Apple UK sales were £1.4B, but says it owes just £6.2M tax – and won’t pay it

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Apple UK sales were almost £1.4B ($1.7B) for its most recent financial year, but the company says that it owes just £6.2M ($7.4M) in tax – and won’t even have to pay that much.

The company is claiming £1.35B in expenses from its nearly £1.4B in revenue, leaving it with a taxable profit of only £337M …

iNews reports on the Apple’s tax filing, which covers the 12-month period from October 2018 to September 2019.

In its latest annual results filed at Companies House, Apple Retail UK revealed sales for the year to the end of last September of £1.37bn and a gross profit of £337m. However, after accounting for costs and expenses of £1.35bn the computing giant stated a pre-tax profit of just £39m.

That would leave it with a tax liability of £6.2M ($7.84M), but the company doesn’t expect to pay it.

Its annual filing also states it expects the payment “to be reversed during the next financial period.”

In other words, it expects its next set of accounts to declare that it made a loss on UK sales, which means it plans to reclaim at least as much tax next time.

That forecast loss is understandable: Apple Stores in the UK have spent most of the pandemic either closed or operating with extremely limited capacity. During that time, Apple has continued to pay staff, and of course still incurs costs associated with the premises. But eyebrows will certainly be raised at just how little tax the company thinks it owes on sales for 2018-2019.

The very high expenses claimed are because Apple UK funnels money back to the US and to other European countries like Ireland and Luxembourg where it pays a lower rate of tax than it would pay in the UK.

Apple made its usual statement that it pays all that it owes – ignoring the fact that it structures its financial arrangements to avoid as much tax as the law allows – and that it contributes to the UK in other ways.

A spokesman for Apple said: “As the largest taxpayer in the world, we know the important role tax payments play in society and always pay all that we owe.

“We are very proud of our many contributions across the UK and last year spent over £2bn with hundreds of suppliers. Our investment and innovation supports more than 325,000 jobs in the UK and, in addition to our tax contributions, we also think it’s important to do more for people and society. We focused our attention on supporting the response to Covid-19, making significant financial contributions and donating face masks and shields here in the UK.”

Amazon, eBay, Facebook, and Netflix all use similar mechanisms to minimize their UK tax liabilities.

We’ve noted before the culture gap here. In the US, the prevailing view is that companies are right to do everything they legally can to minimize the amount of tax they pay (some even incorrectly claim that company directors have a legal obligation to do so*). In Europe, there is more emphasis on the moral question of benefiting from services paid for from taxes – everything from the roads used to deliver stock to Apple Stores, to the police which prevent thieves from just helping themselves to the company’s products – without making a fair contribution to the country’s finances.

*There is no such obligation. Company directors are expected to make reasonable endeavours to maximize shareholder value, but are free to use their own judgement on what is reasonable (provided there is no fraudulent intent). Apple, for example, has stated that it spends way more on accessibility features than are ever recouped from increased sales, but it makes this decision because it believes it is the morally right thing to do. Apple’s board would be perfectly entitled to decline to use aggressive tax-avoidance measures for the same reason.

We’re next week expecting a decision on Apple’s €13B Irish tax appeal. The hearings took place in September of last year, Apple claiming that the European Union ruling ‘defied reality’ and that its Irish companies were ‘unimportant.’

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