It has been revealed after an investigation by Companies House that over 100 firms on the FTSE 350; almost half of Britain’s leading companies, have failed to comply with the most basic requirements of the law and to disclose subsidiaries which can be used to avoid paying UK tax. Companies House started the investigation after claims of that leading UK firms were avoiding the payment of UK tax by hiding profits offshore.
This investigation has caused 290 of the FTSE 350 to release details of their subsidiaries. Shockingly the results showed that although they have since provided the information, 124 companies had seemed to have not disclosed a full list of subsidiaries with 5 companies still to disclose their subsidiaries. The details of these companies will not be named due to “commercial sensitivity” but Companies House has released that these 5 companies are “committed” to providing the required information.
Previously UK companies, unlike their multinational counter parts had escaped the attack by the Commons’ Public Accounts Committee about their UK tax avoidance. Under the Companies Act 2006, all firms must disclose details of the location of all subsidiaries to Companies House or risk a fine for non-compliance.
The inability of the FTSE350 to comply with the most basic requirements of tax law has shocked some including Chris Jordan, the tax campaigns manager of Action Aid, the charity that campaigned for the release of these figures. The figures revealed that nearly half of the companies only disclosed their subsidiaries after being investigated by the Government.
The issues with tax avoidance have consequences for those further afield than just the UK with large companies using tax havens as a way to deprive developing countries of much needed tax revenue which could be used to improve and build schools and hospitals. David Cameron has previously called for there to be a new global system in place to tackle the abuse of tax systems.