According to Roy Maugham from UHY Hacker Young accountancy, a large number of UK businesses will relocate overseas in countries that include Switzerland, Ireland and Malta. In addition to the high taxes charged in the UK, businesses also have to face an increasingly aggressive approach to tax compliance.
In recent years, the amount of tax collected through increased compliance work and investigation has risen steadily, with this year seeing the highest tax yield. Using the extra government funding, HM Revenue & Customs has collected £16.5 billion in the last year, through concentrated investigation of tax evasion and avoidance. The previous year resulted in £12 billion being collected, which shows that HMRC is using a “more aggressive approach” to compliance.
According to Maugham, businesses have been affected most with Corporation Tax investigations contributing 24 percent of the total collected. VAT compliance has been the most effective campaign for HMRC, with the tax yield increasing from £3.2 billion to £6.2 billion during the last year. Maugham said:
“The reality is that much of the money that HMRC collects from compliance work is from businesses that feel intimidated into settling with HMRC, or it is from litigation where HMRC is able to outspend a less well-resourced small or medium sized company.”
Maugham warned that as the UK became a much less attractive home for businesses, they would relocate and that would result in far greater losses to the Treasury than the short term gains from increased compliance.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.