A committee of UK lawmakers has called on government to crack down on multinational companies that make substantial sales in Britain but pay little tax here, echoing demands from leaders across Europe for measures to tackle corporate tax avoidance.
The Public Accounts Committee (PAC) said on Monday the government should set down rules limiting inter-company transactions that reduce companies' tax bills, push for more transparency in company reporting on tax and work with other countries to limit profit-shifting across borders. "Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here. This is outrageous and an insult to British businesses and individuals who pay their fair share," said Margaret Hodge, who chairs the PAC.
The committee, which is charged with monitoring government financial affairs, also criticised the UK taxman, Her Majesty's Revenue & Customs' (HMRC), for being "too passive" with big companies. "Lenient treatment is given to big corporations, of which almost half have a head office overseas," the PAC said in its report on HMRC's annual accounts.
Last month the PAC grilled executives from Starbucks , Google and Amazon over why they paid little tax in the UK while taking in billions of pounds in revenues. The committee said it found the evidence it received was "unconvincing, and in some cases evasive".
Starbucks said it had always complied with UK tax law but revealed on Sunday that, in response to the public outcry around its tax arrangements, it was looking at changing these. Amazon said it complied with the tax rules, but declined to comment on the committee's findings. Google declined to comment. The recent UK focus on tax avoidance follows a Reuters investigation into Starbucks that showed it paid no UK corporation tax in the past three years and had told investors it was profitable while reporting big losses to the UK taxman.