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HMRC stings Apple with £136 million bill for back taxes

Apparently, one subsidiary hadn't been paying another enough commission.
Jamie Rigg, @jmerigg
January 10, 2018
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Stefan Wermuth / Reuters

Tech giants are often criticised for using complex tax loopholes to bank more of their profits than arguably they should, but occasionally the authorities do manage to find fault in their accounts. Following "an extensive audit" of Apple's books, HM Revenue & Customs scored itself an additional £136 million in back taxes, plus interest, from the company. The Financial Times spotted the payment in the financials of Apple Europe, a UK subsidiary that performs sales support, marketing and other duties for other Apple subsidiaries. According to the FT, HMRC reasoned that Apple Europe did not receive appropriate commission for sales leads from an Ireland-based subsidiary over a number of years up to 2015. Less commission, less taxable income... you get the idea.

Apple Europe's financials say the £136 million adjustment "reflects the company's increased activity," and we can't definitively know HMRC's side of the story since it doesn't "comment on the tax affairs of individual companies." Apple Europe also mentioned tax payments will increase in the future to reflect this new understanding with HMRC. Commenting on the news, Apple issued the following statement:

"We know the important role that tax payments play in society. Apple pays all that we owe according to tax laws and local customs in the countries where we operate. As a multinational business and the largest taxpayer in the world, Apple is regularly audited by tax authorities around the world. HMRC recently concluded a multiyear audit of our UK accounts and the settlement we reached with HMRC is reflected in our recently filed accounts."

The HMRC's £136 million is just a drop in the ocean that is Apple's bank account, though the company is due to start paying Ireland the €13 billion it owes in back taxes there any day now. European regulators declared back in 2016 the tax breaks Apple was and had been receiving from the Irish government were illegal, resulting in billions owed to the country. Not that Ireland is the only tax-friendly territory in Europe Apple's set up shop in, of course.

In this article: apple, business, gear, hmrc, tax, taxes
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