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£2 billion rise in HMRC corporation tax

HMRC was found to be overcharging businesses by £7 billion for corporation tax in 2012 which, in turn, potentially put firms at risk of having to close operations, say accountants. Any company employing the services of a specialist contractor accountant is much less likely to experience such issues.

Tax refunds value for the 2011/12 financial year increased by 40 per cent on numbers for the 12 months prior – a £2 billion increase.

Large firms pay corporation tax over four instalments spread through the year and based on estimated profit for the 12 month period. Refunds are due when the estimations are not as high as expected.

One accounting firm, however, has expressed concern for those businesses with difficulties in balancing their books, believing that the increase in overpaid tax may see some companies dealing with dire consequences.

A partner at the firm said that refunds can hold significant value to a company, so the funds that have gone missing could cause problems with cashflow. He said that although it is rare, sometimes business have gone bust when waiting for HMRC to pay back any refunds. The partner said:

“Businesses face a real lottery on Corporation Tax refunds. Quite often, HMRC can be quite slow in returning overpaid tax or tax relief to a business. Some businesses do receive a refund quickly, but others will have to wait months to receive a payment.”

The firm, based in the North West, has worked out that average payments from HMRC for approved claims stood at £20,231 in 2012.

Posted by Peter
May 8, 2013

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