Apple pays just £12m UK tax on £2bn profit: Miserly bill is almost £400million short of the figure tech giant should have paid

Apple is most valuable company in the world – worth an estimated £500bn

But it funnels sales though Ireland to whittle down its tax bills in the UK

Company made £1.9bn profit in UK last year worth £400m incorporation tax

But they paid just £11.8million – only £400,000 more than the year before

Apple sparked fury last night after revealing that it paid only £11.8million in British corporation tax last year – despite raking in profits estimated at almost £2billion.

Experts said the miserly bill was almost £400million short of the figure the US giant should be paying the British tax authorities.

Insatiable appetite for its iPhones and iPads have made Apple the most valuable company in the world, with an estimated value of more than £500billion. It has just enjoyed its most successful year to date.

But it funnels its vast sales though Ireland to whittle down its tax bills in the UK and other countries.

In his March budget Chancellor George Osborne proposed a levy on profits diverted to offshore tax havens.

Corporate accounts show Apple made £116billion of sales globally in the 12 months to September 2014.

The US giant manufactures its products relatively cheaply in the Far East, but sells them at premium prices, which allows it to make large profits. Last year it registered £34billion in profits.

The new iPhone 6 sells for in excess of £500 but costs a fraction of that to manufacture.

Accountants estimate that the UK accounted for £1.9billion of profit. If this was taxed at 21 per cent, which was the corporation tax rate last year, the company would have handed over £400million to tax authorities.

Instead, it paid only £11.8million – only £400,000 more than the year before. Tax accountant Richard Murphy, of the Tax Justice Network campaign group, said: ‘With a profit margin of 29 per cent, you would expect Apple to make £1.9billion of pre-tax profits in the UK.

‘On that you would expect them to pay £400million of tax. But they paid just under £12million, so they owe us £388million. It’s high time that Apple paid its tax where it makes its money.’

Jonathan Isaby, chief executive of the Taxpayers’ Alliance, said: ‘It’s easy to understand people’s anger at large firms that they don’t perceive to be paying a fair share, but our ire should be directed at politicians who have created our tax code.

‘It has become so laden with loopholes and exemptions that clever accountants are going to find ways round it. Simplifying our tax system should be an urgent priority.’

Labour MP Margaret Hodge, who chaired the Commons public accounts committee, said the figures were ‘a joke’.

She added: ‘Apple has faced international pressure at every level, saying that this is wrong and that it is not fair. The gall of continuing to ignore that takes some beating.’

The company has two UK divisions that are registered as service companies, and are paid a nominal fee to handle items sold in Britain. They declare a profit on this, and pay tax.

Apple UK Limited reported profits of £83million on sales of £116million. It paid £7.1million of corporation tax during the year.
The other entity is Apple Retail UK Limited, which runs the company’s 37 high street stores.

Its figures showed a profit of £14.7million on sales of £898million. On this, it paid £4.7million in corporation tax. Complex UK tax allowances mean that neither company paid exactly 21 per cent tax on its profits.

Apple is facing an international crackdown on its elaborate tax structure, which MPs have previously described as ‘immoral’.

The technology giant is under investigation by EU authorities over sweetheart deals it made with the Irish government.

An Apple spokesman said: ‘We have been operating in the UK for over 35 years and are extremely proud of Apple’s many contributions to the British economy. We follow all relevant laws and pay all the taxes we owe.’