HMRC is intensifying scrutiny of large UK companies for suspected tax underpayments amounting to billions, particularly targeting the banking sector.
- 791 of the UK’s top firms are under investigation by HMRC across sectors like banking, telecoms, and retail, due to significant tax compliance concerns.
- The banking sector faces heightened examination, with 70 banks potentially underpaying £9.3 billion, translating to an average of £132.5 million per bank.
- Retail and oil and gas industries are also under review, with potential tax underpayments estimated at £5.5 billion and £3.9 billion, respectively.
- HMRC’s focus on these sectors highlights the urgent need for robust tax compliance strategies within major corporations.
HMRC has initiated a comprehensive investigation into the tax practices of 791 large UK companies, reflecting a significant push towards ensuring tax compliance across crucial industries such as banking, telecommunications, and pharmaceuticals. This move underscores the agency’s commitment to closing financial gaps through meticulous tax scrutiny.
The banking industry, in particular, is under intense examination. As of March 31, 2024, approximately 70 banks are suspected of collectively underpaying up to £9.3 billion in taxes. This staggering figure suggests that each bank may have underpaid an average of £132.5 million. Such scrutiny comes as the sector’s tax liabilities have increased substantially, driven by complex challenges posed by offshore back-office operations and reliance on third-party IT providers, which are often situated in diverse tax jurisdictions.
Similarly, the retail and oil & gas sectors are being closely monitored. HMRC estimates that retail businesses may have underpaid taxes amounting to £5.5 billion, equating to over £50 million per company. The oil and gas industry is not far behind, with allegations of underpayments reaching £3.9 billion, averaging £64.9 million per entity.
Ray Grove, Head of Corporate Tax and Trade at Thomson Reuters, emphasizes the escalating importance of tax compliance in the current economic landscape, highlighting how slow global growth pushes countries like the UK to enhance tax investigations into large enterprises as a financial strategy. As a result, tax departments are under increased pressure to meet demanding reporting and compliance standards, requiring investments in skilled talent and advanced technology solutions.
In response to these challenges, Thomson Reuters has introduced innovative tools such as Checkpoint Edge with CoCounsel, a generative AI assistant that facilitates efficient tax research. This technology empowers tax professionals, including junior members, to conduct high-quality research swiftly and effectively. With these tools, companies can maintain a competitive edge in compliance, even amid growing regulatory scrutiny.
HMRC’s rigorous investigations serve as a crucial reminder that tax compliance is fundamental to strategic corporate governance and risk management.
