Profits up, but Britain gets less tax from big firms
LONDON, (REUTERS) - Big companies in Britain now pay less tax than they did 12 years ago despite a big jump in profitability, a Reuters analysis of official data shows.
Tax campaigners say the trend is the clearest signal yet that tax avoidance has blossomed under a more business-friendly strategy at the UK tax authority Her Majesty's Revenue and Customs (HMRC).
Large companies' payments of corporation tax - the UK equivalent of corporate income tax - totalled 21 billion pounds (S$42 billion) in 2011/12, HMRC data shows. That was down five billion pounds or 21 per cent since 2000/01 when the government, then controlled by the Labour Party, took the first steps towards a more collaborative approach to big business.
At the same time, the gross operating surplus for all companies in the UK - a widely watched measure of companies' profitability compiled by the Office of National Statistics - has risen 65 per cent, to 329 billion pounds. The economy has grown by 55 per cent over the same period, and receipts of both personal income tax and small companies' income tax are higher.