British companies paid £11.9bn in corporate tax last year, says UHY Hacker Young, the national accounting group.
UHY Hacker Young warns companies that HMRC will not automatically reinstate them if they pay too much corporate taxes. They must recover any overpayments themselves – and if they fail to realize that they have paid too much, they will lose out on much-needed cash flow.
Large corporations pay their corporate tax based on estimated earnings for the next year. Overpayments in corporate tax are a sign that the corporate accounting teams have overestimated profits and thus overestimated the amount of tax they have to pay.
The problem can be particularly bad when the economy is weak, and corporate profits are down from the previous year.
“Corporate tax overpayments are a multi-billion pound problem,” says Nikhil Oza, Director of Corporate Tax at UHY Hacker Young. “Most large companies catch overpayments, or at least have good tax advisors who check them out, but small businesses that don’t have dedicated tax advice You could lose thousands in excess taxes if they don’t look for the problem.
HMRC will not tell a company that it is paying too much corporate tax, they don’t see it as their job, and the money will simply stay in the HMRC account, earning a very low interest rate. Companies need to take the initiative and reach out to HMRC to get their money back so they can put that money to better use.”
“Many companies are struggling because of rising costs and declining consumer spending, so they need to pay special attention to making sure they don’t overpay unnecessarily.
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