eBay’s UK tax bill is under scrutiny

According to accounts published on Friday, eBay in the UK has paid a weeny percentage in UK tax when compared to the revenues generated in the last tax year. eBay (UK) Ltd is reported to have paid £1.1m in tax in the UK on revenues of £1.1bn. (Cleverer people than me can calculate what that makes the total merchandise sales made via eBay over that period.)

But I bet there are more than a few UK eBay sellers, multi-channel merchants also using Amazon, who pay more than a million a year to HMRC.

You know how it’s done, from the details of your monthly eBay selling bill. Your fees are paid to eBay International AG and that’s based in Switzerland. You don’t pay eBay (UK) Ltd in Richmond.

We contacted eBay and received this comment: “In all countries and at all times, eBay is fully compliant with national, EU and international tax rules including those of the OECD.”

You can read the report in the Guardian here.

On one level, it’s surprising that to this point eBay’s tax affairs have not been subject to similar scrutiny experienced by Amazon, Starbucks, Google, Facebook and the like. And some of those firms have been called before the relevant House of Commons committee. Perhaps a similar interrogation awaits eBay.

On another level, the uproar that big firms take a lot out and put little in is entirely understandable. But equally the tax system in the UK allows them, quite easily, to funnel their earnings into tax efficient structures to limit their liability.

Every business should do that, as long as it’s all on the right side of the law and these approaches are legal it seems. Indeed, I’d go so far as to assert that a business has a commercial duty to exploit any clause or loophole that legally means they pay as little tax as is possible.

As we have said before: “they haven’t broken the law but the law may well be broken.” It’s just a shame, perhaps, that costs prohibit smaller business taking similar advantage owing to their scale. And it will be interesting to see how arrangements like this change after Brexit, currently scheduled for Spring 2019.