Some of the biggest names in the UK technology industry have been operating under rather perplexing tax arrangements recently. It appears that Oracle, Xerox, Dell, CSC and Symantec all paid “no corporate tax” in the UK last year.
This non-payment is despite the fact that the firms earned what is said to be almost £500m from public-sector IT contracts during the tax year.
These reports have surfaced after Conservative MP for Dover Charlie Elphicke undertook a study examining the actions of the firms, who together boasted combined UK sales of £7bn.
Elphicke is understood to have “revealed” his research findings during a House of Commons debate dedicated to discussing the subject of tax avoidance.
As many readers will be aware, UK corporation tax of 24 percent is paid on a firm’s profit, but many firms use loopholes and backdoors to reduce the overall amount they are required to pay.
Fleecing our tax system
“We are seeing big business tax avoidance on an industrial scale. To me, it is unacceptable, unethical and irresponsible. We urgently need reform,” said Elphicke. “No government contracts should be awarded to businesses that are fleecing our tax system, and the government should examine how much UK tax companies pay when deciding who gets plum government contracts.”
Quoted on IT news commentary website The Register, Elphicke made the below claims:
- Oracle paid no UK corporation tax last year because the firm claimed it made no profit in Blighty despite turning over £1.4bn. Oracle has a global operating margin of 32 per cent that would have equated to profits of £446m.
- Microsoft was also given a special mention as it inked about £700m worth of government IT contracts and had revenues of roughly £2.35bn in our country. Its projected profits – based on the company’s 40 per cent margin – were therefore £945m, which would have resulted in a tax bill of £246m but it actually stumped up £19m.
- IBM was also of “concern” as it turns over about £4bn in the UK and profits were estimated at £642m. But its declared profits for the country were £327m, so it paid £41m tax rather than £167m.
These claims come at a time when tax receipts from the enterprise business sector in the UK have reduced by one fifth between 2011 and 2012.
Lib Dem MP for Redcar Ian Swales has also pointed the finger at Vodafone, Accenture, CSC and Apple.
“Our high streets are now subject to global competition,” said Swales. “Most retailers are competing not only with the unstoppable rise of the internet but with offshore-based giants such as Amazon and eBay. The list of national and local UK businesses that cannot compete will get longer and longer: Comet was the latest to go broke, just before Christmas, probably costing the UK taxpayer £50m.”
More details on this story are available at the The Register.