back to article Amazon meets the incredible SHRINKING UK taxman

Box-slinging cloud botherer Amazon unveiled some impressive results for its UK tentacle last year, and some even more impressive tax efficiencies. In filings available from the UK's Companies House, the box shifter reported an impressive turnover a gnat's whisker shy of £2bn* in 2017, up from £1.5bn a year before. Wafer-thin …

  1. Symon Silver badge
    Paris Hilton

    How it works:-

    https://www.bbc.co.uk/news/business-40884753

    "Each full-time employee gets given at least £1,000 worth of shares every year. They can't cash them in immediately - they have to hold them for a period of between one and three years."

    "HMRC rules allow employees to receive £3,600 worth of shares from their employer tax free every year. Most of these awards are below that threshold. The employee wins through a tax-free windfall, Amazon wins because it hasn't got to pay any cash out, which leaves HMRC as the big loser."

    "the practice of giving staff shares is widespread, generally seen as a good way to promote loyalty and engagement - and is 100% legal."

    1. Ian Michael Gumby Silver badge

      Re: How it works:-

      So how does it reduce their tax bill?

      Are the gains in share price now a write off to Amazon? I mean if they gave 1K in shares to employee but by the time it can be touched the value is 3K, does Amazon get the 3K as a write off?

      Can't really blame Amazon for gaming the system.

      Just close the loophole.

      1. Chris Miller

        Re: How it works:-

        It isn't a 'loophole'. Employees will have to pay personal tax on the value of the shares they receive. As far as HMRC is concerned, it's swings and roundabouts.

        Margaret 'Enver' Hodge should know this very well, being a major shareholder in her family business, Stemcor (which paid very little tax, despite turning over many billions, due to not making a profit) - but she prefers grandstanding.

        1. codejunky Silver badge

          Re: How it works:-

          Tim has done a proper analysis of this to which Amazon is paying more tax regardless of the teeth gnashers protests-

          http://www.continentaltelegraph.com/business/amazon-uk-gets-shouted-at-for-paying-too-much-tax/

          1. Anonymous Coward
            Anonymous Coward

            Re: How it works:-

            If you think Tim Worstall has done a "proper analysis" then I'm sorry to abuse you of that notion but it's rubbish and a complete misinterpretation of how shares in an incentive plan are taxed in the UK.

            His statement that "So, in this method the Treasury is actually getting MORE money" is complete and utter tosh.

          2. Dr_N Silver badge

            Re: How it works:-

            codejunky> Tim has done a proper analysis of this to which Amazon is paying more tax regardless of the teeth gnashers protests-

            Very interesting.

            Ohhh, codejunky!

            As you seem to be on 1st name terms with Mr Worstall, could you ask him about why the IEA employed fashion graduate Darren Grimes and why, when Mr Grimes was fined £20K, for illegally funnelling £675,000 from Vote.Leave to Aggregate IQ through his BeLeave campaign, Mr Worstall then instigated a whip round to pay the fine? (Also probably against UK electoral rules.)

            Thanks awfully!

            1. codejunky Silver badge

              Re: How it works:-

              @ Dr_N

              "As you seem to be on 1st name terms with Mr Worstall, could you ask him about"

              Going slightly off topic dont you think? However I know you like to follow me around and troll my posts but how did that give you the impression I was your messenger? Why dont you go ask him yourself? Or cross your fingers that he will see your post. Or have you tried and found not everyone finds your trolling as amusing as I do?

        2. Anonymous Coward
          Anonymous Coward

          Re: How it works:-

          "Employees will have to pay personal tax on the value of the shares they receive"

          .... If it's structured as a UK Share Incentive Plan then the employee doesn't pay tax or National Insurance provided they hold them for 5 years (or retire at age 55 and above).

        3. Hawkeye Pierce

          Re: How it works:-

          No employees won't "have to pay personal tax on the value of the shares they receive". Depending on how long they hold them, they will be tax free.

          1. Anonymous Coward
            Anonymous Coward

            Re: How it works:-

            A lot of people here are confusing stock options with Reserved Stock Units, which are taxed when they vest. You can't wait five years and then pay the tax, that's not how it works with RSUs.

            https://medium.com/localglobe-notes/options-vs-restricted-stock-in-the-uk-which-is-best-94c0dae12fba

          2. Anonymous Coward
            Anonymous Coward

            Re: How it works:-

            Sorry, you're incorrect.

            We pay full income tax, employees National insurance AND employers national insurance on our vesting shares. (We have to sign a waiver when we start)

            E.g. If I have 10 shares vest, I only actually get 4 (plus some cash change) because 51% goes to the tax man.

            Trust me, the employees are most certainly not getting off lightly... We're rather getting thoroughly screwed by the HMRC.

            AC for obvious reasons.

        4. veti Silver badge

          Re: How it works:-

          If they turn over billions, then of course they pay tax. National insurance contributions for their employees (who also, of course, will be paying their own taxes), and VAT on most of their sales.

          Corporation tax is never more than icing on the cake.

      2. Yet Another Anonymous coward Silver badge

        Re: How it works:-

        >Are the gains in share price now a write off to Amazon?

        No the full price of the shares are a loss to Amazon - they have to buy the shares at market price to issue to the staff - so a tax reduction for them (in exactly the same way as paying staff in cash)

        The shares are tax free to the employee (upto a certain amount)

        If anything it is the employee that is avoiding tax.

        1. anothercynic Silver badge

          Re: How it works:-

          Here's a blurb on what they do: Share Incentive Plan

        2. M man

          Re: How it works:-

          Wha?

          so if amazon are taking thier tax and using it to replace wages

          eg:- anyone in the lowest bracket would cost amazon £1250 to increase thier take home pay by £1000

          pay them in shares and it cost amazon £790

          The top rate earners would cost £1818

          they bought £17.3 million off man hours at least 63.2% the market cost.

          those share purchases also put upwaard pressure on the share price, increasing thier borrowing and decreasing rate(even if minor)

          forcing staff to not sell for 3 years also stablises the share price, an effective anti-short off your own stocks.

          Since Amazons owners pay themself from share sales, profits is for tax paying losers.

          1. LucreLout Silver badge

            Re: How it works:-

            forcing staff to not sell for 3 years also stablises the share price, an effective anti-short off your own stocks.

            HMRC regulate the scheme and insist that staff not be able to sell until the end of the lock-in, and further that they forfeit any shares not held for 3 years at the time of resignation.

            Most FTSE 100 companies have a similar scheme, so its not really an Amazon issue. All listed companies have the same opportunity; I'm not sure about unlisted companies, but I don't see why they couldn't set up a similar scheme.

            1. Roland6 Silver badge

              Re: How it works:-

              >I'm not sure about unlisted companies, but I don't see why they couldn't set up a similar scheme.

              They can and some do. The only additional hurdle is getting HMRC sign off on the (unlisted) share price calculation - impacts amount of PAYE due on initial allocation and baseline for capital gains/loss calculation.

        3. Version 1.0 Silver badge

          Re: How it works:-

          They are simply shifting the money around, you reduce the tax bill by this little share maneuver and, at the same time, boost your share price - thus shifting the profits from taxable to non-taxable locations. "Amazon" doesn't make money ... it's the people who own the shares who make the money. That's the way the company is designed.

  2. Anonymous Coward
    Anonymous Coward

    Just say No to Amazon

    until they pay the same level of tax as a UK based business would on that profit.

    And start treating their workers decently for good measure.

    Neither will probably happen, sigh.

    1. Lee D Silver badge

      Re: Just say No to Amazon

      If what they do is perfectly legal, it's NOT Amazon we need to blame. Any corporation in their position is doing the same, whether they are in the news or not, and you'd never know or make a fuss or call for a boycott.

      The stupidity is that this is legal to do and it wouldn't take much at all to tax everything they do "fairly" (i.e. how we think they should be taxed, not how the legal numbers fall).

      No corporation of any significant size is *EVER* going to pay more tax than they are legally required to. It's just that simple. So, if governments are complaining about a company not paying enough tax, it means THEY HAVEN'T BEEN TAXED PROPERLY. Otherwise they'd be before a court.

      Literally, the solution to this last time was to change the laws of taxation so they couldn't escape VAT by using Guernsey (remember when all the Amazon DVD's came from there?), so Starbucks can't claim to be making no money because their US arm charges 100% of their profit to license their logo and name, etc.

      If legal taxation isn't capturing enough revenue, it's the taxation that's at fault, not the taxpayer (which Amazon are!).

      1. Scunner

        Re: Just say No to Amazon

        20k employees in the UK means there is a huge amount of employer and employee NI contributions and income tax flowing into government coffers from Amazon's activity - that's probably in the 100m range. And if they've shifted 2Bn of goods there's likely to be another 9-figure sum from VAT receipts. Those are the sums that HMRC are going to be paying attention to.

        19% of 72.4m is 13.7m before any tax credits are taken into account. And there are always some allowable deductions to be found - it's hardly a surprise that Amazon has been able to find ways to bring down the amount that's payable. This is all above board - any other UK business would be able to claim the same sorts of allowances. So really, this might generate a few headlines but it's really small potatoes in the overall scheme of things.

        If the UK government did have a crack down it might make it more attractive to shut down some of it's UK operations and build a few more fulfillment warehouses in Ireland instead. Result - less NI and Income tax for HMRC, longer delivery times for UK folk (unfortunately next day delivery is no longer available in your location), and whatever pittance in corporation tax is paid would end up going to the Irish government. I'm struggling to see what good this does anyone in the UK.

        1. Anonymous Coward
          Anonymous Coward

          Re: Just say No to Amazon

          As a former small business owner, HMRC seem to take a perverse delight in putting you under their rectal exam spotlight if you try to claim a few extra quid exemption from Corporation Tax even if you are only paying them a grand. Note, all Income Tax, Ni and VAT dues were paid on time and in full. But try to skimp a bit on CT... and boy are you for it.

          Why don't they give Amazon the full on HMRC rectal treatment? There should be a few dozen million wrongly credited or something.

          Yes, I'm pissed off. They (HMRC) did it to me twice in 10 years and found nothing wrong. My claims were legit because their fines etc were rejected when I appealed. However, it cost me several thousand in accountants and legal fees each time. In the end, I just gave up and returned to being a wage slave and working for a large company.

          One rule for us and another for the likes of Amazon, apple, microsoft and the rest especially Google.

          1. Dr. Mouse Silver badge

            Re: Just say No to Amazon

            "As a former small business owner, HMRC seem to take a perverse delight in putting you under their rectal exam spotlight"

            This is one thing which, I think, pisses everyone off.

            Individuals, except those with massive resources, and small businesses have little choice but to pay exactly what they are told in tax. Try to hedge just a little, push the rules just a tiny amount past what HMRC deems reasonable, and you are whalloped with a bill and must find a large amount to pay for lawyers and accountants to prove you are acting within the law (i.e. innocent).

            Large corporations, however, get away with murder (as do the extremely wealthy, in many cases). Yes, they are acting within the law, but they take it all to extremes and pay a pittance, never seeming to be questioned by HMRC who are just happy they pay even that trifling amount.

            It's quite obvious that, although the payout would be greater, HMRC would much rather challenge the little guy who can't afford an army of lawyers and accountants. IR35 is a great example of this, although HMRC's dismal record with tribunals (9 of the last 10 lost, IIRC) suggests that you may not even need an army of lawyers to defeat their incompetent arses...

          2. Anonymous Coward
            Anonymous Coward

            Re: Just say No to Amazon

            "One rule for us and another for the likes of Amazon"

            That's not the case. It's simply that the big corporation can afford to retain very good tax accountants who can not only tell them how to minimise their tax bill whilst following the rules, but also explain it succinctly to the tax man so no further investigation is required.

            It's a sad but true fact that the people who understand the UK tax legislation best don't work for HMRC.

          3. MachDiamond Silver badge

            Re: Just say No to Amazon

            "Why don't they give Amazon the full on HMRC rectal treatment? There should be a few dozen million wrongly credited or something."

            Probably because the accountants and solicitors employed at Amazon know more about the UK tax code than the civil servants at HMRC. You get what you pay for. There have likely been some audits that made the government staff look pretty silly to have to have outsiders explain the tax codes to them.

            To say that Amazon had £2billion in sales (gross revenue) doesn't mean a whole lot. In many cases, Amazon is the front for smaller sellers and it just providing fulfillment services. They're getting 10-15% on the sale less expenses. So that's more like £17m on whatever is left of £200million minus deductions. But those numbers don't make for big headlines.

            1. werdsmith Silver badge

              Re: Just say No to Amazon

              Everybody who gets a great deal and free delivery on Amazon is enjoying the benefits of tax avoidance and is therefore complicit. Amazon can offer such competitiveness partly because of scale but also because local businesses cannot avail themselves of the tax avoidance methods that Amazon can. And Starbucks etc. So it's harder for the locals to compete. It's not a level playing field and although it's perfectly legal it's still taking the piss.

              1. Stork Bronze badge

                Re: Just say No to Amazon

                Here in the SW corner of Europe we are in a special situation.

                The Govt has no money (no, nothing special about that) and if you or your company ask for a VAT refund, you have to provide a bank guarantee for up to 5 years, until they have processed your claim, which they have no interest in doing. And they usually hit back with a general inspection.

                So, our company has a large VAT credit which is reducing very slowly as our billing is generally at 6% VAT. Which in turn means that there is an extra incentive to buy in other EU countries, as we do not pay VAT on that. And Amazon knows how to handle this, and they generally deliver fast and efficient.

                Tough for the local suppliers, though

              2. Homeboy

                Re: Just say No to Amazon

                What utter drivel.

                The company pays all the tax it is required to pay. Why on earth would they pay any more?

                Wwen you go shopping do you decide that the VAT rate isn't high enough and send a few extra pounds to the Chancellor? Of course not. So why should Amazon?

                If you want corporations top pay more tax get the House of Conmen to change the tax laws. It's realy that simple.

                1. werdsmith Silver badge

                  Re: Just say No to Amazon

                  If you want corporations top pay more tax get the House of Conmen to change the tax laws. It's realy that simple.

                  Yeah so simple. I get the House of Commons to change laws all the time.

                  1. streaky Silver badge

                    Re: Just say No to Amazon

                    If you want corporations top pay more tax get the House of Conmen to change the tax laws. It's realy that simple.

                    There's literally no way to stop this, the way payments move through Europe is *literally* by design of the EU. This stuff isn't in any way complicated. If you tax Amazon fabricating sales in the UK to Luxembourg that's a violation of two of the four pillars of the Single Market (the one you remainers want to stay in). Literally impossible for parliament to resolve (today) - it would end up in the ECJ and we'd be fined millions per day.

                    You can't moan about this AND want to remain in the EU, it's silly.

                    By the way because it's a free movement of capital, goods and services viol it would also arguably be a double taxation treaty violation. Only those of us who want to leave the Single Market get to moan about this stuff, it's right there in the rule book.

        2. Anonymous Coward
          Anonymous Coward

          Re: Just say No to Amazon

          "employee NI contributions and income tax flowing into government coffers from Amazon's activity - that's probably in the 100m range. And if they've shifted 2Bn of goods there's likely to be another 9-figure sum from VAT"

          There's clue in the name employee NI & income tax, they're paid by employees and not part of Amazon's tax so your talking shite. VAT IS A CONSUMER TAX, FFS how many times, businesses DO NOT PAY VAT, they claim it back, they collect it from consumers and pass the tax paid by the consumer on to HMRC. They would be paid by employees of other retailers if there was no Amazon, unless you are so deluded you think that Amazons takings are completely new transactions that wouldn't have been spent with out the global tax avoider.

          You are just showing yourself to be a utter pillock spouting the same old shite over and over; together with your free market right wing zelots who upvote anyone who's in favor of keeping cash in their pocket instead of providing decent education, roads and health for the community.

          This share save shceme is just a fog they're using to cover the fact that they're not paying corp tax because the have a whacking great transfer pricing scheme to shift profit and it's nowt to do with employee perks that are available to all companies.

        3. Jellied Eel Silver badge

          Re: Just say No to Amazon

          This is all above board - any other UK business would be able to claim the same sorts of allowances. So really, this might generate a few headlines but it's really small potatoes in the overall scheme of things.

          Not really, it's the meat & veg of the matter. Especially as Amazon's moving into food. It's true that some UK businesses could operate the same way, but by no means all. Which is what gives Amazon an advantage, and harms it's competitors.

          So assume I'm Eel Fruit & Veg. I buy my products from the wholesalers or farmers in the UK, weigh them for you and stick them in a bag. Profit's the difference between my buy price and sell price less allowable overheads.

          If I adopted the Amazon model, my subsidiary would buy the product. My till would be in Ireland, and Bob the packer would work for another subsidiary. My shop sign might be in Delaware or some agreeably low tax jurisdiction. Then I'd charge my shop royalties for using my IP and services, and lo, any profits I made would vanish from the UK. And then I'd have to convince HMRC that my little shop wasn't running an artificially contrived model purely for the purposes of avoiding taxes. Which requires some sharp lawyers, and time.

          Currently this is legal for Amazon, but impractical for many other retailers, especially small/indie ones. Challenge for government is legislating to prevent contrived structures, especially as it really needs international agreements about the way stuff like debt, IP and intercompany transfers are valued and taxed. Currently it's a bit of a legal fiction though. So I order something from the UK, it's sourced from the UK and delivered in the UK, yet Amazon loses money on all those transactions.

      2. charlieboywoof

        Re: Just say No to Amazon

        Always the same with lefty wet news outlets. Not even commenting the particular figures, but is NOTHING to do with amazon, moan at Gov. if needed, they make the rules.

    2. Dr Dan Holdsworth Silver badge

      Re: Just say No to Amazon

      There is no stipulation in English law or indeed ANY law anywhere that any person, body, company or whatever should seek to maximise its tax bill. There is however a stipulation that a company should strive to maximise the profits for its owners whilst staying within the law.

      Thus if the law permits a company to avoid tax by paying its employees with shares, then the company is more or less obliged to do that.

      Ms Hodge is being extremely silly by effectively bemoaning a company acting entirely within the law. If she doesn't like it, she ought to see about changing the law which permits this trick.

      1. anothercynic Silver badge

        Re: Just say No to Amazon

        And it's funnily enough Ms Hodge's own party who introduced the share award tax loophole. It was NOT the Tories, or the Tory-LibDem coalition... it was Labour.

      2. Anonymous Coward
        Anonymous Coward

        Re: Just say No to Amazon

        No, there is nothing in UK or EU law that requires a company to maximise its profits.

        1. Scunner

          Re: Just say No to Amazon

          "there is nothing in UK or EU law that requires a company to maximise its profits."

          Of course not, there doesn't need to be. Shareholders like profits and the dividends that come with them - and they're the ones calling the shots (albeit through their appointed board).

        2. Thoguht Silver badge

          Re: Just say No to Amazon

          Well, actually this follows from the duty placed on board directors in company law:

          "The board of directors' key purpose is to ensure the company's prosperity by collectively directing the company's affairs, whilst meeting the appropriate interests of its shareholders and stakeholders."

          So that means basically maximising the company's profits.

          1. Hawkeye Pierce

            @Thoguht: Re: Just say No to Amazon

            The paragraph you quote is not "a duty" and there is no such requirement under UK law. The word "prosperity" does not feature at all in the in the Companies Act 2006 which codifies a director's responsibilities.

            The closest requirement is as follows and clearly involves more that simply "maximising the company's profits":

            "A duty to promote the success of the company (including considering the interests of the company’s employees, the community and environment, the company’s reputation, and the company’s members)."

      3. M man

        Re: Just say No to Amazon

        One that she "abuses" just as much I beleive.

      4. Anonymous Coward
        Anonymous Coward

        Re: Just say No to Amazon

        >> "There is however a stipulation that a company should strive to maximise the profits for its owners whilst staying within the law."

        Citation needed... which you won't find because it's not true.

      5. Anonymous Cabbage
        Headmaster

        Re: Just say No to Amazon

        Your first paragraph implies, but doesn't actually clearly state, that there's a stipulation in English law that a company should maximise profits. That is not the case. If you disagree, please cite the appropriate Act(s).

        Although there is a lot of law around companies, the business end of a particular company's goals and obligations are set out in its Articles and Memorandum of Association, which form part of the contract with shareholders. It's common to take precanned documents and just change the company name on them. I've just read through the ones I got when I formed a company a while back, and (to almost distil these legal documents into absurdity) basically says "the directors can do anything they see fit with the company" and "if the shareholders don't like it, they can change the directors".

        In other words, the directors have to do whatever is necessary to avoid a shareholder revolt. That normally means that they have to run it competently and return more money to shareholders than they put in. But it doesn't mean *maximise* profits, since there are quite a lot of lucrative but highly unethical things that a company could do, but would result in the board being replaced if they actually tried it.

    3. Helen Highwater

      Re: Just say No to Amazon

      If you want globalization this is the price you pay - become protective in commercial terms, less so - tax is only paid on PROFIT, not turnover - if these tactics were illegal HMRC would be all over them

    4. streaky Silver badge

      Re: Just say No to Amazon

      until they pay the same level of tax as a UK based business would on that profit.

      March next year when they can't book UK sales to RoI, Luxembourg, others any more. Be there and watch the fun. See also Google, Facebook, Microsoft, Apple and others. One of the reasons high up on my list of reasons to leave (it's a long list but this is a pretty good one) - the open door policy the EU has to taxes, making states pay the costs of companies like Amazon selling in the UK but allowing them to pay taxes where they feel like no matter how synthetic the relationship in the transactions. No wonder tech companies love the EU so much.

      By the way before anybody does what some smart arse tried to do to me the other day on twitter, the EU tax avoidance directive is a very late and very poor copy of our own tax avoidance rules - and it most definitely does not deal with this problem.

      1. Stork Bronze badge

        Re: Just say No to Amazon

        @ Streaky: It also means that Amazon.co.uk looses the business it has from countries without their "own" Amazon store (DK/SE/NL/PT/IE)

        And do you trust your politicians to be any better at clamping down on tax avoidance after Brexit? I mean, the have been quite defensive of tax havens generally...

        1. streaky Silver badge

          Re: Just say No to Amazon

          do you trust your politicians to be any better at clamping down on tax avoidance after Brexit? I mean, the have been quite defensive of tax havens generally...

          Yes? As for defensive of tax havens we have very little say over the tax regimes of foreign countries. We *COULD* force them, but it wouldn't be cricket - as long as they're playing by the same rules as Switzerland it's hard to have a problem and the UK has been leading the fight on this - so what's your point?

          As I pointed out elsewhere the EU avoidance directive is just a poor facsimile of UK law on this, [5] years later. We can only deal with what we can deal with is the issue at hand here.

          1. Roland6 Silver badge

            Re: Just say No to Amazon

            >As for defensive of tax havens we have very little say over the tax regimes of foreign countries.

            Many of the more 'important' tax havens are British protectorates... They are used because whilst companies wish to avoid tax they do like the reassurance of UK law.

            1. streaky Silver badge

              Re: Just say No to Amazon

              Many of the more 'important' tax havens are British protectorates

              I understood what you meant, they're protectorates, we don't write their laws - they're independent nations. Stop trying to tag us with something that isn't us. I'm sure we could exert pressure, and we have been that's why the UK has a bilateral TIEA with some of these, but they're not the UK any more than Canada is the US.

              Can't just throw our weight around, this isn't the 17th century.

              1. Roland6 Silver badge
                Pint

                Re: Just say No to Amazon

                @streaky " we don't write their laws - they're independent nations."

                I suggest you do a little more research, Westminster holds a much greater sway over these ex-colonies than you suspect...

                However, there is a balance between the UK funding these ex-colonies and the colonies being self-sufficient through a nice revenue earner. I've always maintained that the UK government should turn the Falkland Islands into a tax haven and thus moving the costs of maintaining the military bases from Westminster's MoD budget to the Falklands local budget...

  3. Andy 97

    Turkeys stage a referendum on Christmas.

    At first I blamed some f*cknut at HMRC or HMG (who all enjoy a decent, index linked final-salary pension) for this happening.

    Obviously, if we wanted to go all- "oh.. Jeremy Corbyn" about this we'd cancel our Amazon accounts and refuse to have anything to do with companies like this, but if you really need to know who's responsible it's you and me.

    1. Anonymous Coward
      Anonymous Coward

      Re: Turkeys stage a referendum on Christmas.

      "who all enjoy a decent, index linked final-salary pension"

      The civil service pension is no longer index-linked and hasn't been for some time. It no longer affects me (that was a couple of TUPEs and other changes of employment ago) but it did and does affect people I used to work with.

      1. Velv Silver badge

        Re: Turkeys stage a referendum on Christmas.

        Civil Service Pensions remain among the best available in the UK. They might not be what they once were, but that too can be said about almost every public and private pension scheme in the UK.

    2. Doctor Syntax Silver badge

      Re: Turkeys stage a referendum on Christmas.

      "who all enjoy a decent, index linked final-salary pension"

      People keep saying this. It's actually a smaller proportion of final salary than I encountered in the private sector. Every time HMG decided there should be a freeze on pay rises it was to their own staff they could apply that. Until I got out I had every expectation of retiring in penury.

    3. streaky Silver badge

      Re: Turkeys stage a referendum on Christmas.

      How can HRMC do anything about a tax situation created by one of the pillars of the EU?

  4. Rupert Fiennes Bronze badge

    My experience says different

    A former employer gave me options, and then Restricted Stock Units. When I cashed them in, the taxman took half of the proceeds. Meanwhile, the UK corporation tax rate is 19%. It may annoy the "we hate capitalists" brigade, but from the point of tax revenue I would suggest Amazon are doing us all a favour....

    1. Hollerithevo Silver badge

      Re: My experience says different

      They are doing us a favour because Amazon shifts the tax payment to its employees, who pay 50% in taxes when cashing intheir options? Did you perhaps miss out a word, such as 'not' somewhere?

    2. M man

      Re: My experience says different

      dont cash in more than 5K per yeah and its tax free.

      + 1K from your employer

      +11K from you tax allowance.

      1. Roland6 Silver badge

        Re: My experience says different

        >dont cash in more than 5K per yeah and its tax free.

        + 1K from your employer

        +11K from you tax allowance.

        If you run an ESOP and/or (HRMC approved) profit share scheme further amounts can be had tax free... However, much depends on whether the expense is worth it; this is the primary reason why the government achieved higher tax receipts when they lowered the upper income tax rate from 50% to 45%.

  5. Andy The Hat Silver badge

    I do find it amazing that a company with such tight margins and minimal taxable profit can be so financially efficient that they can still find a few coppers to invest in space exploration ...

    1. A Non e-mouse Silver badge

      It's not that Amazon aren't profitable: They just (lawfully) work the system so their profits are achieved by subsidiaries that are based in locations that have (close to) zero tax rates.

    2. anothercynic Silver badge

      @Andy The Hat

      Amazon does not invest in space exploration. Blue Origin does. They are not owned by Amazon. They share an owner (Jeff Bezos).

    3. MachDiamond Silver badge

      "I do find it amazing that a company with such tight margins and minimal taxable profit can be so financially efficient that they can still find a few coppers to invest in space exploration ..."

      It's Jeff Bezos, not Amazon behind Blue Origin. With the amount of turnover that Amazon has, the sums get pretty dang large. If you were running a small business and only bringing in 5%, you'd be starving. If you are selling billions of dollars of kit, 5% is a pretty big paycheck. Amazon is still carrying around a load of debt from all of the years they weren't making ends meet, so they aren't in the clear financially. Being cash flow positive is very helpful when it come to raising money and getting good interest rates on loans.

  6. Anonymous Coward
    Anonymous Coward

    All companies should pay proper tax including Margaret Hodges dads company Stemcor.

    https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9694452/Stemcor-denies-abusing-corporation-tax-system.html

    It's all outrageous but it's up to politicians to change the law to stop it from happening, which won't happen while it is in their interests to keep the status quo.

  7. Rol Silver badge

    Tax is optional!

    A brilliant observation by David Mitchell, a British comedian, pointed out how the UK tax system is based on an obfuscated set of rules that increasingly punish the decent and honest.

    Seeing as it is within the capabilities of the rich to decide exactly how much or how little tax they pay, it boils down to how morally centred you are.

    Far from encouraging an honest and civilly minded population, it rewards the most deceitful and morally corrupt.

    It's about time our tax laws were devised by those of us who haven't got a plethora of interest to protect.

    1. Anonymous Coward
      Anonymous Coward

      Re: Tax is optional!

      @Rol: The tax system is indeed skewed in favour of companies — even small ones like mine.

      I have had to incorporate as I work for government organisations through agencies that require me to be incorporated to avoid giving me all the benefits that ordinary employees get. Due to many factors I avoid being hit by the IR35 rules and can therefore benefit from the company rules, which means that I end up paying less tax than had I been employed.* In my case the overall taxation (i.e. company plus personal) is less than 25%, which is still substantially more than Amazon pays, but I'm not complaining. Add to that the trifle I pay my accountants and I'm still below the 25% limit. It's hard for me to understand to what extent the UK seems to favour corporations to the detriment of the working man.

      * Working through certain agencies is a way to skirt the EU tender rules, as the agencies have EU-tendered (framework) contracts with the government where I just get slotted into that contract and pay my pound of flesh to the agency at a substantial higher rate than I could probably command as myself.

  8. kuiash

    Dividends/Tax/Profit/Revenue/Van Drivers & Box Packers?

    Their use of deflecting share holder payments against their tax payments, whilst legal, is just horrid.

    I have to pay my corporation tax and THEN pay out my share dividends.

    They should simply have to follow this pattern.

    Do the owners of shares have to pay Capital Gains Tax when the exercise them? I assume there's just a numeric bucket of shares, issued by the company, to their employees - then it's up to the employees to sell (I was in a similar scheme and remember open and closed periods for selling)

    Last Q - Who is actually receiving these shares? How many of the box packers & van drivers will get one of these tax free windfalls? Does anyone here have a better idea how Amazon operates at this level?

    1. anothercynic Silver badge

      Re: Dividends/Tax/Profit/Revenue/Van Drivers & Box Packers?

      Do the owners of shares have to pay Capital Gains Tax when the exercise them?

      Correct. You have to pay CGT (20%) beyond your tax-free allowance.

      I assume there's just a numeric bucket of shares, issued by the company, to their employees - then it's up to the employees to sell (I was in a similar scheme and remember open and closed periods for selling).

      If it's the standard stock being issued, they'll probably have a standard service (like Capita Shareholder Services) that manages the Share Incentive Plan because it's easier.

      1. Hawkeye Pierce

        Re: Dividends/Tax/Profit/Revenue/Van Drivers & Box Packers?

        Not true - assuming the shares are in an approved incentive plan. Up to £3.6K in shares can be given per year and if kept for five years, they are tax, NIC and CGT free.

        See https://www.gov.uk/tax-employee-share-schemes/share-incentive-plans-sips

  9. msknight Silver badge
    FAIL

    We're the ones to blame

    What Amazon is doing is unethical. We love to complain about how it pays bugger all tax and treats its employees badly... because they aren't employees, they're contractors and self employed.

    If you actually give a damn, then stop shopping at Amazon.

    I've been dropping my Amazon spend for years, working harder to find alternatives and in some cases my ethics costs me more... other times it cost me less... like a Metz 58 AF-2 going on Amazon for the princely sum of £289.99 with free delivery. Got the same flash from a specialist camera shop in Essex for £199 delivered.

    I get some of my books from hive.co.uk and in other cases, if I buy from some independent shops more than once, I'll go direct to their own web pages, or drop them an e-mail enquiry if I can't find something. There's nothing like getting help from someone who knows their stuff.

    1. Paul Smith

      Re: We're the ones to blame

      Amazon are not being unethical! What part of obeying UK tax laws to the letter or maximizing shareholder return do you find objectionable? Or are you just jealous that they do it better then you can?

    2. Phil O'Sophical Silver badge

      Re: We're the ones to blame

      We're the ones to blame

      What Amazon is doing is unethical.

      So when you fill in your tax form each year, do you ignore all the deductions you're allowed, because it's unethical to to take legal advantage of tax law?

      If not, how can you criticize Amazon? As noted above, they pay huge amounts of NI and VAT, and business rates for their office/warehouses. Their employees pay income tax. If the government also wants them to pay more corporation tax the solution is very simple - change the corporation tax laws to make them pay more.

      1. msknight Silver badge

        Re: We're the ones to blame

        The way they treat the contractors is unethical. The way they kick sellers off the platform and don't tell them why is unethical. Good grief, a simple search will give you years of Amazon's behaviour.

        https://www.huffingtonpost.com/gregoris-kalai/amazon-is-cruel-and-it-is_b_8026824.html

        https://alexzolo.wordpress.com/

        http://old.seattletimes.com/html/businesstechnology/2019705292_amazonseller18.html

        Or do you just like to limit this discussion to tax?

      2. Yet Another Anonymous coward Silver badge

        Re: We're the ones to blame

        >So when you fill in your tax form each year, do you ignore all the deductions you're allowed, because it's unethical to to take legal advantage of tax law?

        No, but I also don't have my employer pay my Panamanian services company and then have everything I use in the UK be owned by a shell company in the Caymans and leased to me. Whilst claiming my cat as a dependent and my shed as an offshore territory where I am normally domiciled.

        1. MachDiamond Silver badge

          Re: We're the ones to blame

          "No, but I also don't have my employer pay my Panamanian services company and then have everything I use in the UK be owned by a shell company in the Caymans and leased to me. Whilst claiming my cat as a dependent and my shed as an offshore territory where I am normally domiciled."

          Why aren't you? If it's legal, maybe you should.

          Big companies are in a better position to take advantage of these dodges. The savings makes the costs less of an issue. It would cost the small trader way too much money to set up the holding company in Costa Rica and the corporate headquarters on the Isle of Man to be able to fiddle their tax bill than it's worth.

          1. msknight Silver badge

            Re: We're the ones to blame

            But there's the problem. The dodges are unethical... and it's caused enough people in the public view to hung out to dry for their ethics over this last few years.

            That's the whole point of the Amazon thing... the reason people are talking about all this in the first place, is because of ethics, not legality.

            Just because it's legal to do something, doesn't mean that you should do it.

            1. Roland6 Silver badge

              Re: We're the ones to blame

              the reason people are talking about all this in the first place, is because of ethics, not legality.

              Disagree, the whole taxation debate is wholly based on numbers and a lack of comprehension: Someone with an axe to grind see's a business (preferrably foreign owned and HQ'd) with huge revenues, but paying very little UK Corporation tax, their brain, unable to fully comprehend the numbers, proceeds with the logic: if you have huge revenues you must be making huge profits so why aren't you paying huge amounts of Corporation tax, brain shuts down and mouth is engaged...

      3. kyndair

        Re: We're the ones to blame

        But they don't pay huge amounts of VAT NI or income tax, they just collect it by order of HMRC. The employee pays NI and income TAX (yes the employer also pays a bit of NI) and the customer pays VAT. It disingenuous to claim a business pays those taxes and is generally used by those trying to distract from the fact the larger the business the more they get advice from the large accountancy firms on how to best use the loopholes the accountancy firms put there through staff secondment to the treasury.

      4. Anonymous Coward
        Anonymous Coward

        Re: We're the ones to blame

        @ Phil O'Sophical

        It's not clever to be a VAT retard, I thought people here were supposed to be intelligent & VAT isn't hard to understand.

        Business pay VAT but reclaim it for each step in the buying chain so they don't pay VAT. At the end of the chain, the cunsumer pays VAT and the business at the end of the chain that sells to the consumer collects the tax and passes to HMRC.

        I'm sure your know this, but claim otherwise, so you either spread propaganda too support a right wing "free market" agenda or you're a pillock, which is it?

    3. Hollerithevo Silver badge

      Re: We're the ones to blame

      MsKnight, I agree with you and your further comments. Amazon max the legitimate tax breaks they can, then use the global financial system to max the rest. Good books and reportage are coming out about the vast ocean of off-the-books or dark money that all global companies, zillionaires and oligarchs use (these categories sometime overlap) to pay the monomum tax everywhere. Governments such at that int he UK don't penalise them because the power structures are run by the beneficiaries of those who like to do favour for the very rich. But it is almost impossible to be a citizen and consumer without supporting this structure where they pay less so you pay more.

      But you can exercise some narrow choice over where you buy, and I haven't bought anything from Amazon in years. I go to independent and smaller companies for books and DVDs and goods, if they seem to me to be better employers. Amazon gets exposed over and over again for its terrible employment practices. I can't support that sor tof employer. It's the same reason I never shop in Walmart. It's mini-ethics, but it's about all that's left to us.

  10. Thomas Steven 1

    This is just a non-problem isn't it

    Politicians look at company profits

    Politicians see big numbers

    Politicians want to get hands on company money

    Politicians can't because of the laws only politicians can change

    Politicians tell company it's doing it wrong

    Politicians leave law alone because they are all doing the same as big company, they're just not as good at running their affairs as big company, which is why they're in politics.

    Those who can't go into politics where they shout loudly that those who can shouldn't or something

  11. Paul Smith

    ...not paying their fair share of tax...

    I am not a tax expert but I had a quick look at the HMRC web site and I couldn't find any reference to 'fair share'.

    Amazon in the UK obey the laws passed by UK politicians including the tax laws. If UK politicians want them to pay a different amount of tax, all they have to do is change the tax law. Of course they wont do that because the new laws would apply to all companies, including Stemcor. Instead, they prefer to get a few column inches by grandstanding without doing anything, it just happens that this particular politician is unusually stupid and/or hypocritical given her family connections.

  12. Tromos

    Yammermouth politicians

    What is Ms Hodge on about? Which public services are Amazon using without paying? Did they borrow a library book or something? Their UK employees pay taxes and are entitled to these services.

    As far as damaging the high street by undercutting goes, well, it must have been really difficult to find a source of USB cables less than £15 each to beat Maplins. Good bloody riddance to all those price gougers. I'm happy to pay a small premium for the convenience of being able to pop out and pick something up quickly, but draw the line at a several hundred percent markup. Supermarkets undercut the local convenience stores, but they seem to know how much to charge in order to keep enough custom.

    1. Palladium

      Re: Yammermouth politicians

      I got a USB charging cable that came with a USB rechargable light direct from China for £1.60.

      It's not just UK, every brick and mortar retailer in this world is price gouger when it comes to electronic stuff.

    2. Hollerithevo Silver badge

      Re: Yammermouth politicians

      Services such as roads, street-lighting, hospitals, etc? Clean water, safe electricity, thanks to Government-set standards? Police, firefighters, air ambulance, etc? That sort of thing?

  13. J J Carter Silver badge
    Thumb Up

    Not seeing a problem, TBH

    Tax paid the Treasury is just wasted on foreign aid, allowing African despots to buy gold-plated Lear jets

    1. Hollerithevo Silver badge

      Re: Not seeing a problem, TBH

      Mr or Ms Carter, so that's a staggering 0.7% of the Gross National Income? About maybe £14m p.a.? Not all of which goes to Africa?

      However, I agree that foreign aid is shockingly mis-used in many cases. Or could it be that this is exactly the point, to buy the loyalty of the despots?

    2. Anonymous Coward
      Anonymous Coward

      Re: Not seeing a problem, TBH

      Is J J Carter posting to wind people up or is he just posting a note saying hi there, I'm a knob?

  14. Anonymous Coward
    Anonymous Coward

    Margaret Hodge MP

    I'd be more inclined to believe her sentiments about getting tough on corporate tax dodgers if it weren't for the fact that she's leading a coup to oust the only person that would actually deliver on these threats.

  15. Ian Tresman

    £32m Income tax on £72m salary

    If I earned £72m, I'd have to pay £32m in income tax.

    1. Daniel Bower

      Re: £32m Income tax on £72m salary

      Only if you were PAYE which at £72m you wouldn’t be. You’d be paid gross and hire the same accountants as Amazon.

  16. Boris the Cockroach Silver badge

    Just remember

    For every pound successfully avoided by Amazon et al, YOUR tax rate has to go up to cover the loss in income.

    This is great reality for today, that as corporate tax income has declined thanks to the clever avoiding devices , then personal taxation has had to go up to cover this.

    But in the end, Amazon are using our roads, and facilities built with taxpayers money for their own enrichment without paying for it.

    And whats worse... a small company like the one I work at cannot avoid the tax as its based in the UK not luxemburg/wherever it could get a sweetheart tax deal.

    1. matjaggard

      Re: Just remember

      It is using our roads, partly paid for by vehicle excise duty and partly by fuel tax, both of which it pays at the same rate as any other business. Defense might be a slightly better argument potentially but even then, I'm not convinced by the benefits of corporation tax, as long as they're paying VAT and income tax at the right levels (though I'm sure they successfully dodge both to some extent).

      1. Boris the Cockroach Silver badge

        Re: Just remember

        Amazon dont pay VAT... they collect it from sales and pass it along to custom and excise

        Amazon dont pay income tax.. that deducted from employee pay by amazon under the PAYE scheme, then passed along to the inland scu err revenue

        Just try not doing the above 2 things when you're an employer and see what happens......

        hello auditors.... and court cases .. and baliffs... and no business.

        Unless you're a multi-nationational who can do a deal with inland revenue like google did and only pay a % of money owing...

        1. Anonymous Coward
          Anonymous Coward

          Re: Just remember

          Amazon dont pay VAT... they collect it from sales and pass it along to custom and excise

          Amazon dont pay income tax.. that deducted from employee pay by amazon under the PAYE scheme, then passed along to the inland scu err revenue

          True, but at the end of the day it's still money that goes to the treasury as a result of Amazon's business operations.

          1. Anonymous Coward
            Anonymous Coward

            Re: Just remember

            Another clever reg reader.

      2. Fred Dibnah

        Re: Just remember

        ”It is using our roads, partly paid for by vehicle excise duty and partly by fuel tax..”

        ...but mostly paid for out of general taxation. Which, imho, they don’t make a fair contribution to, given their enormous income in this country.

        1. Anonymous Coward
          Anonymous Coward

          Re: Just remember

          The treasury collects far more money from fuel duty and taxes than it spends on the roads. That income subsidises general taxation, not the reverse.

      3. Anonymous Coward
        Anonymous Coward

        Re: Just remember

        Only they're not paying VAT.

    2. Twanky
      FAIL

      Re: Just remember

      "For every pound successfully avoided by Amazon et al, YOUR tax rate has to go up to cover the loss in income."

      No. That's only true if the treasury insist on balancing the books at the end of each tax period. If they're willing to run a deficit for multi-year periods then it won't be YOUR tax that has to cover the shortfall - it'll be a future generation's.

  17. Daniel Bower

    Cash in hand

    My roofer and I both agree that Amazon are a tax dodging pile of shite as he agreed I could pay him cash in hand for a ‘hefty discount’.

    We all cheat (or play by) the rules when we can.

    1. Anonymous Coward
      Anonymous Coward

      Re: Cash in hand

      There is a substantial difference. Amazon's tax dodging is almost certainly perfectly legal tax avoidance. You and your roofer however would seem to be engaged in tax evasion which is illegal and could lead to prosecution.

  18. matjaggard

    Fines are the new corporation tax

    The sooner the media get that, the better. You no longer get charged a few quid for your profits, you now get charged millions for breaking arbitrary rules.

  19. WibbleMe

    Enough's enough, time to start banning companies out right that do this including 3'd part use.

  20. dnicholas Bronze badge

    All above board, guv

    Hate the game, not the player

  21. This post has been deleted by its author

  22. This post has been deleted by its author

  23. theExecutive

    Offshore transaction, onshore goods

    The transaction is handled by computer outside the UK. Thus is not taxable, in the same way that if my software was developed offshore I would pay India, its not Brexit, its very simple, like most thinking that brexit will cost them, imagine when every store and cloud device is amazon, have you seen the future? Good, go back to running through wheat fields...

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2019