More than £5 billion in extra tax has been secured from multinationals after the UK introduced the Diverted Profits Tax (DPT) in 2015, according to the HM Revenue & Customs (HMRC).

DPT is designed to encourage large companies that try to minimise their tax liabilities through the use of contrived arrangements to change their behaviour and pay additional corporation tax, or face paying tax at a higher rate. Companies risk being charged a higher rate of tax (25%) upfront if HMRC believes the tax applies.

In the UK, the 2,000 largest and most complex businesses are responsible for around 40% of the country’s tax receipts. In 2018 to 20019, this was £251 billion.

Figures published by HMRC show that since DPT was introduced it has helped the tax authority to secure a total of £5 billion by:

  • settling over 60 investigations for additional Corporation Tax of over £2.2 billion;
  • securing almost £2 billion VAT from businesses restructuring their operations as a result of DPT investigations or the introduction of DPT;
  • collecting £369 million from DPT charging notices.

So far in 2019 to 2020, another £480 million has been secured through DPT investigations, bringing the grand total to £5 billion.

HMRC is currently carrying out around 100 investigations into diverted profits arrangements by multinationals and the amount of tax under consideration was £2.9 billion as at March 2019.

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