Most  UK FTSE 50 companies have yet to fully embrace new government regulation that requires large businesses to publish an annual UK tax strategy, according to a recent report by the Fair Tax Mark and the Local Authority Pension Fund Forum.

The research found that just a third (34%, or 17) of FTSE 50 companies had published a tax strategy resembling that required by the new law online by 30th June 2017. Among those that did report disclosure of the level of tax risk that the business was prepared to accept was frequently absent as well as clarity on tax planning motives. The Fair Tax Mark added that nearly every business failed to comment on how they work with HMRC on interpreting the law.

The analysis of how the top 50 companies of the FTSE 100 have responded to the new requirement also assessed the degree to which companies provided clarity on other best practice indicators: their approach to (and use of) tax havens; the provision of public country-by-country reporting of economic activity and the degree to which the tax strategy covered global operations.

The Fair Tax Mark reported that a small group of companies are not only implementing the legislation promptly but also voluntarily disclosing extra information. Those named as leading the way on tax transparency are Legal & General, Prudential, SSE and Vodafone.

Commenting on the report Meg Hillier MP, chair of the Public Accounts Committee, said: “Transparency in corporate tax is vital if the public are to have faith that the tax system is being supported by large corporations as well as ordinary working taxpayers. It’s incredibly disappointing that only 17 of the FTSE top 50 had sought to comply promptly with Government guidance. The corporate world needs to wake up to the fact that the public is fed up with the lack of openness over tax arrangements and endeavour to publish fully as soon as possible.”

Paul Monaghan, chief executive of the Fair Tax Mark added: “Progress to date is disappointing. There is an apparent reluctance amongst the UK’s largest companies to embrace the spirit of the tax transparency legislation and to respond quickly to the opportunity to provide much needed clarity in an area of significant concern to a variety of stakeholders.

"Thankfully a small number of companies are bucking the trend and have not only implemented the Government’s tax transparency regulations promptly, but have voluntarily gone further and are disclosing vital information on their approach to tax havens and the country-by-country reporting of their results.”

Schedule 19 of Finance Act 2016 introduced the requirement for designated large businesses to publish a tax strategy in relation to UK taxation – before the end of their first financial year, commencing after 15th September 2016. The legislation applies to UK companies, partnerships, groups and sub-groups if in the previous tax year: turnover exceeded £200 million, or balance sheet exceeded £2 billion.

The report rated tax strategies of the FTSE 50 on a five-point scale with 66% of companies being non-compliant and achieving a score of zero as they had not published a tax strategy online by the cut-off date for the study (30th June 2017).  Seven firms (14%) demonstrated “poor compliance” and scored 1, as their strategies did not meet basic legislative requirements.

Four firms demonstrated basic compliance and scored 2; two companies scored 3 by demonstrating good compliance. No companies went beyond compliance on their UK tax strategy reporting but four scored 5 and went beyond compliance globally by being fully transparent in their tax strategy and by making additional disclosures as well as applying their strategies across all countries they operated in not just to UK taxation, as required by Finance Act 2016.