HMRC collected some £70m in extra tax in the financial year to 31 March 2023 through voluntary disclosures by MNEs via its Profit Diversion Compliance Facility, reports Pinsent Masons. The facility allows businesses to voluntarily disclosure structures which would be caught by diverted profits tax, such as transactions which lack economic substance or arrangements which avoid creating a taxable presence in the UK.
Sam Wardleworth, senior associate at the firm said: ‘HMRC is now particularly vigilant to multinationals diverting profits abroad to reduce their UK tax bills. It is an area where HMRC is increasingly focusing its investigations.’
‘Businesses that wait for HMRC to investigate them are more likely to be hit with higher “geared penalties”. That can quickly become very expensive. Proactively engaging with HMRC to deal with the problem is likely to be a far better approach.'
‘The benefits of using the Profit Diversion Compliance Facility are clear: it generally takes less time and costs less than an investigation and often results in lower penalties.’
The firm also reports that HMRC opened 147 transfer pricing enquiries in the year to 31 March 2023, suggesting a continued focus on MNEs.
HMRC collected some £70m in extra tax in the financial year to 31 March 2023 through voluntary disclosures by MNEs via its Profit Diversion Compliance Facility, reports Pinsent Masons. The facility allows businesses to voluntarily disclosure structures which would be caught by diverted profits tax, such as transactions which lack economic substance or arrangements which avoid creating a taxable presence in the UK.
Sam Wardleworth, senior associate at the firm said: ‘HMRC is now particularly vigilant to multinationals diverting profits abroad to reduce their UK tax bills. It is an area where HMRC is increasingly focusing its investigations.’
‘Businesses that wait for HMRC to investigate them are more likely to be hit with higher “geared penalties”. That can quickly become very expensive. Proactively engaging with HMRC to deal with the problem is likely to be a far better approach.'
‘The benefits of using the Profit Diversion Compliance Facility are clear: it generally takes less time and costs less than an investigation and often results in lower penalties.’
The firm also reports that HMRC opened 147 transfer pricing enquiries in the year to 31 March 2023, suggesting a continued focus on MNEs.
