Amazon UK’s tax bill under scrutiny again – MP urges boycott

Amazon’s British business accounts were published by Companies House on Friday. According to reports, the UK arm of Amazon paid £4.2m in tax to the Exchequer on £4.3bn of sales.

The Guardian outlines clearly how their structure makes this possible, and legal, under the current system and also provides the full set of figures and their sources. Reuters too is a useful read on the subject.

Labour MP Margaret Hodge, who chairs the House of Commons Public Accounts committee has been previously strident against “off-shoring” and has spoken up against the current system that makes such avoidance entirely legal. Hodge says she is already boycotting Amazon.

She said: “It is an outrage and Amazon should pay their fair share of tax. They are making money out of not paying taxes. I no longer use Amazon. We should shop elsewhere. What we demonstrated with Starbucks is the power of the consumer voice.”

“If you are an Amazon user you get endless emails saying Amazon.co.uk. You then order your goods and you get them delivered by the Royal Mail in parcels stamped with the Queen’s head, and they then pretend it’s nothing to do with business in the UK. They are damaging British jobs. If you are a small bookshop in the high street you can never compete with their prices, because you pay taxes. Even for John Lewis their future is also threatened because they pay their taxes.”

Another MP, Conservative Charlie Elphicke, noted that the current arrangements seem unfair to British concerns who don’t have the resources to exploit these regulations: “People will look at this and feel it’s incredibly unfair that they work hard and pay their taxes while big American multinationals engage in industrial scale tax avoidance. This is why international tax reform is badly needed and why the chancellor has been right to make the international case. Tax abuse is wrong and must be stamped out.”

The first point that must be made, not least because I haven’t seen it made anywhere in the press, regards who is making the sales. It’s not known what percentage of the £4.3bn sales are made by British small businesses who are paying their tax be that local business rates, NI for staff, corporation tax on profits and the rest. It could be as much as one third. It could be more.

Those businesses are also paying rents for premises and their staff are also paying income tax and NI and playing fair. It is unfair to tar them with the same brush.

Amazon are doing the army of small firms who use their marketplace service a massive disservice by not making that point loudly and clearly to MPs and government.

Secondly, this is Government’s problem to solve. I find it very difficult to summon up much opprobrium for any company acting entirely within the law and legally reducing its tax bill. Indeed, I would urge any business large or small to pay no more tax than they are required to.

The laws as they stand are detrimental and unfair to SMEs and, as Tamebay has said before, Government should take steps to resolve these issues urgently. The current system needs reform but until that happens we cannot condemn any business that is clearly acting within the law.