For all the talk of the ‘business-friendly government’, FDs have still got plenty to grumble about after the last eight years, it would seem. New research from PricewaterhouseCoopers has found that although corporation tax bills have dropped by 17% since 2005, VAT, employer’s national insurance and business rates have collectively risen by 58% in the same time. You don’t have to be a chartered accountant to realise that this means companies are paying more than their critics might think.
The chairman of the tax committee of the ‘Hundred Group’ of firms which PwC surveyed for the report, Andrew Bonfield, said: ‘Successive government policies have driven a shift of the burden of companies tax away from corporation tax, which is dependent on profits, to more indirect but reliable taxes on things like property and employees.’ The Hundred Group is an assortment of finance directors mainly from FTSE100 companies, some privately owned UK firms and also some transnational corporations.
The study is timely considering the recent furore about the tax arrangements of US corporations such as Starbucks, Google, Facebook and Amazon. Even yesterday, the Parliamentary Accounts Committee said that it plans to have hearings with the UK’s four biggest accountancy firms (Deloitte, Ernst & Young, KPMG and PwC) to discuss the ways in which they help large firms reduce their tax burden.
But the Hundred Group said that in total, it contributed more than £77bn in UK tax last year (that’s around 14% of the total tax take for the whole country), and about the same the year before. Bonfield said that there is a ‘perception that companies don’t pay their fair share of tax’, adding that the survey was proof that most of them do.
He is obviously concerned that the UK-based companies paying their fair share are not only being tarred with the same brush as tax-avoiding US firms, but they are actually paying even more than a lot of the public would know…