HMRC have published statistics showing a 23% increase in tax and National Insurance receipts for the period to 31 March 2022 compared to the period to 31 March 2021.
Of the additional £134bn collected, the statistics show that over 40% of the increase is due to the payment of deferred VAT, under COVID-19 measures introduced in 2020.
These measures allowed businesses to defer payments due between March and June 2020 until March 2021, or March 2022 when the interest-free instalment payment option was available to them. Now that this deferred VAT has presumably all been settled, we would expect VAT receipts to drop back to a more normalised annual level going forward.
Other taxes with noticeable percentage increases during the period include Stamp Duty Land Tax (SDLT) which rose by 49%, with SDLT holidays being in operation at the height of the pandemic and air passenger duty (73%).
HMRC is also reporting a 49% rise in revenues from transfer pricing enquiries in the year to 31 March 2021 with receipts exceeding £2bn for the first time ever. This is largely explained by assessments raised for Diverted Profits Taxwith a 100% increase in additional Corporation Tax collected this way compared to 2020. It would seem that the new profit diversion compliance facility launched in 2019 is proving a success having settled 22 cases in its first year and raised £305m.
Useful guides on this topic
Diverted Profits Tax
Large Multinational Enterprises (MNEs) that use arrangements between connected parties to divert profits away from the UK and avoid UK tax, will be subject to the Diverted Profits Tax (DPT). Who does it apply to? What are the rules?
BEPS & Diverted Profits Tax (for SME Owners)
What is BEPS? What is Diverted Profits Tax? Will either of these affect me or my SME clients?
Time limits for assessment: offshore time limits for assessment:
What are the time limits for assessment for offshore matters? When do the Discovery rules apply?