HMRC is intensifying investigations into suspected tax underpayments by some of the UK’s largest companies.
- Nearly 800 major companies are scrutinised, focusing on banking, telecoms, retail, pharmaceuticals, and oil and gas sectors.
- The banking sector is particularly under the spotlight, with a potential £9.3 billion in underpaid taxes.
- These investigations highlight the growing importance of tax compliance amid global economic challenges.
- Innovative solutions are being implemented to aid firms in meeting complex tax compliance demands.
Her Majesty’s Revenue and Customs (HMRC) is currently conducting investigations into 791 of the UK’s largest corporations across several key sectors. These sectors include banking, telecommunications, pharmaceuticals, retail, and oil and gas, where significant tax underpayments are suspected.
In particular, the banking sector is facing exceptional scrutiny. There are around 70 banks believed to have underpaid as much as £9.3 billion in taxes by 31 March 2024. This amount suggests that each bank could, on average, be underpaying approximately £132.5 million.
The retail and oil and gas industries are also under intense examination, with estimated tax underpayments of £5.5 billion and £3.9 billion, respectively. For retail companies, this translates to an average shortfall exceeding £50 million per establishment, whereas oil and gas companies may face an average underpayment of £64.9 million per firm.
The emphasis on banking stems from their intricate tax obligations, exacerbated by reliance on third-party providers in diverse jurisdictions. The tax liabilities for banks have surged from £6.1 billion in 2018/19 to £9.3 billion in 2023/24, indicating increased financial pressure on this sector.
Ray Grove, Head of Corporate Tax and Trade at Thomson Reuters, commented on HMRC’s approach: ‘The scale of HMRC investigations into large businesses shows the growing importance of tax compliance. Slow global growth means that many countries, including the UK, are looking towards tax investigations into large businesses to help close gaps in their finances. That means more intensive scrutiny by tax authorities and an expectation of more penalties.’
In response to these challenges, there are concerted efforts to enhance compliance measures within corporations. Tools such as Checkpoint Edge with CoCounsel, developed by Thomson Reuters, are enabling tax professionals to navigate complex tax queries more efficiently. This innovative solution uses advanced AI to streamline research, helping even less experienced professionals perform at a high level and reduce dependencies on senior knowledge.
HMRC’s intensive focus on tax compliance among UK corporations signifies an era where strategic planning and risk management in taxation are quintessential for large businesses.
