FTSE 100 Group Tax Chair Warns on Big Company Compliance Burden

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By Ben Stupples

The U.K’s top businesses are facing an “increasing” burden to comply with local tax laws, the tax committee chair of the lobbying group for FTSE 100 companies warned.

If companies face more responsibility to collect tax and oversee compliance on the government’s behalf, “we must ensure that there’s a commensurate reductions in costs—and we’ve made that point to the government,” Chris O’Shea, chairman of The 100 Group’s tax committee, told Bloomberg Tax in a Dec. 4 telephone interview in advance of the report’s release.

The comments come alongside accounting firm PwC’s Dec. 5 report on The 100 Group’s total tax contribution for the financial year that ended March 2017. In that period, the U.K.’s largest businesses collected 57.6 billion pounds ($77.6 billion) in tax for the government, the report said.

O’Shea’s warning also follows the introduction of U.K. laws to target any corporation that fails to prevent the facilitation of tax evasion. Large businesses will have to assess risk across their whole business, including with suppliers and customers, to comply with the legislation.

‘Hugely Important’

At its Sept. 12 annual stakeholder conference, the U.K. tax authority’s large business director Jo Wakeman highlighted how large businesses are central to improving tax compliance.

Large businesses are often “at the head of extensive supply chains, and that means their position is hugely important for tax compliance,” she said. They “can put pressure to comply on anyone looking to join their supply chain, requiring compliance up front before they can enter.”

On top of the anti-evasion laws, large businesses in the U.K. must publish a local tax strategy this year. Jim Harra, the U.K. tax authority’s customer strategy chief, told lawmakers last month that a key aim of the legislation is making large business’ leaders think seriously about tax.

“The key purpose of this was that by getting better public transparency of their tax strategy, you are more likely to get them to focus at board level on what that is saying,” he said Nov. 6.

82.9 Billion Pounds

In its report, PwC said The 100 Group’s members directly paid 25.3 billion pounds in tax during 2017, making a total contribution to 82.9 billion pounds. That figure represents 14.5 percent of the U.K.’s overall tax receipts in the last financial year, according to data compiled by Bloomberg Tax.

Known as National Insurance Contributions, employment taxes made up 30.6 percent of The 100 Group’s total contribution. In total, these companies have a workforce of 2.1 million people and pay staff around 6,000 pounds higher than the U.K.’s average of 28,600 pounds, the report said.

“We hope that enriching the public narrative with robust data can help to build trust, inform constructive debate and contribute to sound policymaking,” O’Shea and Andrew Packman, PwC’s total tax contribution and transparency leader, said in the report’s foreword.

To contact the reporter on this story: Ben Stupples in London at bstupples@bloombergtax.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bloombergtax.com

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