HMRC hands Amazon £1.3m despite retailer's UK sales surging to £7bn

Retailer halved its UK corporation tax bill to just £7.4m, but a series of deductions meant that it actually received a credit to deduct from its future payments

Accounts show the company was billed £15.8m in 2015 compared with £7.4m in 2016 (Reuters)

MPs and campaigners have expressed outrage after Amazon received £1.3m back from the UK taxman despite the company’s annual sales in this country soaring to £7.3bn.

Amazon halved its UK corporation tax bill to just £7.4m, but a series of deductions meant that it actually received a credit to deduct from its future payments to HMRC.

Accounts filed by the company’s UK subsidiary, Amazon UK Services, which handles warehouses and logistics, showed revenues jumped more than 50 per cent to £1.46bn in 2016 from £946m a year earlier. However, profits were down from £48.5m to £24.2m, leading to the lower tax bill.

Amazon’s sales in the UK are made through a separate entity but are then aggregated across a Europe-wide balance sheet. Filings in the US reveal that the online retailer made sales of £7.3bn in the UK in its last financial year.

In 2015, Amazon agreed to stop using a controversial structure that allowed all UK sales and profits to be declared through a subsidiary in low-tax Luxembourg after a crackdown by then-Chancellor George Osborne.

Amazon said in a statement that it pays “all taxes required in the UK and every country where we operate”.

Will Snell, director of advocacy group, Tax Justice UK, said that, until now, Amazon has declared just a fraction of its income in this country.

“This means that the cost of doing business wipes out the small profits they declare in their UK accounts, and they end up paying little tax,” he said.

“The fact that this game continues, years after the Government promised to clamp down on such practices, makes clear the extent of inaction from the Government on the tax avoidance issue.

“If the Government is serious about closing the budget deficit, and improving fairness in the economy, it must do much better at taking on tax dodging companies.”

Oxfam’s head of inequality, Ana Arendar, said multinationals like Amazon “are able to exploit flaws in global tax laws and use tax havens to avoid paying their fair share”.

She called on the Government to enforce country by country reporting for multinationals in order to combat “widespread tax avoidance, [which] continues to cost both rich and poor countries billions every year that could pay for schools and lifesaving healthcare”.

Labour MP Margaret Hodge, a former chair of the Commons Public Accounts Committee, blasted Amazon for its “blasé” attitude to paying tax in the UK.

“It is a scandal, they are deliberately manipulating the way they do their business for no other purpose than to avoid tax,” she said.

A spokesperson for Amazon said: “We’ve invested over £6.4bn in the UK since 2010 including opening a new head office in London and development centres in Cambridge and London this year, and creating 5,000 permanent jobs across the country in research and development, our head office, customer service and fulfilment centres, to bring our total workforce to 24,000.”