The Confederation of British Industry has hit back at claims that big companies are dodging their “fair share” of tax.
In a speech to launch the CBI’s report, ‘Tax and British Business’, last week CBI director general John Cridland pointed out that UK companies contribute £163bn in taxes, more than a quarter of total tax revenues of £551bn.
Cridland distinguished between legitimate “tax management” (using all tax reliefs and allowances to make sure a company doesn’t pay more tax than necessary), and illegal tax evasion; and “unacceptable” abusive tax arrangements that are artificial and have no commercial purpose.
Key Corporation Tax facts
• The top 1% of companies pay 81% of all corporation tax
• 60% of small companies pay no corporation tax
• Over half (55%) of all companies claim capital allowances, while 10% claim group relief and only 1.8% claim double tax relief
Source: ‘Tax and British Business’ CBI report
“For too long, business has been slow – or perhaps even reluctant – to enter the public debate on tax policy,” Cridland said. “That needs to change. We want to defend robustly our record – and advocate pro-growth tax policies which are in everybody’s interests.”
Cridland focused on big companies and the tax system, although in a panel discussion at the event in London, John Whiting, policy director at the Chartered Institute of Taxation and also tax director at the Office of Tax Simplification, stressed the need to make the tax simpler for small businesses.
The OTS has proposed cash-based accounting for the smallest businesses, while government plans for a “real-time” pay-as-you-earn system could also reduce paper work for small and medium-sized businesses.
However, Whiting said there was no “quick fix” to make tax simpler. He also said that current plans for a General Anti-Abuse Rule (GAAR) on tax may not address what the public perceives as tax avoidance and that the government may need to explain the rule’s purpose.
About Nick Huber
I’m a specialist business journalist and have a particular interest in tax and technology.