HMRC challenging tech sector for underpaid tax

Complex arrangements used by international tech companies to reduce their UK tax liability by moving profits to different jurisdictions have attracted HMRC’s attention.

Moore Stephens says the department is under political and media pressure to increase the tax collected from these companies. The UK has the largest tech sector in Europe and is one of the fastest growing parts of the economy. Therefore it is important that attempts to raise more tax are balanced against discouraging investment into the UK.

The diverted profit tax introduced in April 2015 already prevents businesses moving profits out of the UK to avoid paying corporation tax. Further HMRC’s rigorous approach to transfer pricing has had some success. Since 2012-13 it has raised £6.5bn of additional tax through challenging transfer pricing structures including from tech businesses.

Ken Almand partner at Moore Stephens said: ‘It seems that HMRC...