IT suppliers scrutinised
Posted on 26 Oct 2020
A committee of MPs is considering examining the financial affairs of IT companies who are regular suppliers to the public sector amid concerns about how much tax some are paying, reports accountancy services Harris & Co.
A study by the Financial Times (FT) found that nine of the biggest IT suppliers made UK sales totalling £62bn for the five years to 2011, but paid only £527m in corporation tax over the period.
The FT research found Microsoft and Dell were directing hundreds of millions of pounds worth of UK sales through Ireland to minimise their tax burden. Symantec was able to count online sales as outside the UK, since its website is based in Ireland. Symantec’s UK arm paid no net corporation tax over the past four years, according to accounts filed at Companies House.
PAC’s scrutiny of IT suppliers is part of a wider government move to examine its procurement processes, which could see firms who bid for contracts asked to provide details of their tax compliance history and use of any avoidance mechanisms.
The IT companies cited in the report all emphasise that the accounting methods they use are in accordance with UK tax laws. However, routing sales via lower level tax regimes is currently a politically sensitive issue.
