After an uncertain year in the business , finance and property market, businesses & home movers have overpaid fees and taxes by billions.
Corporations claimed back a record £11.5bn in overpaid corporation tax from HMRC last year, a jump of 26% from £9.1bn the year before, according to financial experts.
Property tax experts estimate that stamp duty overpayment figures are equally drastic – with some £2 billion overpaid to HMRC.
It is ‘extremely likely’ that these figures are merely the tip of the iceberg. Corporation tax refunds only reflect losses suffered by businesses in the early part of the pandemic, as businesses pay corporation tax based on forecast profits for the following year, making it easy to overpay tax if profits fall below their expectations, which will have been the case for most companies during the pandemic.
Likewise, given the areas of stamp duty error, confusion, and the incredible pressure felt by conveyancers this year, there is evidence and sentiment to suggest this £2 billion a year is a conservative figure. There is considerable scope for miscalculation – especially with multiple dwellings relief for both main homes and property as investment opportunities, and for transactions involving partnerships, trusts, and pension schemes.
David Hannah, principal consultant at Cornerstone Tax, discusses why such a tumultuous year has led to such significant overpayments:
The reason why such a tumultuous year has led to remarkable overpayments are:
Tax is not a simple thing , whether it is corporation tax based on the uncertain year ahead, or the outdated and incredibly complex SDLT charge that conveyancers have to calculate.
With such confusing processes over such a difficult year has o led to issues that are surfacing now : many companies, and many people are simply not paying the right amount to HMRC.
Businesses and individuals can be helped by digitalising & streamlining the processes.
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