HMRC sitting on £11.9bn in overpaid corporation tax
Businesses overpaid £11.9bn in corporation tax in the last tax year, with HMRC unlikely to address overpayment unless the company realises the mistake.
Sara White, Editor, Accountancy Daily
UHY Hacker Young warned businesses that HMRC will not automatically refund them if they overpay corporation tax.
The latest figures for tax year 2022-23 show that £11.9bn has been overpaid by UK businesses.
They must reclaim any overpayment themselves and if they fail to realise they have overpaid, they will miss out on much needed cashflow.
Large businesses pay their corporation tax based on estimated profits for the upcoming year. An overpayment in corporation tax is a sign that companies’ accounts teams overestimated profits and therefore overestimated the amount of tax they would need to pay.
The problem can be particularly bad when the economy is weak, and a businesses’ profits have fallen from the previous year.
Nikhil Oza, corporate tax director at UHY Hacker Young said: ‘Overpayment of corporation tax is a multi billion pound problem.
‘Most large corporates spot overpayments, or at least have good tax advisors which do the checking for them, but small companies without dedicated tax advice can lose out on thousands in overpaid tax if they don’t look out for the problem.
‘HMRC won’t tell a business that it is overpaying corporation tax, they don’t see it as their job, and the money will simply sit in HMRC’s account, earning a very low rate of interest.
‘Businesses need to take the initiative and approach HMRC to get their money back so that they can put those funds to better use.
‘Many businesses are struggling due to rising costs and a slump in consumer spending, so they should pay special attention to ensure they aren’t making unnecessary overpayments.’