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.
30 Responses
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.
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!
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.
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.
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!
Thank you Captain Obvious!!
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….
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?
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.