Stricter tax rules could hit big business, experts say as chancellors could seek to recoup £ 6.2bn lost annually due to a loophole
- Rishi Sunak urges HMRC to launch consultation on uncertain tax planning
- This practice causes the Treasury to lose £ 6.2 billion every year
- This equates to 18% of total uncollected taxes
Sunak urged Revenue to launch consultation on “uncertain tax planning”
Plans to close a £ 6.2 billion a year tax loophole could hit businesses struggling to survive the coronavirus crisis, experts have warned.
Chancellor Rishi Sunak plans to make it mandatory for large companies to alert the tax authorities when they have used their own interpretations of the rules to pay less corporate tax, VAT, excise duties or other taxes.
This type of action is known as “uncertain tax planning” and businesses that fail to alert tax and customs services could face criminal penalties in the future.
Sunak has asked the IRS to launch a consultation on the practice after learning he loses £ 6.2bn to the Treasury every year, or 18% of total taxes not collected.
The measures would affect companies with annual turnover exceeding 200 million pounds or more than 2 billion pounds on the balance sheet.
Chris Sanger, Head of Tax Policy at the EY Accounting Group, said: “Taxpayers will need to understand the thinking of the tax inspector and read the thoughts a bit. It is a new burden.
Mike Warburton, former tax director for the Grant Thornton accounting group, said: “If the law is uncertain, they should change it to make it clear. It is a basic human right for people and businesses to know how they will be treated by government and its agencies.
Le Revenu said some companies have already approached it “for approval and approval,” but said the process currently “is voluntary.”
He said: “It should be noted that this measure is not intended to promote an assumption that the interpretation of income is always correct. “