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HMRC gives firms one more chance to voluntarily comply with tax rules

The UK tax authorities are cracking down on so-called “Google tax” avoiders, but are giving those affected the chance to comply.

HMRC data suggests that a significant number of multinationals are diverting some or all of their profits to overseas subsidiaries so that they can benefit from lower tax rates. Some are not paying any tax at all. This is the case despite the introduction of the diverted profits tax, which is best known as the ‘Google tax’.

To deal with this issue, HMRC will be sending letters to a number of large and mid-sized companies, asking them to come forward and use the new Profit Diversion Compliance Facility (PDCF) to regularise themselves. Provided they accept this invitation and comply, firms may avoid having to pay some penalties.

Any firm that does not respond positively and pay what they owe faces the prospect of a full-blown investigation. The fact that HMRC is currently recruiting more inspectors means that this is not an empty threat.

Naturally, accountants from Prenton to Birkenhead are watching this development with interest. Those with clients who move profits overseas are already preparing them for this change in approach.

They are pulling together the data needed to go through the PDCF process as well as helping their clients to understand if they are likely to owe any tax. Most are also providing their business owners with fresh profit and loss reports to enable them to identify whether the products and services they provide will still be profitable in the future.

Posted by Peter
January 22, 2019

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