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The number of businesses fined by HMRC for deliberately obscuring corporation tax has increased to its highest level in four years, according to City A.M.
The outlet revealed HMRC penalised 62 firms last year for purposefully sending incorrect information to possibly decrease the amount of corporation tax they pay, up 35% from 46 in the previous year, according to a freedom of information request response from HMRC.
Despite the increase in fine volumes, HMRC is reducing the amount of money it asks businesses for obfuscating its tax affairs. The average corporation tax penalty issued fell 72% over the last year to £4,845, down from £17,454.
Total corporation tax fines hit 100 last year, up from 86. The total value of fines issued last year dropped to £485,000 from £1.5m.
HMRC sets the size of a corporation tax fine based on the severity of a firm’s mistakenly filed tax return. If a business deliberately sends incorrect information, HMRC can issue a fine of up to 70% of the tax owed.
Experts said a drop in profits caused by the pandemic-induced economic shock could have pushed down the value of fines levied by HMRC.
Accountancy Today has contacted HMRC for a comment.
