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OECD advises HMRC on anti-tax avoidance

HMRC’s campaign against multinational corporations engaged in tax avoidance schemes has received support from the Organisation for Economic Co-operation and Development (OECD), which has offered a number of recommendations.

Firms including Starbucks, Amazon, and Google have been targets due to offshore jurisdictions being employed in a bid to decrease tax liabilities in the UK.

The companies have been applying transfer pricing, with can mitigate their liabilities, some claim. Multinational corporations put a value on goods before purchasing them and relocating them from to one corporate entity to another, over international borders.

The recommendations from the OECD have been laid out by seven individual reports, including but not limited to the following areas: tax treaty abuse, hybrid mismatch arrangements, and the digital economy.

The advice is regarded as an important transition towards international collaboration in working against this kind of activity.

Tax partner for PwC, Richard Collier, said:

“The first part of the OECD’s ambitious package has been delivered on time and intact. The scale and scope of change surpasses what many people had anticipated at the outset.

“The impact on businesses will depend partly on how the rules are implemented by tax authorities across the world.”

SMEs in the UK would be mistaken if they think that HMRC’s focus on multinationals means they will not be subject to investigation. The tax body periodically focusses on various company sizes and sectors, and every UK firm is a potential subject of investigation. Business owners can avoid any red flags simply by ensuring they have an accountant in the Wirral, or elsewhere, helping them to keep their books as accurate as possible.

Posted by Louise
September 25, 2014

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