AccountingWeb article : Corporate Tax Avoidance.

I’ve just stumbled upon an insightful article on AccountingWeb, one of my favourite sites with regards to learning more about tax policy , accounting practice and HMRC.

This article is mostly factual and centres around HMRCs new policy of targeting SMEs in a government initiated “crackdown “ on tax avoidance. As someone who has been researching and writing about the sizeable damage done to the economy by large, transnational corporations, this confuses and surprises me.

Small and medium sized businesses are the lifeblood of the economy. Research has shown that they are amongst the main employers and drivers of growth within our economy, yet lending to small businesses has declined consistently over recent years , and more than ever, large businesses are exploiting tax loopholes and abuses such as transfer pricing , exacerbating the advantage they already have over small businesses by means of their economies of scale and ability to hire the most skilled and experienced accountants and financial services professionals.

As such, when we consider not only this, but HMRCs hugely inaccurate estimates on the scale of corporate tax avoidance (article forthcoming ) , one can only reasonably conclude that HMRC ultimately cannot tackle the problem of corporate tax avoidance by large corporations. Here is the pertinent extract from the article :

“HMRC’s tax receipts from investigations into small and medium-sized businesses have increased by 31% in the last year, according to figures obtained by accountancy firm UHY Hacker Young.

“Compliance” investigations into SMEs raised £565m for HMRC in 2012-13, up from £434m in 2011-12 (year ending March 31), Hacker Young said.

In the 2010 Spending Review, the Chancellor set a target to net an extra £7bn a year in additional tax revenues from compliance activity.

“Small businesses are bearing the brunt of HMRC’s tougher approach to tax investigations,” said Roy Maugham, Tax Partner at UHY Hacker Young.”