In total, the so-called Hundred Group of businesses paid an eye-watering £67.7bn in tax in the year to March 2011, according to data released by PwC this morning.
Their contribution made up 13 per cent of all receipts to the public purse, prompting the Treasury to hit back at recent claims that the government has been toadying up to big business.
Public debate over tax paid by large firms has become “distorted and detached from reality”, Treasury minister David Gauke MP will argue today. “I’ve seen external estimates that the UK tax gap is as much as £120bn – more than three times HMRC’s own figure – based on far-fetched assumptions,” Gauke will say.
Once legal tax relief is taken into account, investigations often find “there is no tax liability at all,” he will claim today.
Business must engage with the debate and “demonstrate just how critical [their] success is to the prosperity of individuals and families across the economy,” Gauke will add.
But the news that large companies pay more tax than ever was marred by the revelation that HMRC has cracked down on Barclays, shutting a loophole worth £500m to the bank. HMRC did not name the company involved yesterday, but said it was closing a scheme that saw banks buy back their debt at a lower price than they sold it, before avoiding corporation tax on the profits.
Over 2m people in the UK are employed by Hundred Group firms (mainly FTSE 100 groups and several large private companies).
PwC estimates that these firms employ seven per cent of the workforce, paying around £20,000 per annum above the national average. And from their average wage of £46,000 per annum, £20,000 is paid to the state via employment tax, the research shows.
Employment taxes were one of the drivers of higher tax take from large firms, along with corporation tax – revenues from which leapt by 60 per cent – and irrecoverable VAT.
And a falling corporation tax rates could actually boost revenues if they “encourage more businesses to invest in Britain”, said Andrew Packman, a partner at PwC.
Separately, HMRC is set to appoint a new tax “assurance commissioner” in a bid to overhaul the way it brokers tax settlements, following criticisms of its previous agreements with the likes of Vodafone and Goldman Sachs.