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The number of businesses that have been punished for intentionally providing misleading information about their corporation tax has reached a four-year high.
The number of companies that have been issued fines by the HMRC for intentionally trying to conceal their corporation tax issues has reached its highest point in the last four years. According to a response to a freedom of information request made to HMRC, in the past year, the tax man penalised 62 businesses for purposefully sending incorrect information in an effort to possibly reduce the amount of corporation tax they pay. This number represents a 35% increase from the 46 businesses that were penalised in the prior year.
HMRC is reducing the amount of money it requires firms to give up for concealing their tax problems, despite the fact that the number of fines it has issued has increased. The average corporation tax penalty levied by the taxman has decreased by 72 per cent over the last year, falling from £17,454 to £4,845. This is a decrease of £4,845.
The total amount of corporation tax fines reached 100 in 2017, up from 86 the previous year. The entire amount of fines handed out fell to £485,000 from the previous year’s figure of £1.5 million.
The severity of a company’s incorrectly filed tax return will determine the level of the corporation tax fine that will be levied by HMRC. If HMRC determines that a company has intentionally sent inaccurate information, they have the authority to issue a fine equal to up to 70 per cent of the amount of tax that is owing.
According to the opinions of several experts, the value of the fines imposed by HMRC may have been reduced as a result of a decline in earnings brought on by the economic shock brought on by the epidemic.
The earnings of enterprises are subject to a tax known as the corporation tax. Rishi Sunak, a former chancellor who was a candidate for the leadership of the Conservative Party, indicated in the March 2021 budget that the rate will be raised from its present level of 19% to 25% in the following year. Liz Truss, his competitor in the contest for the number 10 spot, has vowed to roll back the six percentage point increase. Her campaign did not want to comment, so they refused. The campaign for Sunak did not provide a timely response to a request for a remark.
If HMRC finds out about the error in the tax return on its own, the penalty that is issued might be more severe. Firms that discover the inaccuracy on their own and report it to HMRC are subject to a fine that is far less severe.