Despite the recent cut in corporation tax, in real terms, companies in the UK have faced tax rises of 19 per cent in recent years, as various other taxes on business, including VAT and property rates, have risen by 58 per cent since 2005.
In a survey of finance directors of both UK-based private firms and multinationals, the consensus was that businesses are being hit by other levies, even though the Government appears to want to make the UK an attractive place to be based. In fact, corporation tax is now only one of 24 business taxes levied by the UK.
In addition, the finance directors polled showed an “overwhelming consensus on the need for simplicity and certainty in the UK tax system.” They accepted that efforts had been made to benefit business and improve the UK’s competitiveness, including the reduction of corporation tax from 28 percent in 2010 to 21 percent in 2014, but called for a moratorium on further changes to the tax system now that the Government’s corporate tax reform programme has been delivered.
However, according to a Reuters’ analysis of official data published late last year, large companies in the UK now pay less tax than they did twelve years ago and have been a lot more profitable.
This indicates to tax campaigners that tax avoidance has increased under a more business-friendly strategy at HM Revenue & Customs (HMRC), which the department refutes.
Instead, HMRC cites recent economic weakness and the lower corporation tax rate for the reduction. A spokesperson for the department also said that the downward trend may also have been emphasised by a shift in the way taxes were paid from 1999 which led to “elements of double counting” in 2000/01 and 2001/02.