Irish firms targeted

Irish firms targeted by HMRC for UK-based revenues

New figures suggest that HM Revenue and Customs (HMRC), the authority responsible for tax collection in the UK, is aiming to recoup €838m from Irish firms in potential unpaid taxes from UK-based revenue earned in 2018.

The data, obtained by British law firm, Pinsent Masons, as part of a freedom of information request, displayed the total tax under consideration from businesses segmented by country.

The figures are an early estimate from HMRC of the maximum potential tax liability prior to any full and proper tax investigations into limited companies and even fast-growing start-ups taking place.

According to the data, Ireland has the third-highest potential tax liability out of all the overseas nations examined by HMRC.

HMRC insists that these initial figures are primarily a “tool to guide their inquiries”, helping the tax department to pinpoint where the biggest risks lie in readiness for tax investigations, carried out in the same manner as a Revenue audit.

Jason Collins, partner, Pinsent Masons, believes HMRC is under pressure to put tax revenues from neighbouring countries such as Ireland firmly on its agenda.

“Often the large amount HMRC initially believes has been underpaid boils down to basic misunderstandings with businesses,” said Collins.

“It is not just multinational businesses on HMRC’s radar. The affairs of all large businesses are under growing scrutiny.”

An HMRC spokesperson responded to the findings, saying: “We enforce the UK’s tax rules impartially, irrespective of the size or structure of the business.”

The news from across the Irish Sea was revealed at the same time as Ireland’s Central Bank confirmed that government finances have been boosted by as much as €7 billion in the last four years amid rising tax receipts and reduced interest rates on national debt repayments.

This equates to a €1.7 billion annual boost to government spending, which it believes could improve economic output domestically by as much as 2.5% above the baseline.

Last updated: 3rd May 2019