PAC set to call in IT companies for tax grilling

The Public Accounts Committee (PAC) is considering examining the financial affairs of IT companies who are regular suppliers to the public sector amid concerns about their tax arrangements.

A study by the Financial Times found that nine of the biggest IT suppliers made UK sales totally £62bn for the five years to 2011, but paid only £527m in corporation tax over the period.

The research found Microsoft and Dell were directing the majority of UK sales through Ireland to minimise their tax burden. Symantec, the IT security software company, 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.

The PAC did not respond to requests for confirmation of the date of the hearing.

Pat Sweet | Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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