25 August 2010
- 64% of businesses say tax red tape burden has increased
- Survey suggests that a softer stance on tax disputes is “not before time”
Research undertaken for HMRC shows that nearly one in five (18%)* large businesses have considered relocating part or all of their business abroad for tax reasons says Roy Maugham, tax partner in our London office.
The research for HMRC also revealed the businesses overwhelmingly felt that the tax related red tape burden was on the rise and that HMRC was becoming less transparent in its decision making.
Comments Roy: “If only a small fraction of those companies that have considered relocating did relocate abroad it would decimate the UK’s tax revenues.”
“Whilst the Treasury might feel that deficit reduction means it cannot cut business taxes too quickly there is also a risk to the UK’s finances from having a tax system that is uncompetitive compared to places like Ireland.”
“UK companies feel that they are the goose that has been well and truly plucked by HMRC and the Treasury.”
Of the large businesses polled for HMRC 64% * felt that over the past 12 months the administrative burden of tax compliance has increased. Only 2% felt it had fallen.
Adds Roy: “This is a poor result as you would expect that HMRC would want to provide large companies with a blue riband treatment. However, these results show businesses are increasingly dissatisfied with the way the tax system and HMRC is working.”
HMRC have hinted that they may now take a more conciliatory approach to tax disputes with companies. Roy says that the survey results suggests that such a u-turn is not before time.
Other results from the research paid for by HMRC:
30% of large businesses said that the way HMRC administers the tax system has a negative impact on the UK’s competitiveness.
Only 36% of large businesses rated the HMRC’s service as very good in 2009, down from 43% in 2008
11% said their experience of dealing with HMRC was worse than a year ago versus 9% in the previous year.
Only 4% agreed strongly with the statement that “HMRC resolves disagreements within an appropriate time period” versus 8% last year
It is not all unrelenting bad news for HMRC – for example, none of the large businesses surveyed suggested that HMRC’s English language abilities need urgent improvement.
However, Roy says that the results indicate HMRC might have other problems in communicating with businesses:
- Only 14% of businesses agreed strongly with the statement that “HMRC makes it clear to you what their areas of concern are” versus 23% last year
- Only 17% agreed strongly with the statement that HMRC “make it clear what you need to do to be compliant” versus 20% last year
- Only 10% agreed strongly with the statement that “HMRC makes it clear what you need to do to address any concerns” versus 15% last year
Full Report: http://www.hmrc.gov.uk/research/lbcs-full-report.pdf
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