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

By Dan Wilson May 11, 2014 - 11:02 pm

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.

  • Mark
    3 years ago

    Well said Dan. I think that most small limited companies are exploiting the ‘pay yourself minimum wage/make you wage up with a dividend’ loophole to pay less NI and tax. Which is no different to any corporation paying as little as possible. The change needs to come from the government, not from the people who are playing by the rules which the government set.

    • Alex
      3 years ago

      So let me figure this, for each 1000 million in Amazon sales they paid 1 million in tax? For real???

      OK, so thats big business for you.

      Whilst it may be legal, is it ethical? or even right? can it continue? should it continue? I think not.

      It only take a handful of small struggling businesses to add up to more than 4 million in tax so my thinking is this “offshore” crap must be outlawed. The current tax system favours big business, celebraties, the rich, and famous, and ofcourse their expensive advisors (who not only make a fortune – wonder how much tax they pay- but are also coincidentally involved in the drafting of such tax rules for Government), whilst hammering UK based businesses who struggle daily to survive.

      Think Take That for an example of abusing the system, it may have been legal but it was a blatent abuse of a system designed for good but abused by those with money and expensive accountants – it was only right they got caught! Now its Amazon, and there will be many more to follow…

      I would love to get a 4.2 million bill, at least then I’d be actually making something!!

    • Gerry007
      3 years ago

      .
      Regarding % of tax paid against turnover, depends on interpretation of billions….
      USA is 100m = 1 billion
      UK is 1000m = 1 billion (Your comment).

      Amazon UK is an arm of Amazon Inc, that do make a profit, hence tax is being paid.
      The question that is not explained/shown in their accounts will be the amount hived offshore…

      I wonder also how many of their employees are actually on working tax credits that due to their lowish salary allow them to claim off the state for a multitude of benefits.

      That is the sin here…

    • Alex
      3 years ago

      Thank you Captain Obvious!!

      I actually said ” for each 1000 million in Amazon sales they paid 1 million in tax” so the total they paid to HMRC is 4.2m

      Thank you also for explaining the difference between UK/US billions, I’m sure that educated many TB readers who will doubtless be grateful for your enlightenment!

      I won’t bother responding to your “tax credits” comment – its a pointless distraction to the real issue and phatetic at best.

    • Gerry007
      3 years ago

      .
      Thank you Private Alex…

      I am fully aware of what you said, I pointed out the difference in UK and USA, because (as you say) because some people surprisingly do not know it…

      “phatetic”, oh, I see you mean pathetic.

      Of course it is relevant. Amazon UK pay in 4.2m.
      It would be interested to see how much their low paid employees take out in benefits, and therefore if the UK actually gain anything from their presence..,

    • Alex
      3 years ago

      Being a lowly Private I may not be able to spell but like most TB readers we are not total idiots and can read!! Thank you also for repeating my main comment, I am pleased that you understood it!!

      Moving on from stupidity, I think the real issue is wheather legal is right, or even ethical, and should companies like Amazon be permitted to operate in ths manner. Doubtless you will have some useful insight and educate us all further. Hopefully you will drop the “benefits” thing as I doubt anyone really cares given the many bigger issues at large.

      Feel free to clear up my spilling mistakes!!

  • Stuart
    3 years ago

    Good points and true, if it’s within the law there isn’t a man woman or probably child in the country that wouldn’t do everything they can to pay less tax as long as it is legal.

    Amazon, ebay, google etc etc are all working within the law.

    People also forget that prices will increase if they pay tax, so we won’t be better off.

    Also one thing that is always over looked is Chinese sellers on platforms such as ebay/amazon. This is massive hole in tax revenue for the country, especially when these sellers send goods to UK consumers with lower value stated on customs forms than has been paid!

    • Gerry007
      3 years ago

      .
      Not to mention the silly low postal charges Chinese sellers pay.

  • 3 years ago

    I agree with Dan in many ways. Amazon are slightly different from the likes of google and eBay because Amazon actually have a lot of staff in the UK so maybe should be paying a bit more. But if we could just lower corporation tax to the same level as Luxembourg we could have all of these companies setting up base here and paying the tax here. Maybe I am wrong but its seems quite clear that every major company is bases in Luxembourg for a reason.

    • Stuart
      3 years ago

      Luxemburg probably don’t have the NHS to pay for, to name just one big burden we have in this country that taxes have to pay for.

      Also you will probably find that companies don’t pay much there in tax either as there will be another place it is sent too or re-charged too. The money just flies around the world without stopping to pay much tax.

    • Gerry007
      3 years ago
    • Stuart
      3 years ago

      Remind me not to set up a business in the UAE! 55%!

      I should imagine Amazon and the like must have a deal with Luxemburg otherwise they would of moved here by now!

      I should imagine the money moves on further around the world after then anyway, like Starbucks was doing.

  • mw
    3 years ago

    I’ve said it before and will say it again.
    Anybody who uses these companies to either buy or sell, positively supports their legal tax avoidance status. If you don’t agree, then don’t use them. It’s that simple and it’s the only thing that will change their attitude.

    • Gerry007
      3 years ago

      .
      Starbucks woke up…..

  • Glenn
    3 years ago

    Labour MP Margaret Hodge is as stupid as stupid can get.

    I pay thousands in VAT and corporation tax as do many small businesses.

    Without Amazon our company wouldn’t exist, and that’s two people not claiming benefit thanks to Amazon.

    Get you fact right you STUPID woman!

    • fusion
      3 years ago

      haha yeah, they never seem to grasp the concept with Amazon and the fact that there are many seller who live and support themselves and families on Amazon.

    • JD-Hog
      3 years ago

      Amazon would still be around even if they had to pay more tax, they would not pull out of the UK market. They would have to be careful about raising their fees as this would drive business away.

      It’s just not fair that a big company with their economies of scale and buying power advantage, also has the advantage of legally avoiding paying tax too! The net effect if they had to, would be that more business would go directly to UK companies with their own websites, and prices would not increase as most companies charge less on their websites to start with.

      Amazon is a great place to sell on for sure, but they should legally have to pay fair taxes like the rest of us.

    • 3 years ago

      The one thing everybody seems to have ignored is that if such as Amazon pay less tax because they have employed skilled Tax Accountants to work the system then somebody else(us who cannot afford to employ expensive Tax Accountants to work the system) have to pay more tax. Government estimates just how much it needs to receive in tax. It estimates how much all of us who actually pay our tax are going to earn. This gives them the rate of tax they need to levy.

      So if Amazon, ebay, etc were to pay their fair share of the tax then we could pay less. Although knowing this present Government it is likely that they will just look for other grand schemes like HS2 at £50 Billion to waste the Tax money on.

      It really is irrelevent that various businesses trade on Amazon or ebay and that they pay tac if Amazon, ebay etc are not paying the tax on their revenues and turnover.

    • JD-Hog
      3 years ago

      Exactly right Chris! Companies like eBay/Amazon should pay fair taxes.

      They should also be obliged by law to address the problem of Chinese and other EU and non-EU sellers selling into the UK on their sites, who exceed the VAT thresholds.

      The two issues together mean the UK loses billions in taxes, and tens of thousands of jobs, now wonder we have deficit problem!

    • John
      3 years ago

      Spot on Glenn.

      Many of these low life MP’s who consider themselves better than the serfs they rule over have never had a proper job before so how could they appreciate the fact that Amazon allows millions of people in the UK to run their own small businesses (or large businesses for that matter all who pay tax of course)

      Or the fact that Amazon employ thousands of people in its warehouses often in high unemployment areas which is surely better than them being on the dole?

      Amazon pays its taxes within the current law, all of the idiots going on about how criminal tax avoidance is would soon change their tune when their online purchases cost more.

  • Alex
    3 years ago

    Thank you Captain Obvious!!

    • 3 years ago

      Let’s keep rigorous debate polite, ehh Alex?

  • Alex
    3 years ago

    Hi Dan, I requested immediate deletion of my 23.44 comment as it posted in an incorrect place within the thread. I’d have thought you would have deleted it immediately upon seeing my deletion request.

    I don’t understand why instead of deleting it you leave it posted and then reply to it?

    This seems very odd….

    • 3 years ago

      We publish every comment made that doesn’t breach the rules. I don’t see a delete request anywhere but here in this comment.

    • Gerry007
      3 years ago

      .
      Dan,
      Sticks and stones, etc’……

    • Alex
      3 years ago

      Sticks and stones??? What a pointless stupid comment. Maybe its time someone told you that most of your comments assume TB readers are idiots and you generally contribute nothing to the debate except either pointing out the obvious or irritating people with your “I know it all” attitude.. Please lose the chip and stop treating everyone like idiots.

    • Gerry007
      3 years ago

      .
      I was not aware you also went by the name Dan.
      My comment was to Dan, not you!!.

      “I know it all” attitude, try looking in your mirror….

  • Kyle
    3 years ago

    Again, it’s all just 5 minutes of hate if nobody is willing to actually address the cause.

    This tax avoidance is possible due to the freedom of capital enshrined in the single market. The UK would have to leave the single market which means leaving the EU, and once left also not joining the EEA or EFTA. This would be a huge shake up far beyond what even UKIP proposes.

    So Margaret Hodge can complain all she wants but if she’s too much of a Europhile to point the finger at the right culprit then what’s the point?

    The Guardian and Reuters articles get the gist right but even they won’t name names.

    The alternative is of course to stay within the single market but offer a business environment with low taxes that is attractive enough to make Amazon move here. But when is a Labour MP ever going to recommend that?

  • jjroger
    3 years ago

    Don’t forget Margaret Hodge is labour MP, it is her job to challenge anything, this is what she get paid to do. And news papers need something to write, unless people happy to buy 50p for few pages of A2 blank paper.

    Amazon did not write the rules book, the politician did when they needed.

    • 3 years ago

      There is a feeling that Politicians have some secret agenda in making the Tax system so full of loopholes that companies like Amazon can take advantage of them. In reality Britain’s Tax System has developed into a complicated mess by the actions of successive governments tinkering with it without any real over riding plan of what they are attempting to achieve.

      So while the governments have not intended to create loop holes that is what they have done. What is needed is a comprehensive review to find and eliminate the numerous loop holes, without creating any new ones, and simplifying the system. At the end of the day we need every person and company doing business in the UK to pay their fair share of the tax. What we have is that with expensive Tax Accountants and the ability to more money or goods around the world companies and the super rich can evade paying their fair share. Which means that the rest of us have to pay our fair share plus a proportion of the tax that the businesses and super rich have managed to evade.

      But I wonder how many extra votes a Political Party would gain at next years General Election if they had a major plank of its Election Promises to sort out the mess that is the British Tax System… my guess would be not very many.

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