U.K. Government Denies Claims of Going Easy on Amazon’s Taxes

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By Ben Stupples

The U.K. government has rejected claims it sought to avoid going “too hard” on the tax affairs of Amazon.com Inc., the world’s largest online retailer.

“We would never give a company or individual preferential treatment,” a government spokesman told Bloomberg Tax in a Jan. 23 emailed statement. “Multinationals must pay all taxes due and we don’t settle for less.”

The denial comes after a secret recording of a senior U.K. tax authority official raised questions about the government’s approach to taxing Amazon.

The conversation took place in 2015 between indirect tax campaigner Richard Allen and Her Majesty’s Revenue and Customs official Guy Westhead. A signed affidavit from Allen on the details of the conversation claims Westhead told him that the U.K. Treasury had asked HMRC not to go “too hard” on Amazon.

U.K. tax barrister Jolyon Maugham published part of the recording in a Jan. 23 blog post. In an email to Bloomberg Tax, he then called on the U.K. government to apply a governance structure at HMRC to ensure that “our tax laws are applied without regard to wealth, power or access to the corridors of Whitehall.”

Amazon’s U.K. press office didn’t reply to Bloomberg Tax’s request for comment.

Illegal Tax Benefit

Like other U.S. multinationals, Amazon has often faced scrutiny of its tax affairs.

Last October, the European Commission ruled that Luxembourg had given the Seattle-based company illegal tax benefits worth 250 million euros ($349.4 million).

The same month, U.K. lawmakers singled out Amazon alongside eBay Inc. for not taking enough action against the value-added tax fraud among online marketplaces that costs HMRC at least 1 billion pounds a year.

“While HMRC has been slow to act, it is playing a game of cat and mouse with companies based outside the U.K. and therefore harder to tackle,” the Public Accounts Committee said on VAT fraud in its report, published Oct. 18. “The online marketplaces have not been taking the issue seriously,” it added.

VAT Fraud Fight

According to his affidavit, signed last Nov. 29, Richard Allen has worked most recently to highlight the way online VAT fraud harms U.K. retail businesses.

His online mail-order business failed in 2007 due to rival sellers abusing VAT, and he met with Westhead eight years later to discuss VAT fraud, it added.

Westhead was program director for HMRC’s new customs declaration system between January 2012 and March 2014, according to his LinkedIn profile. Since January 2017, he has been on secondment at a subsidiary of GKN Plc, the engineering business at the center of the U.K.’s latest hostile takeover deal.

Westhead’s profile doesn’t list his HMRC role when he and Allen met in December 2015. A November 2015 letter cited in Maugham’s blog post, though, shows Westhead signing off as “Deputy Director, Customs Transformation.”

To contact the reporter on this story: Ben Stupples in London at bstupples@bloombergtax.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bloombergtax.com

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