UK businesses overpaid £11.9bn in corporation tax the past year says UHY Hacker Young, the national accountancy group.
UHY Hacker Young warns businesses that HMRC will not automatically refund them if they overpay corporation tax. 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 says: “Overpayment of corporation tax is a multi-billion-pound problem. Most large corporates spot overpayments, or at least have good tax advisors which do they 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.