People say that death and taxes are the only certainties in life, but it seems that only one of those is true.
It turns out, there is a tax currently on the UK statute book that no one has ever paid, and it has never generated even a penny of revenue.
Not a single one.
It’s the Public Interest Business Protection Tax, and, no, we’d never heard of it either.
If you’re wondering how it’s possible that a tax was passed into law but never collected, there’s actually some pretty clear logic behind it.
What is Public Interest Business Protection Tax?
The Public Interest Business Protection Tax (PIBPT) is something of a unique concept within the UK tax system, as it was originally, in some sense, not to be revenue-raising.
Introduced in the Finance Act of 2022, the tax was presented as a deterrent to discourage large businesses (over £100 million) from taking actions that might lead to the collapse of energy companies. This was all amid huge uncertainty of the energy markets in the wake of the COVID-19 pandemic and Russia’s invasion of Ukraine.
These actions could have included transferring or cashing in valuable energy contracts within a corporate group, just before an energy supplier entered administration.
In the HMRC summary of the tax, it states that ‘such arrangements would lead to substantial increased cost falling on the government and energy consumers and would also risk disruption to the supply of energy’.
Simply put, when energy suppliers collapse, the risk to the public purse goes up, and the government wanted to guard against any shady business moves that might see companies profit off that happening.
Why was PIBPT needed?
Speculating on the need for the tax, and posting on X, ‘tax realist’ and founder of Tax Policy Associates, Dan Neidle said, ‘I’d never heard of the Public Interest Business Protection Tax before this morning.
‘It’s a very weird measure which is using a tax to do the job of the energy regulator, presumably because the energy regulator was being too slow.’
This theory is seemingly supported by a comment from rossmartin.co.uk, a website on resources for accountants and advisors, which said, ‘The government acted [with PIPBT] as it recognises that Ofgem cannot react quickly enough and this draws the question, why it is easier to create and impose a new tax than it is to enforce regulatory body actions?’
While the legislation currently applies only to energy supply companies, it includes provisions that could allow future extension to ‘other public interest businesses’ deemed essential for the public good.
How much was the Public Interest Business Protection Tax?
If you think your last payslip on income tax gave you a raw deal, then you’ll be glad you never had to pay PIBPT, as it ran at 75%.
Why has no one ever paid PIBPT?
Put simply, the reason the tax was never collected upon was that it seemingly did its job as a deterrent.
While several large energy suppliers collapsed during the market uncertainty, none of those cases involved the specific ‘asset-shifting’ actions above the £100 million threshold that would have triggered the PIBPT.
Do you have a story to share?
Get in touch by emailing MetroLifestyleTeam@Metro.co.uk.
