Look at Corporation Tax returns to decide which businesses to help

There has been a lot of discussion in the press about which businesses should be supported through the pandemic and complaints about Premier League Football Clubs & Victoria Beckham asking for Government help. An easier way of assessing the contribution a business makes to the Government coffers is to look at annual Corporation Tax returns. Those Companies who have contributed most over the years should be the ones benefitting from grants or discounts now.

Why the contribution is important

Lots of businesses reduce their Corporation Tax liability by artificially lowering their end of year profits to make it appear that they aren't making as much money as they are and subsequently they reduce the amount of Corporation Tax that they pay(money is often diverted to pension funds for example). It would also prevent those large Multi-National Companies who pay small amounts of Corporation Tax in the UK(such as Apple who say that their "sales" don't take place here)from claiming money from the UK Government when they've been disguising their real level of profits in the past.

by DanGlen on May 08, 2020 at 10:43AM

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Comments

  • Posted by Pensionaccess May 08, 2020 at 11:04

    This is an overly simplistic suggestion.
    1. The situation is way to urgent to afford the time to scrutinise CT returns
    2. You surely mean who’s paid the biggest proportion of “profit” rather than the biggest amount
    3. Pension contributions are perfectly legal, and encouraged. Most auto enrolled employees benefit from employer contributions

    If you want to have a sensible conversation about pensions then ask why has the government not given those not being subsidised access to their pensions for essential funds. Unlike all other schemes it would cost the state absolutely nothing as it’s just making peoples savings available to them at this time of crisis

  • Posted by JimSlater May 08, 2020 at 11:35

    Two companies (A and B) make £1m profit. A is a service company employing 10 people with no capital equipment. It's corporation tax bill is £200k. B is a manufacturer employing 100 people and it invests £500k in capital equipment. It's corporation tax bill is therefore £100k. Which company is more worthy of support?

    This idea is overly simplistic.

  • Posted by DanGlen May 11, 2020 at 12:18

    Thanks for your replies. The pension option is interesting and could work for those Companies who aren't able to access support in other ways. I'm not suggesting that putting money into a pension scheme isn't legal, just that it reduces the overall profit of the business and therefore the Corporation Tax liability.

    Jim - regards your comment. Nothing is going to be a perfect solution. In your example, the Company that invests will do so with the aim of making more profit in the future. It doesn't mean they're not worthy of support, just that the amount they contributed via Corporation Tax will be less due to an investment that will/should benefit their business.
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