More than £5bn in extra tax secured from multinationals
More than £5 billion in extra tax has been secured from multinationals on the back of reforms introduced in 2015 to tackle profit diversion, the HMRC revealed.
According to figures released on Monday, since diverted profits tax (DPT) was introduced in 2015, the HMRC has secured a total of £5 billion by settling over 60 investigations for additional corporation tax of over £2.2 billion; securing almost £2 billion VAT from businesses restructuring their operations as a result of DPT investigations; and collecting £369 million from DPT charging notices.
So far in 2019 to 2020, the HMRC has secured another £480 million through DPT investigations, bringing the grand total to £5 billion, it said.
The tax authority also announced it is currently carrying out around 100 investigations into diverted profits arrangements by multinationals.
“I’m pleased to say we’re making progress in tackling those who think it’s OK to shift their profits offshore and avoid paying tax in the UK on their economic activities here,” HMRC’s director of large business, Jo Wakeman, said.
“The £5 billion secured so far since the diverted profits tax was introduced shows that it’s helping to bring in additional money for the UK’s vital public services.”
According to the HMRC, DPT has revolutionised the government’s approach to countering arrangements intentionally used by some multinational corporations to shift their profits abroad and avoid paying tax they rightly owe in the UK.
DPT was introduced specifically to change behaviour – only being charged where businesses aren’t paying the right tax in other areas, principally corporation tax. Companies risk being charged a higher rate of tax (25 per cent) upfront if the HMRC believes the tax applies.
The tax authority noted that it has seen an increasing number of businesses changing their behaviour, structures and policies. These changes include increases in both corporation tax and VAT as the amount of DPT receipts begin to fall away.
2018 to 2019 saw business restructurings that will increase VAT billed through UK companies by around £1.8 billion. Also in 2018 to 2019, more than half a billion pounds was secured in additional corporation tax from diverted profits investigations.