Ritchie cannot even read a set of accounts these days

There has been much anguish expressed about the latest Amazon accounts for its UK operating company. This is unsurprising. Those accounts suggest that Amazon has increased its UK activity from £1.45bn of sales in 2016 to £1.99bn of sales in 2017, with its profits increasing threefold from £24m to £72m. Yet its overall apparent tax charge was still a minuscule £1.7m.

However, all is not as it seems. Once the tax effect of payments made to staff using share option schemes is taken out of account, this company looks as if it paid £4.7m in tax in 2017, compared with £3.7m the year before. That’s actual cash paid, and it suggests a tax rate of approximately 6.4% in 2017 compared with 15.5% in 2016. Given that the expected tax rate for the 2017 accounts was 19.25%, Amazon appeared to pay only a third of what might have been due.

Amazon explains the fuss by referring to the effect of those share payments. But that’s a sideshow, in my opinion.

Well, it would help if the accountant writing this article were able to do the most basic reading of accounts. Share options, awards, they’re part of paying the staff. They’re an expense, which is why they’re not part of the profits which make up the bit taxed.

So, what were the profits after we take off the cost of those share awards? And what is the percentage of those post all costs of business then paid in tax?

No, not what is he tax paid as a percentage of profits before all costs, but what is the percentage of profits paid as tax as a percentage of taxable profits?

Do note that The G isn’t allowing comments on Spudder’s piece.

18 comments on “Ritchie cannot even read a set of accounts these days

  1. “Do note that The G isn’t allowing comments on Spudder’s piece.”

    At his request, most probably…

  2. “Socialist demands staff are paid less!”

    “The Guardian has found that Amazon are avoiding paying corporation tax by paying their staff too much money and so paying even more money to the Treasury. We are therefore going to campaign that Amazon pay their staff and the Treasury less money and therefore reward their filthy capitalist running dog shareholders more!”

  3. “It’s time for a root-and-branch reform of accounting.”

    I, me, all by myself, I and I alone, have invented a new type of accounting. Not merely was I the first, to be clear I was the first, the ABSOLUTE FIRST, to propose country by country reporting, I also suggest that from now on under a new more efficient and more modern Murphy Accounting system (which I invented), debits will be booked on the right, credits on the left and the old neo-liberal system of debits on the left, credits on the right will henceforth be consigned to the dustbin of discredited far-right ideology.

    “Savaged by a dead sheep” seems a fitting phrase for the Samurai warrior Spud’s ferocious Guardian attack.

  4. Murphy writes an article about Labour and the Jews. There is a backlash from readers. They accuse him based on his article.

    His response his revealing. Not only is everyone else misinterpreting what he wrote, what he wrote should not be misinterpreted.

    ‘And I think it was clear

    But it appears there is collective blindness on this issue

    It deeply depresses me”

    The arrogance. He cannot even admit to a badly written blog. Everyone else is wrong. Everyone. He is right.

  5. Just about every media outlet has incorrectly reported the Amazon tax situation. See, for example, the article in yesterday’s MoS written by their city editor.

    (I tried to leave a similar comment on ConTel but it appears I’ve been blocked as a suspected spammer, despite having left comments there before.)

  6. AndrewC

    That is what makes him so dangerous – the refusal to admit any kind of error is something highly unusual and speaks to a megalomaniac tendency. You see it in his lecture on Youtube – an overweening arrogance combined with a massive over-estimation of both his talent and his level of knowledge. A thoroughly odious man, and one of the most dangerous in the known world.

  7. There are several amazon companies in the UK and this is only one of them and they are not consolidated accounts.If you want consolidated accoumnts you need to look at the Luxembourg holding company and that will, obviously, not be solely the UK companies. So to get a total of Amazon’s UK tax you have to add together all of its UK subsidiaries (a quick search found 9 whose names started with “Amazon” but there may be more.
    Do we have a Chartered Accountant who does not know the difference between Consolidated and non-consolidated accounts? Did the absence of a cash flow statement not trouble him in the slightest? It worried me as I couldn’t find out how much tax Amazon UK Services paid – but then I realised that I could estimate that from the tax payable at the beginning of the year and the note on current tax due which between them give £6.876m as a minimum (it could be £7.364 if one item is misleadingly labelled) – *excluding any tax paid on account*. £4.7m is nonsense.
    It really does prove that Murphy cannot read a set of accounts!

  8. It worried me as I couldn’t find out how much tax Amazon UK Services paid – but then I realised that I could estimate that from the tax payable at the beginning of the year and the note on current tax due which between them give £6.876m as a minimum (it could be £7.364 if one item is misleadingly labelled) – *excluding any tax paid on account*. £4.7m is nonsense.

    You realize, of course, that all those tax numbers were calculated using IFRS standards, and are not tax basis.

    Within the context you are attempting use them, all three numbers are nonsense.

  9. “Comments are now allowed on the article…”

    Not really. I pointed out in the comments you can buy Spud’s books on Amazon, and as for open accounts, stating income from a “Private Trust (name withheld to protect the trustees)” in you LLP isn’t exactly open.

    Post deleted.

  10. Scrap that, it’s back 🙂

    Let’s see if I can get the Ashcroft libel loss posted as well. people need to be educated about Le Spud.

  11. Purely in terms of the company Murphy is looking at, this is the link (click on the latest set of accounts – 31/12/17):

    https://beta.companieshouse.gov.uk/company/03223028/filing-history

    Page 17 (note 8) has a bucket load of info, including the usual tax reconciliation as to why £72.7 milllion of profit at 19.25% does not equate to £1.7 million of tax.

    “Share based awards” is a very substantial reconciling item. There is other complexity, including large fixed asset additions and depreciation (note 9), and large deferred tax assets (again linked to share options), etc.

    His comments about “paying” too little (£4.7m) look to be based on nothing more than note 8 (a), which is quite amusing, as that simply separates the P&L corporation tax charge from the deferred tax charge. If he actually means “paying”, he’s missed a load of obvious corp tax debtors and creditors b/f and c/d.

    His comments are basically meaningless unless unless he’s going to explain which part of that tax rec he objects to or believes is wrong? Which would be pretty much impossible without access to the workings. But which we do know is largely to do with share option awards (because it clearly say so).

    So, yes, he really is being a complete and utter jerk, sounding off and insinuating there are issues without offering any half credible evidence whatsoever. But it’s the Guardian, so it can’t possibly be fake news…

  12. Murphy’s article has slipped off the front page of the Guardian online and, unusually for the Guardian, many of the comments are critical (not just from the usual suspects round here).

    Maybe even the Guardian has started to realise the Potato is just an insufferable bell3nd.

  13. @ Dennis
    Actually they are prepared using UK GAAP not IFRS because Amazon UK Services isn’t a quoted company.
    But remember: it’s *me* that you are talking to, not Murphy: I’ve been looking at UK GAAP accounts for more than forty years. If the “tax due within a year at 31st blanker N” isn’t paid before 31st blanker N+1 then it must either show up as tax due at the end of the year or show up as an adjustment to tax due relating to prior years in the tax calculation in the notes to the P&L accounts. [I didn’t mention in previous post that Amazon Services UK had no tax due after more than 12 months at either year-end – I hadn’t anticipated that you would want to know]. So any tax due which cannot be explained from an analysis of creditors or an analysis of the tax note must be assumed to have been paid unless the CFO and auditor fancy being disqualified.
    You may think that an honest company managing its cash flow by paying staff in share options instead of cash would use the same accounting stadards for the parent company and its subsidiaries – I couldn’t possibly comment.

  14. My God he is thick. It is all set out in Note 8 to the accounts. There is nothing of any consequence there except for share payments to staff if we ignore the effect of some non-deductible expenses. Not even a hint of a sideshow to those prepare to look.

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