A simpler business tax system would eliminate the loopholes that lead to tax avoidance schemes, the British Chambers of Commerce (BCC) said today.
The BCC's comments come as MPs on the Public Accounts Committee get ready to grill Google executives and HM Revenue & Customs (HMRC) bosses over the controversial "sweetheart" deal that saw Google hand over £130m to settle claims covering a 10-year period.
Google Europe, Middle East and Africa (EMEA) president Matt Brittin and vice president Tom Hutchinson will be quizzed in the House of Commons from 10AM. Outgoing HMRC chief executive Dame Lin Homer is also set to be questioned, alongside two other HMRC bosses.
The BCC said that by simplifying business taxes, concentrating HMRC enforcement activity on aggressive tax avoidance and pushing for faster international action to stop companies from shifting profits, the government can help crack down on unfair corporation tax activity.
"There is great anger amongst many companies on this issue," said BCC director general John Longworth. "Most businesses see large-scale tax avoidance by major corporates, and particularly large multinationals, as unfair competition that undermines the implicit contract between business and society.
"After all, corporations only prosper with the consent of the societies in which they operate. It is in the self-interest of corporates to remember this."
Longworth said the UK government has "made some strides" by signing up to the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) process – but added ministers needed to "embark on a wholesale simplification of business tax" in the UK to "eliminate the loopholes that give rise to tax avoidance schemes".
"Until these reforms are realised, all companies with substantial undertakings in the UK should demonstrate their clear commitment to paying the profit taxes due here," Longworth added.
"Other firms, and the general public, can see through the artifice of creative accounting – and their anger is growing."