A staggering £2.7 billion is missing from the Government’s coffers after it was revealed that more than 200 of the UK’s top firms may have underpaid VAT.
According to research by Thomson Reuters, HM Revenue & Customs (HMRC) suspects that 208 of the UK’s 2,000 largest businesses have underpaid the tax by an average of £13.4 million each. They have been warned they are likely to be high on any list for investigation.
Investigations to be stepped up
That average figure relates to what the authority calls “tax under consideration,” which is an estimate of the amount of VAT believed to have gone unpaid, prior to full tax investigations being completed.
The taxman is set to step up investigations after an extra £292 million was allocated to strengthen its investigation capabilities.
Jas Sandhu Dade, head of corporates Europe at Thomson Reuters, said: “The Government has beefed up HMRC’s tax compliance capabilities and will be expecting results. Large corporates, which HMRC views as underpaying VAT, are likely to be a high priority target for investigation.”
More people paying tax after pandemic
The move comes after it was revealed that UK taxpayers paid more in taxes in 2021-2022, taking HMRC collections to £718.2 billion, a near 23 per cent rise from the year before when we were still in the grip of the COVID-19 pandemic.
According to HMRC data, tax receipts for April 2022-May 2022 were £121.9 billion. These were £14.8 billion higher compared to the same period last year even as the country grappled with a cost-of-living crisis.
Tax collection fell to £584.5 billion in 2020-2021 as COVID-19 hit the economy and the Government rolled out policies to support businesses and people affected by the pandemic.
Big rise in VAT collection
Receipts for Value Added Tax (VAT) rose to £157.3 billion over the past year from £101.6 billion in 2020-2021.
More than half of the receipts (56 per cent) came from Income Tax, Capital Gains Tax, and National Insurance Contributions. Receipts for these in the tax year 2021-2022 increased to £395.8 billion from £348.3 billion the year before.
Business taxes, which included Corporation Tax, fuel duty, and Digital Services Tax, were at £68.6 billion in 2021-2022, 2.9 per cent as a proportion of GDP.
For help and advice on tax payments and any related matters, please contact our team today.