UK firms ‘whittle down tax bills’

ALMOST a quarter of British firms are paying far lower taxes than the rates demanded by the countries in which they operate, an international study has suggested.

Analysis of more than 1,000 listed companies by MSCI found a tax gap of £56bn from firms using tax havens and loopholes to whittle down their bills.

By comparing the overall tax payments of the companies against the corporation tax rates levied in the countries where they did business, the investment research group was able to determine how many companies were scrimping on payments.

In the UK, 16 of the 71 included businesses had a tax gap of more than 10pc, it said.

MSCI director Linda-Eling Lee said these firms faced the prospect of falling profits if the tax loopholes were closed, as well as reputational risk if they are exposed for minimising tax.

The findings will inflame the debate around the issue of legal but dubious avoidance of tax.

The Government has sought to lead an international crackdown on what it sees as ‘immoral’ tax dodging by multinational firms.

At the same time, companies such as Google, Amazon and Starbucks are being investigated by EU authorities over tax deals with European governments.

For the study, MSCI took the 1,500 firms in its World Index – which includes some of the world’s largest companies including Apple and ExxonMobil – and excluded those that made losses as well as property companies and miners.