Businesses have been urged to be vigilant as firms overpay the tax man by more than £4.6billion, a report has warned.
Scottish accountancy firm Campbell Dallas has revealed that 286,000 businesses received a corporation tax refund in the year to March 31st, 2013, equating to an average refund in overpaid taxes of more than £16,000 each
Refunds are often due if larger companies, which are asked to pay instalments based on their projected annual profits, do not reach the predictions, the firm said. Another reason is when companies incur losses that can be offset against earlier taxable profits or where profits have been reduced due to capital investment.
SMEs could be eligible to claim a research and development (R&D) tax credit if they have not made a profit during the relevant period.
Aileen Scott, tax partner at Campbell Dallas, said: “We have dealt with hundreds of these cases in Scotland and for businesses they can create a lot of frustration. Some companies could find themselves overpaying to a degree that affects day to day running. The figures show how important it is to regularly review any overpayment of tax. HMRC will not be looking to see if they owe you money.
“There is also a need for refunds to be paid quickly. The majority of cases took two to three months to settle and in others there has been a 12 to 24 month wait to receive payment. Such delays can be an additional business burden if outgoings have been higher than expected.”
The number of approved claims for corporation tax refunds is down 17% on 2011/12 when there were 346,000. There were 386,000 in 2010/11.
The figures were compiled by Campbell Dallas’ national network UHY Hacker Young