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Brits Say Big Firms Not Paying Fair Tax Bill

Two thirds of Britons believe big companies are not paying their fair share of corporation tax based on the level of sales they generate in the UK.

Research from YouGov (LSE: YOU.L - news) , commissioned jointly by energy firm SSE (LSE: SSE.L - news) and the Institute of Chartered Accountants in Scotland, (ICAS) showed most consumers (80%) felt small businesses paid appropriate corporation tax but their larger counterparts did not.

Of those surveyed, only 6% said they would trust a company to provide accurate information on whether they are paying the right amount of tax.

And only 10% thought it was acceptable for companies to move their base of operations abroad to avoid paying corporation tax in the UK.

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The survey also showed that most UK adults (69%) thought the government should consider facts such as a company’s ethics and how it pays its taxes, in addition to value for money and quality of service, when awarding contracts.

Under current tax rules, companies are legally entitled to use various schemes to shift profits across borders to take advantage of tax rates that are lower than in the country where they make the majority of their profits.

Companies including Amazon and Starbucks (Swiss: SBUX.SW - news) and Google (Xetra: A0B7FY - news) have all been criticised in the past for only paying minimal tax in countries where they register high levels of sales.

According to the Organisation for Economic Co-operation and Development (OECD), some multinationals end up paying as little as 5% in corporate taxes, while many smaller businesses are paying up to 30%.

Giant companies are able to exploit the fact that tax systems are still essentially nation-based and were designed at a time when companies' operations were less global, and before the huge changes brought about by the world wide web.

SSE chief executive, Alistair Phillips-Davies, said of the survey: “These findings from YouGov offer an alarming insight into the relationship between company behaviour on tax and consumer trust.

"Big business has a major job on its hands to convince the public that it is paying taxes fairly. The consequences of not doing so go to the heart of our legitimacy within the societies we serve.

"Tax is not a penalty for profit; it is the proper way to contribute to the society that enables your business to be successful."

Jim Pettigrew, president of ICAS, said: "The survey demonstrates that big business has got a long way to go to convince the public that companies have earned their trust on taxation.

“Ensuring companies behave in the right way and improve transparency and communication is key to changing this perception. There is a difficult mountain to climb for business and the profession to explain the tax landscape to the public.

"There is also a pressing need for better tax legislation to be enacted which minimises complexity and reduces the grey areas where so much of the ambiguity lies."