Declining corporation tax receipts a cause for concern
28th September 2015 | News
Official figures from the Office for National Statistics (ONS) revealed £1.36bn was recouped in the form of corporation tax in August – a 14 per cent year decline on the same month last year.
Month-on-month comparisons indicate an even bleaker outlook with £6.9bn collected in July – an 80 per cent fall in receipts from July into August.
The figures show income tax figures remained largely unchanged year-on-year, with £11.89bn recouped in August 2015 compared with £11.9bn in August 2014.
David Brookes, tax partner, BDO, said: “Given that the Government is aiming for a budget surplus by 2019/20, the negligible increase in tax receipts compared to last year will come as some concern.
“In particular the sharp fall in corporation tax receipts will need to be addressed and we would strongly recommend the backing of mid-sized businesses, particularly in their aspirations to expand internationally, to accelerate these.
“The notable year-on-year fall in stamp taxes should be seen in the context of an exceptional month for house sales last month resulting from a release of pent-up demand and we would expect things to normalise in this area over the following weeks.”
In addition the ONS revealed that HM Revenue and Customs’ (HMRC) total tax receipts over the year to August only grew by 0.28 per cent; heaping pressure on Chancellor, George Osborne after it was also announced the Government borrowed £12.1bn in August 2015 - £1.4bn more than in August 2014 and much higher than the £9.2bn the markets anticipated.
Ross Campbell, director for public sector policy, Institute of Chartered Accounts for England and Wales (ICAEW), said: “Sorting out our public finances depends on robust tax receipts, so it is disappointing to see corporation and income tax revenues decrease.
“The weakening global economy could also have a significant impact on tax receipts in the coming months, which would only make the situation worse.
“The UK’s debt is nearly £70bn higher than this time last year, and if tax receipts don’t improve then we will not make a dent in the debt.”