oil and gas companies face a potential GBP1.8 billion tax liability from the UK tax authority

oil and gas companies face a potential GBP1.8 billion tax liability from the UK tax authority

Large oil and gas companies face a potential GBP1.8 billion tax liability from the UK tax authority according to new figures obtained by Freedom of Information request by DLA Piper, the global law firm. Large banks face a potential GBP2.2 billion tax liability from the UK tax authority according to new figures obtained by Freedom of Information (FOI) request by DLA Piper, the global law firm. The FOI to HM Revenue and Customs (HMRC) shows that as at 31 March 2021 additional tax liability under investigation has increased by 26% for large banks compared to the previous year, jumping from GBP6.2 billion to nearly GBP8.5 billion.


Tax under consideration is an estimate of the maximum potential additional tax liability in each case before HMRC has carried out a full investigation of the specific facts or analysis of relevant law. Tax under consideration covers all taxes, including Corporation Tax, VAT, PAYE and National Insurance contributions. The largest companies in the banking sector face the highest potential tax liabilities, with total tax under consideration nearly doubling in the last five years.


Other industries also face potential large tax liabilities. Large pharma and healthcare companies have seen total tax under consideration almost double in the last financial year as at 31 March 2021. Companies in the retail sector are under investigation for more than GBP3.5 billion as at 31 March 2021, however this figure has fallen by more than GBP2 billion in a year.

Total tax under consideration reached GBP35.8 billion as of 31 March 2021, 31% more than it was five years ago.

Jason Collins, Head of DLA Piper’s International Tax Disputes practice, said: “Tax under consideration for large companies has grown exponentially over the last five years as the UK authorities have tried to crackdown on “tax planning” or boundary pushing. HMRC are now challenging activities which even just five years ago were not considered to be aggressive. Large banks’ tax arrangements are being scrutinised by the authorities, with VAT recoveries facing particularly aggressive scrutiny. Across the board we have seen transfer pricing inquiries for multinational companies increase, as HMRC has tried to prevent large companies from allocating profits between different countries to minimise their tax liabilities – as well as intrusive challenges into the deductibility of interest on debt to reduce UK tax liabilities. No corporate is out of HMRC’s scope.”


20172018201920202021
Alcohol
£261,616,140£414,634,783£195,940,836£561,392,290£700,338,206
Automotive
£322,900,316£299,264,138£527,529,174£407,095,988£182,272,015
Banking
£4,708,961,618£6,073,439,109£5,219,981,293£6,234,490,097£8,470,508,673
Betting & Gambling
£77,288,100£89,967,819£273,419,450£661,028,931£586,327,680
Business Services
£1,148,740,288£970,969,829£1,763,010,617£2,022,119,829£1,607,568,570
Construction
£2,318,057,280£2,187,674,932£2,999,961,771£484,768,968£528,050,129
Insurance
£1,595,944,307£1,936,922,328£1,897,218,636£2,036,512,951£2,297,071,569
Media
£1,026,614,163£1,050,178,820£870,022,020£1,260,548,407£1,132,412,433
None
£2,619,907,586£3,605,481,248£3,214,312,303£4,197,326,624£4,122,429,106
Oil and Gas
£1,606,288,392£2,924,009,121£2,357,233,569£2,494,097,406£1,842,090,645
Pharma and Healthcare
£1,939,788,367£1,284,318,593£1,461,683,243£2,732,572,672£4,664,026,463
Real Estate
£442,177,430£540,888,483£639,046,894£461,484,623£471,420,620
Retail
£1,886,876,805£2,345,348,784£3,988,734,342£5,693,239,749£3,541,443,088
Telecommunications and Information Technology
£3,147,956,612£2,536,802,723£2,402,198,733£2,374,569,986£2,161,604,474
Transport
£618,864,803£378,087,336£773,483,861£804,175,297£511,702,762
Utilities
£1,099,815,923£1,138,272,100£1,286,336,641£1,633,156,541£1,794,310,857
Other
   £769,161,930£1,232,600,446
Totals
£24,821,798,130£27,776,260,146£29,870,113,383£34,827,742,289£35,846,177,736

*The information was collated from Freedom of Information requests submitted to HMRC


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Submitted By: Andrew McLagan

Senior Account Manager, Edelman Smithfield

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