So, Apple has had to pay more tax in the UK:
Apple has paid £137million in backdated taxes after a probe by UK authorities.
The iPhone maker handed over the cash after an investigation into how much it paid the taxman from 2011 to 2015.
Inquiries centred on London-based Apple Europe Ltd, which has nearly 800 UK staff and provides business support and marketing services to Apple’s other companies. HMRC argued it was not paid enough commission for these services, meaning its profits ended up being lower than they should have been.
Apple Europe reported sales of £644.7million and profits of £51.1million for the years 2011 to 2015 but paid no UK corporation tax. It was instead due a £7.3million tax credit.
No, this isn’t as a result of campaigners. It’s not a result of new rules. It’s simply the application of the old rules.
The key here is “transfer pricing.” All a bit complex but essentially, subsidiaries of the same company should price transactions between them as if they’re not subsidiaries of the same company. The “arms’ length” principle. What’s the price a truly independent business would charge for this? That’s what the price should be.
HMRC has the current right to, and has for some time, challenge the prices which people do charge themselves internally. A few years back Starbucks changed the royalty rate it charged itself for example. HMRC was looking cock-eyed at the one they were using (from memory, 6%) and “suggested” that a lower rate was a good idea (4% again from memory) in the sense that nice business here, be shame if something happened form of “suggestion.”
This is what has happened here. HMRC has suggested that Apple Inc (or some part of it) isn’t paying Apple Europe Ltd enough for the services it provides and that a true market price would be a little higher. Thus leading to more profits in the UK and a higher tax bill.
No, this is nothing about selling from Ireland, scooping the money off to Bermuda or anything like that. This is straight transfer pricing stuff, all entirely and wholly already in HMRC’s power.
As shown, obviously, by the fact that they’ve just won, eh?
£30 million a year too. We can pay for a lot of Corbyn with that, right?