos where they know they won't get any money, so any tax due from investigations would be written off. However watch them chase the self-employed who have Assets.

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ireallyshouldkn... | | Permalink

@John, why wont small ltd co's generate investigation money?  So long as they are liquid then they are a pretty good target given how much crap directors try and dump through them and how poorly prepared a lot of them are based on what we pick up from the cowboy end of the market. 

If people know they don't get investigated then the abuse continues.  Take dividends, do HMRC ever cross check dividends in the company accounts are properly declared in SA returns?  Must be a huge hole there. I am always highly suspicious of the directors who wont let you do their SA return - I make a point of offering to do them for free so there is no excuse. 

Not all small ltd co's are borderline bankrupt.  Mine isnt for example.

johnjenkins's picture

HMRC will

johnjenkins | | Permalink

normally only go after tax payers who can pay. It makes their figures look good. Small Ltd Co's are generally asset poor, which means even if an investigation does find something, there is no money available and the best course of action is liquidation. How many liquidations are due to unpaid taxes?. Yes, I know that some will be contrived but percentage wise a lot more than the self-employed.

Again a lot of Ltd Co's are set up purely as a service company where the assets are held by the shareholders.

When tax payers are squeezed too hard (10% of our electric and gas bill is due to stealth tax) they will fight back by abusing the system.

Of course it's not right, but nor is a lot of government spending.

HMRC do check dividends against SA returns, although with different year ends sometimes it can be difficult.

You can thank Gordon Brown for the present predicament.

should_be_working's picture

What are the odds...

should_be_working | | Permalink

... on the PCS union (and our old friend Richard Murphy) citing this as a case for *more* staff at HMRC?

johnjenkins's picture

Does the offset

johnjenkins | | Permalink

of the cost of new technology weigh up against the saving of getting rid of staff? I'm not so sure it does.

New technology will enable more information to be gleaned. That info has to be used, otherwise there is no point in new technology. You need staff to use the info. So at the very least HMRC should have kept their staff and justified it by the increase in take. Now Government thinking is that people who are frightened of losing their jobs will work harder therefor no need to increase staff. That's ok until you get to saturation point, which HMRC are now beyond.