A report published by a UK accounting firm indicates that 85 of the companies in the FTSE 350 index paid corporation tax at a rate of less than 5% on their accounting profits; a further 8 companies paid less than 10% of their profits in corporation tax and 19 companies paid less than 15% of their accounting profits as tax. Around 36 of the companies paid almost no tax at all even though their accounts showed that they were profitable.

There has in recent years been a focus on the tax paid by large companies in the UK and a perception that the tax authorities have a relatively relaxed approach to tax collection from large companies compared to their strict attitude to the tax affairs of small and medium enterprises (SMEs).

There are however legitimate reasons why these companies may be paying less UK corporation tax than the level of their accounting profits would indicate is payable. Many of the FTSE 350 companies earn some of their profits outside the UK; some may have losses carried forward to offset against their current profits; and they may be benefiting from tax allowances such as those for purchase of certain plant and machinery; research and development expenditure; income from certain patents; or tax relief for the creative industries.

There is however pressure on the UK government to ensure that large companies are paying the correct amount of tax in the UK. There is also a need for the government to maximize tax collection especially as the headline rate of corporation tax is due to decrease further. The Chancellor may therefore address this issue in the Autumn Statement that is due to be delivered on 25 November 2015.