back to article Facebook's UK wing paid just £4k in corporation tax last year

Facebook has once again ponied up corporation tax to Blighty's HM Revenue & Customs – this time around handing over the vanishingly small sum of £4,000 to the Treasury. Last year, the free content ad network coughed up £3,169 to HMRC, but that figure was offset by tax credits. In 2012, Facebook didn't pay a penny in …

  1. Your alien overlord - fear me

    Surely shifting your profit to the shareholders to the extent you lose 28 million shouldn't earn you tax credits sinced the shareholders will no doubt also be offshore.

    1. Chris Miller

      Shareholders are paid (dividends) from funds that have already been subject to Corporation Tax (which is then excluded from standard rate tax in their hands). You can't reduce your CT bill by paying more to shareholders.

      1. Fonant

        Thanks to the Tories shareholders will pay 7.5% on top of their top tax rate on share dividends next year. So company income taxed with CT will be taxed again when distributed as dividends.

        Probably not a problem for the big boys, but it could well increase my tax bill from my one-man-limited-company by 30%. They're not the party of small business.

        1. Preston Munchensonton

          In case you weren't aware, there isn't a party for small businesses. Parties coalesce around power and money, which small business have but in far fewer number than larger ones. Does anyone think that the progressives or conservatives would possible think about what's best for competition? Given all the rent-seeking that run rampant in tax law and industry regulation, it's little wonder that rules like the one mentioned won't actually effect the parties for whom they were publically intended.

          /rantover

        2. This post has been deleted by its author

  2. Anonymous Coward
    Anonymous Coward

    £4K?

    That's nearly as much as some contractors!

    1. Anonymous Coward
      Anonymous Coward

      Re: £4K?

      Yawn. As well as contractors paying much more than 4k in tax, all their payments stay in the UK. They pay tax here, spend money here, live here, and keep their skills up to date here.

      Leeches like Facebook et al just take.

      Now before anyone says "this is acceptable business practise", you start a business - no matter how legitimate - in the UK and try some Facebook / Amazon / Starbucks style tax avoidance, or some Uber style law-ignoring. You won't get very far. This is a privilege our governments give american companies only.

  3. The Axe

    Companies don't pay tax

    Facebook itself paid tax, but it was only doing on behalf of the shareholders, the employees, and the customers of Facebook. In other words it was people who paid the tax, in lower dividends, lower wages or more expensive product prices.

    Companies don't pay tax, people do. All companies do is collect it and act as a tax collector for HMRC. Even employers NI is really a tax that employees pay, it's just that they don't see it but it does affect their salary, making it lower.

    So Facebook staff got a nice bonus. Well they pay tax. So Facebook itself paid a low corporation tax and did so by giving the staff a bonus. Tax was not avoided, just redirected and assigned to a different accountancy column.

    PS. Corporation tax is on the PROFIT a company makes. If it decides to invest, or give large bonuses, or dividends which lower profit then it will lower the corporation tax. That is all legal, and moral, and ethical. Corp tax is not on turnover.

    1. Prst. V.Jeltz Silver badge

      Re: Companies don't pay tax

      good point - if the company does make a profit - then that profit will go to some people and then those people pay tax on it.

      1. Voland's right hand Silver badge

        Re: Companies don't pay tax

        good point - if the company does make a profit

        Have you ever tried to make that point to the HMRC as an independent contractor?

        Yeah, I know, all animals are equal, but some are _MORE_ equal than the others.

      2. Anonymous Coward
        Anonymous Coward

        Re: Companies don't pay tax

        >>>> good point - if the company does make a profit - then that profit will go to some people and then those people pay tax on it.

        Ok, you start a coffee shop, or an internet book shop, or a "ride sharing" service and try and compete with foreign companies paying no tax. See how far you get, see how your prices just to break even compare to theirs. That's the damage tax avoidance does, it kills any home grown competition.

        1. The Axe

          Re: Companies don't pay tax

          @tombo, its not the tax avoidance that's the problem, it's the tax itself. Lower taxes to be competitive with other countries and biz in other countries won't have the advantage.

        2. LucreLout Silver badge

          Re: Companies don't pay tax

          @tombo

          Ok, you start a coffee shop, or an internet book shop, or a "ride sharing" service and try and compete with foreign companies paying no tax. See how far you get, see how your prices just to break even compare to theirs.

          Putting aside for a moment any perceived rights or wrongs of this, because your moral position will vary from the next persons, you're assuming that the home grown competition won't structure themselves along the same lines as the foreign domiciled companies, when that is certainly not always the case.

          EU law prevents HMRC from insisting that any business deriving most of its income from the UK must be domiciled in the UK - it could be anywhere in Europe. International law and various free trade agreements open up a further tier of corporate structuring possibilities which are available to all.

          Without going into a level of detail my previous employer would resent, while HMRC may know everything about my UK based subsidiary, they know less about my head office in Prague, and they know absolutely nothing about the businesses from which we buy products and services abroad. (I don't own any companies anywhere - this is a hypothetical example).

          The tax man accepts almost all voluntary donations to an address on Horseguards. There's nothing stopping anyone who favours higher taxes from raising their own prevailing rate. People won't, obviously, because 9/10ths of those most vocal on tax issues won't even show enough commitment to their apparent beliefs to boycott Facebook over this; and that tells you all you really need to know about them.

          1. dotdavid

            Re: Companies don't pay tax

            "because 9/10ths of those most vocal on tax issues won't even show enough commitment to their apparent beliefs to boycott Facebook over this"

            God I wish they would.

    2. beast666

      Re: Companies don't pay tax

      Guns don't kill people, rappers do.

      1. David 132 Silver badge
        Happy

        Re: Companies don't pay tax

        Guns don't kill people, rappers do.

        Did you see it in a documentary on BBC-2?

    3. AMBxx Silver badge

      Re: Companies don't pay tax

      @The Axe

      Dividends are paid after tax, so no tax deduction.

      It's the transfer of the profits that's the problem, but how do you apportion profits when a company has cost centres all over the world?

      1. ragnar

        Re: Companies don't pay tax

        Using well established transfer pricing rules based on the arm's length rule, soon to be beefed up by the OECD.

    4. JoshOvki

      Re: Companies don't pay tax

      "Even employers NI is really a tax that employees pay."

      You honestly think that if your employers didn't have to pay employers NI that you would be paid more?!

      1. DarrenJ

        Re: Companies don't pay tax

        Actually, yes, maybe in some cases. As a partner in a small business we factor salary + employers NI into how much we *actually* pay staff. If NI went down, we'd pay our staff the equivalent difference. We're nice that way.

        1. Anonymous Coward
          Anonymous Coward

          Re: Companies don't pay tax

          "As a partner in a small business we factor salary + employers NI into how much we *actually* pay staff. If NI went down, we'd pay our staff the equivalent difference. We're nice that way."

          Meanwhile the corporates and their book-keepers have discovered a similar fiddle and called it "salary sacrifice". Benefits which historically have been taxable miraculously start being paid for by an downward adjustment to your before-tax salary.

          IIRC the benefit to the company is that they dodge paying tax and/or NI on the benefit.

          I think the benefit to the employee is often negligible or nil (or even negative if you count corporate tax dodging as a negative, as some do). Motivating factors for employees to sign up include "sign up for salary sacrifice or you'll never get another pay rise, ever" (at one company where I've worked, a well known but rather troubled one headquartered in Derby).

          https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye

    5. Raumkraut

      Re: Companies don't pay tax

      Companies don't pay tax, people do.

      Given that actors in modern economies are all so intricately intertwined, it seems to me that making such a distinction is pretty much meaningless, except to push a political agenda.

      Sure, a tax directed at companies will affect the amounts they give and take from people. But conversely, a tax which is directed at people will also affect the amounts they're willing to give and take from companies.

      Any tax is really just a tax on the economy as a whole, so who has to pay any tax should really be decided solely based on where is most efficient to extract it.

    6. HausWolf

      Re: Companies don't pay tax

      I don't think moral and ethical mean what you think they mean.

      I'm also thinking perhaps a companies complaints about IP and trademark protection should get the same treatment they give to the tax laws.

    7. The Vociferous Time Waster

      Re: Companies don't pay tax

      About £30m was paid in income tax - that is the bit the lefties are forgetting.

    8. Andy Nugent

      Re: Companies don't pay tax

      paying dividends doesn't lower your profit. Dividends come from your profits.

  4. James 51

    What are they doing paying out on shares of they are making a loss? You'd think the shareholders would prefere he focuses on keeping the business solvent. Unless they know something the rest of us don't ^^

    1. J.G.Harston Silver badge

      They're not making a loss, as demonstrated that there was sufficient profit to pay £4000 tax on it. The profit is so low because they've spent almost all their trading surplus on paying staff and shareholders - who then pay a chunk of that in tax as income tax and national insurance.

      1. Anonymous Coward
        Anonymous Coward

        Of course that is true that those shareholders will be paying the tax.

        But where do those shareholders live? They will be paying their own countries tax.

        This isn't a dig at them, this is a dig at the UK's technology sector, it is pretty terrible now and all the companies that are dominating the UK market are based in other countries.

      2. James 51

        On a company the size of facebook £5,000 should be considered running at a loss. All it would take is a few days of extra heating/cooling requirements or even hire a cleaner on a part time basis and they'd be in the red. There has probably been some tax management deployed to managed the figure to that level.

        1. SkippyBing Silver badge

          'On a company the size of facebook'

          But then most of Facebook isn't in the UK so oddly enough it won't pay most of its tax here. In fact as we're currently in the EU I'm surprised they pay any here instead of in Luxembourg...

          1. James 51

            They have engineers here and they have sales people too. It's just that the sale people, the customer and the docuements they sign are teleported to Dublin for the few seconds it takes to sign them.

      3. Anonymous Coward
        Anonymous Coward

        Surely a tax on the value of data is in order. Since it is valuable as everyone likes to say then transferring more than 10,000 USD out the country should be subject to money laundering law and also any data collected in the year be counted as taxable income. Oh well, maybe if they paid tax on data they might naturally rethink all those laws again.

        How long before data blocks are bought and sold on the open market ready to be mined? Such a f'kd up world we live in.

        1. Anonymous Coward
          Anonymous Coward

          @terra re Data trading?

          "any data collected in the year be counted as taxable income. Oh well, maybe if they paid tax on data they might naturally rethink all those laws again. How long before data blocks are bought and sold on the open market ready to be mined?"

          Correct me if I'm wrong but isn't that basically the way that Carbon Emissions Trading is supposed to work (except with carbon rather than data, obviously)?

          So surely you *could* have a data emissions boundary tax as well, for data emissions that cross trading boundaries. D E B T.

      4. Paul 76

        Err....

        Dividends are after tax.

        Payment to staff is before tax.

        If a company has a working profit of £1m but reduces that to zero by dividing it all up between employees, the no CT is paid (no profit) but IncomeTax and NI are paid on the money, which is more than the current CT rate.

        And, no, you can't just "move it offshore"

  5. J.G.Harston Silver badge

    Yes, force Facebook to pay their staff and shareholders less so they have more money to pay corporation tax instead and lose all that lovely income tax.

    Surely anybody with any tenuous grasp of sums would prefer to be collecting income tax ranging between 20% and 40% instead of corporation tax at 20% dropping to 19%.

    1. werdsmith Silver badge

      Yes exactly. And looking at those bonuses there will be quite a lot of it at 40%.

    2. DaveDaveDave

      "Surely anybody with any tenuous grasp of sums would prefer to be collecting income tax ranging between 20% and 40% instead of corporation tax at 20% dropping to 19%."

      Of course. And when you look at the net effects of criticising companies like Facebook, and at how ludicrous the case against them is, you see that really the desire is nothing to do with collecting taxes.

    3. NotWorkAdmin

      Which is exactly why...

      ...I wonder what the point of corporation tax even is. If we stopped charging it, companies like FB would employ more people here and they'd pay the PAYE. All corporation tax achieves as far as I can tell is to make domestic businesses uncompetitive and why the heck would we want that.

      1. Roland6 Silver badge

        Re: Which is exactly why...

        "...I wonder what the point of corporation tax even is."

        In general, it is a lever that enables a government to encourage reinvestment in a business; which includes paying declaring bonus's or employing more people. So to some extent it counters shareholder demands for dividends.

        Interestingly, recent governments have been encouraging companies to set up R&D capabilities in the UK, because these are largely profit sinks and whilst these are unlikely to declare a profit, they will employ people who will pay PAYE, NI etc.

  6. Dr. Mouse Silver badge

    £4k?!

    I pay more tax than that!

    Corporation tax is not fit for purpose. I firmly believe it should be scrapped, and all the profit should be taxed (at normal PAYE rates) as it is taken out of the company. Tax individuals, not companies: The companies just avoid it anyway*.

    * OK, so do many high-income individuals, but that's a separate matter.

    1. Anonymous Coward
      Anonymous Coward

      Re: £4k?!

      > I pay more tax than that!

      Get a better accountant then.

      Facebook paid the tax due (unless you are accusing them of something?) and there's nothing to see here. Or are you suggesting that everyone starts to pay MORE tax than is due?

      If this really grinds your gears, then go and speak to you MP about it. They are the one who can effect change.

      1. Dr. Mouse Silver badge

        Re: £4k?!

        Facebook paid the tax due

        I know they did. And it doesn't really "grind my gears", so much as it seems unfair.

        Now, in the end, they will be paying a lot more than that worldwide. However, I still feel that corporation tax is a waste of time.

        My own take on it would be (simplified version):

        * Scrap corporation tax.

        * Change the rules such that all individuals (including foreign) to pay tax on all UK income at standard income tax rates.

        * Tax the money as it leaves the company and is paid to individuals, in the form of dividends, wages, or anything else.

        Individuals are less likely* to be able to use fancy accounting to get out of paying tax, and have more to loose (no limited liability etc).

        * Yes, I know that there are rich individuals who find a way, and are able to move money outside the country etc, but they have less options available to them than large corporate structures.

  7. Prst. V.Jeltz Silver badge

    if , after you've paid staff , and theyve paid income tax , theres a profit - it belongs to that M.I.T. brat dosent it? zuck? so which country is he supposed to pay his tax in?

    (lets forget for a mo its a floated co. )

  8. Bernard M. Orwell

    Bet they didn't *actually* pay each employee a £96k bonus. It was almost certainly more like the top bods got millions and the technical staffers got a handful of cheap cakes.

    1. Tromos

      RTFA (@Bernard M. Orwell)

      494 employees COLLECTIVELY got £96000. That's an average of less than £200 each.

      1. Synonymous Howard

        Re: RTFA (@Bernard M. Orwell)

        Badly worded article.

        To quote the BBC ...

        "Its most recent Companies House filing shows the company as making a pre-tax loss of £28.5m last year, but the firm also paid its 362 UK staff a total of £35.4m in share bonuses.

        The share bonuses amount to £96,000 on average per UK Facebook employee."

        And the Gruniaad ...

        "Facebook made an accounting loss of £28.5m in Britain in 2014, after paying out more than £35m to its 362 staff in a share bonus scheme, according to the unit’s latest published accounts. Operating at a loss meant that Facebook was able to pay less than £5,000 in corporation tax to HM Revenue for the year.

        The share scheme was worth an average of more than £96,000 for each member of staff. Once salaries were taken into account, a British employee of Facebook received more than £210,000 on average."

        1. Yet Another Anonymous coward Silver badge

          Re: RTFA (@Bernard M. Orwell)

          It would be interesting to see the breakdown on that.

          Did a bunch of engineers in the UK each receive an extra £96,000 in cash, pay income tax on it, then spend the money in local shops.

          Or did a bunch of senior VPs receive a £1M in shares which they laundered through their own Cayman island holding companies so that when they sell them they will pay 0% capital gains tax instead.

        2. Steelhead

          Re: RTFA (@Bernard M. Orwell)

          But you can't believe the BBC or the Greendiad as they are clearly dangerous, subversive, left-wing Trotskiest publications, unlike the bastion of unbiased objective journalism that is El Reg.

      2. Bernard M. Orwell

        Re: RTFA (@Bernard M. Orwell)

        Thank you for the correction; I must've been half asleep.

  9. silent_count
    Pint

    The Worstall Effect

    After looking at the comments on this story, I'd like to thank Mr Worstall for his articles.

    It's fairly obvious that the readership of El Reg (myself included) has become markedly more economically literate, which in turn has raised the level of discussion.

    Cheers to you all!

    1. Tim Worstal

      Re: The Worstall Effect

      Most kind of someone to remember!

      1. This post has been deleted by its author

  10. JeffyPoooh
    Pint

    The usual scheme...

    A corporation can draft a memo to transfer ownership of their Trademarks to a holding company in a tax haven such as the Cayman Islands. Then they simply put their profits into an envelope, scrawl 'Trademark Royalty Payments' on the envelope, and mail it off to the Cayman Islands.

    The final punchline is that these 'Trademark Royalty Payments' (a.k.a. escaping untaxed profits) become a business expense that can be deducted from any other accidental profits that might turn up at the last minute. Net result, no profit year after year. And billions in cash sitting in some tax haven.

    This is just the easiest to explain tax avoidance scheme. They go up from there.

    Solution is an Alternate Minimum Corporate Revenue Tax. Tax any of a very long list of things that can't be moved, like keyboards and door hinges. Full deduction if they pay normal amounts of income tax.

    1. Stoneshop Silver badge
      Devil

      Re: The usual scheme...

      Tax any of a very long list of things that can't be moved, like keyboards and door hinges

      Keyboards can be moved. Although it's often cheaper to discard the one over here* and buy a new one over there**, with the one over there often allocated to another person than the one whose keyboard was discarded.

      * here being, you know, here.

      * not here.

    2. DaveDaveDave

      Re: The usual scheme...

      "This is just the easiest to explain tax avoidance scheme."

      No, it's just a fantasy - and one based on old antisemitic tropes, at that. Everything you describe is complete nonsense with no relation to reality at all. The taxman's not stupid.

      1. Anonymous Coward
        Anonymous Coward

        Re: The usual scheme...

        "No, it's just a fantasy - and one based on old antisemitic tropes, at that. "

        Dave3, you may find this hard to comprehend, but not everything is about anti-Semitism, no matter how far you try to stretch it in your rather obsessive mind. To clarify; some anti-Semites tend to work by attributing the worst facets of capitalism to "the Jews". But that does not mean that those worst facets do not exist, or that when Ted Heath described Lonrho as the "unpleasant and unacceptable face of capitalism" it could be dismissed as being an "anti-Semitic trope." It just means that some people try to smear Jews in general by assigning to them attributes which are generally accepted to be a bad thing.

        And in any case it isn't a fantasy - Apple currently have the difficulty that they cannot repatriate a whole lot of profit to the US without being taxed on it owing to the way it has been accounted for. But then the IRS is not stupid, whereas anyone who has actually had to deal with HMRC might have a less than nuanced view on the subject. Some people in HMRC are very good...and privately with people they know well may express views on the higher ups which are less than complimentary.

        1. Anonymous Coward
          Anonymous Coward

          Re: The usual scheme...

          A while ago I worked for a company where I was doing shift work and in particular the early morning shift starting at 5am sharp. I had to be there at that time to take over from somebody else in a mission critical role. So the company had a private hire firm collect me from home and deposit me at their offices as there was no reliable public transport at that time (we had to leave at 4:15am. They also informed the HMRC (as they are require to do) that I was getting a cab 5 days a week to (but not from) my place of work and the HMRC taxed me on that journey. When I phoned to speak to someone to ask why they taxed people on such journeys I was told that as I had received a financial benefit they taxed me on it.

          I said I don't get a financial benefit I pay every year for a travelcard to cover my journeys to and from work, the pub etc. and if I could use public transport I would. Nope comes the reply you've had a financial benefit "you must be able to see that?" I said that I couldn't see that as I was losing money. He comes back with the phrase “In some cases the financial benefit may not be immediately obvious but there will be a financial benefit to you. If you had a company car then the provision of the car is taxable as you have not had to provide your own car”

          “So rather like my travelcard that I can use all the time but I’ve paid for out of my own already taxed salary? Why don’t we follow my money in these two scenarios:”

          1 What I earn is paid to me taxed at 20%, I then pay for a travelcard (£1200) which I use to get around with and from work and would use to get to work. The company pays a car firm to deposit me at work and then you tax me on those journeys. Total cost of my travel over the year £1700. Net result I am out of pocket around £500.

          2 What I earn is paid to me taxed at 20%, I then pay for a travelcard (£1200) which I use to get around with. I travel to and from work on the travelcard and you don’t tax me on those journeys. Total cost of my travel over the year £1200 . Net result I lose nothing.

          Or are you suggesting that I would have paid for the cab myself if one wasn’t provided? Which to answer your next question I wouldn’t have done as I have already paid for a travelcard.

          So where is the financial gain for me? I agree there is a speed advantage and a more likely to be warm on the journey advantage, but not a financial advantage. Can you please explain where the financial gain is there for me because I can’t see it and my accountants can’t see it either. I’d be better off financially not taking the car they provide and getting into work when public transport is reliable enough i.e. before midnight.

          The explanation he provided was thus:

          “I'm sorry those are the rules and we’re not going to change them just because some people are disadvantaged by them.”

          "So you admit that I'm worse off?!?" but by that point he'd hung up. So lovely to see all these big corporations paying their fair share of tax.

        2. Anonymous Coward
          Anonymous Coward

          Re: The usual scheme...

          US Tax rules are quite different to the UK's. For a start US companies don't pay corporation tax on overseas profits until they are repatriated, and the US rate is relatively high, around 39=40% from memory. So Apple can easily repatriate and it can afford to repatriate as it has a shed-load of cash; but every few years the (not-stupid according to you) IRS offers an "amnesty" on repatriation at a bargain rate and no doubt Apple is waiting for that time to roll around again. Apple *could* save tens of billions by waiting, so it is probably thought to be worth the wait.

          The US IRS is also far more politicized than HMRC, the whole Louise Lerner debacle should be a complete blot on their reputation, but thanks to a complete disinterest on the part of the "Justice" department nothing will happen because the "right people" were targetted (aka our political enemies). For all its sins, I don't think HMRC has sunk that low.

          But as pointed out many times above, in a general sense corporates don't pay tax, the tax is paid by some combination of the shareholders, employees, customers, and, to a lesser extent, broader stakeholders.If Facebook paid more tax, it would come from some combination of the above.

          But if you really don't like FB and it's shareholders, simples, stop using it and encourage as many others as you can to do the same. That'll eventually remove it from the taxpayers list altogether.

      2. El_Fev

        Re: The usual scheme...

        What the flying fuck as , dodging tax by sending money to the caymen islands got to do with hating jews????

        1. Naselus

          Re: The usual scheme...

          Anyone ever get the feeling that DaveDaveDave is extremely anti-Semitic, and just projects his loathing onto literally every other subject? After all, he's declaring tax evasion to be fine here because anything else would be antisemitism... which implies that he thinks all Jews are tax evaders...

    3. AceRimmer

      Re: The usual scheme...

      "Tax any of a very long list of things that can't be moved, like keyboards and door hinges"

      Windows?

      Jokes aside, I would love to see them try and brick up the Gherkins windows

  11. Kevin Perry

    I always find it quite interesting (ie. annoying) that I pay tax on what income I get, not what "profit" I make (ie. what's left at the end of the paycheque after paying for essentials like food, mortgage, bills etc). If companies got treated the same, it would not only be more equitable but a damn site harder to avoid.

    1. Anonymous Coward
      Anonymous Coward

      Yes, but take, say electricity. If the leccy firm had to pay tax on all the income from electric bills, before paying for fuel, distribution, wages etc. Then your electric bill would be a lot higher. Maybe you think that is ok because it is more equitable.

      Firms are not individuals.

      Nor can you say Facebook make a lot of profit here if they have huge cost centers elsewhere that are necessary to make that income. Apart from that it was not invented in the uk and so it is not unreasonable that the original inventors ate rewarded. The fact that the us tax system tolerates its own firms holding so much cash offshore is another problem entirely.

      1. Anonymous Coward
        Anonymous Coward

        "Firms are not individuals."

        ?

        I thought US law said that corporations could be considered as individuals for legal purposes (when it suits the corporation)?

    2. sjaddy

      let's take that one step further.

      You work for company A and they pay you £40k a year which is what you are taxed on.

      Company A's income is £45k a year. Out of which they pay you £40k and the other £5k goes on electricity and other non negotiable costs such as building, internet etc. So there is no profit at the end of the year and nothing to currently be taxed on.

      So Company A is now taxed on £45k a year (because that is fair to you) - even at 20% tax that means they are paying £9k in tax.

      If they only had an income of £45k and they have had to pay £5k in non negotiable costs, and £9k in tax (because that is fair in your eyes) - then suddenly they only have £31k to pay you.

      Oops - you have just done yourself out of £9k a year. Would you be happy with that?

  12. Tim Worstal

    It's better than people think....

    OK, so, the £4k tax payment is not the tax due on this years trading. Corp tax is paid a year in arrears. This is the tax paid for the previous trading year.

    The other issue is that the company doesn't really trade in the UK at all. What it has is a bunch of engineers (dunno, maybe infrastructure, data centre, possibly research, whatever). But that company's not selling anything here.

    All ad sales are done via Ireland. So, what Facebitch Ireland does is, every now and then, send a pot of money into Facebitch UK to pay those engineers. Any tax being owed at the end of the year is simply because they sent a bit too much in.

    There's really no connection at all between what the real company is doing and the corporation tax bill being paid.

    Finally, don't forget that there's two sets of NI paid on those wages (and there is no cap on employers' NI). Top end of those bonuses will be paying 54% or so in taxes upon that income. Much more than the corporation tax rate.

  13. Drefsab_UK

    Im with the tax should be paid on income at a certain point. I find it crazy that facebook UK pay less in tax for a year than I pay in a quater. Sure im not on the lower income bracket but im not on the upper either so surely a compay as big as this should be paying more than an idividual.

    1. xerocred

      Paying more than an individual - They do just not to the uk.

      1. Tom 7 Silver badge

        They do just not to the uk.

        And that's a problem for the UK and we should sort it out.

        I dread to think how much of our lauded GDP (see the weekend article) now heads offshore without paying for the roads its driven on or all the other services that need to be paid for for it to be generated and launched out of the country.

        I wonder how hard it would be sit down and calculate (say) just how much government subsidy for power and internet provision etc could be realistically allocated to this overwhelmingly generous contribution to the UK economy.

        1. xerocred

          Re: They do just not to the uk.

          I used to be the overseas office of a small UK firm.

          All the invoices and $$ went back to the UK, profit if any was wholly in the UK and tax was paid in UK etc... there was no tax paid in my overseas location, except by me on my salary.

          That is how it works.... This is exactly what Facebook are doing.

          The alternative you suggest is that the small UK firm has to pay corporation tax on all the /revenue/ (or profit - how to work that out) that it earns in the 50 different countries it does business in, with their different tax years and special rules and so on.

          The current system is not perfect but the alternatives are expensive tax authority bureaucratic nightmares. You might nail Facebook for a few millions but just watch the SMEs get crushed by additional unnecessary tax accounting charges.

  14. Anonymous Coward
    Anonymous Coward

    This would seem to present an excellent opportunity to increase personal taxes and blame large overseas companies - it *could* end up being a revenue-neutral exercise.

  15. batfastad

    Minimum

    So that entity paid their legal obligation of corporation tax. Like I paid my legal obligation of income tax.

    Hate the game not the player!

    1. Graham Marsden
      Thumb Down

      Re: Minimum

      > Hate the game not the player!

      It helps when the playing field is level and the rules are not rigged in favour of the big players and against the little people...

      1. batfastad
        Stop

        Re: Minimum

        > It helps when the playing field is level and the rules are not rigged in favour of the big players and against the little people...

        Sort of. But blame incompetence, ignorance and a mid-to-top civil service, MPs and their advisors filled with blazer eunuchs and history of art degress. Hardly the fault of Facebook et al.

        Just out of interest which specific rules are you referring to that are rigged in favour of big players against the little people?

        1. batfastad
          Pint

          Re: Minimum

          * Please excuse my lack of typing ability and poor sentence construction.

          I blame the 10 minute post editing deadline. And ----------------------------------->

        2. Graham Marsden

          Re: Minimum

          I am not a tax expert, so don't expect me to cite specific rules and I doubt you're an expert either, so even if I did, would you be able to validate my claims?

          That is, however, of course, the point. Neither of us can afford the "buy in" which is the cost of the expensive accountants and tax experts who know the loopholes and avoidance methods that exist in the incredibly complicated tax rules we would need to negotiate to play the game on their level.

          1. Graham Marsden
            WTF?

            Re: Minimum

            Apropos of this: here's an article published just today "Now the Tories are allowing big business to design their own tax loopholes"

  16. Anonymous Coward
    Anonymous Coward

    It's seems straightforward to fix imo, just like contractors,

    Here's what you can offset against your revenue and here is what you can't.

    E.g. As a contractor you can offset travel and accommodation costs up to a certain amount but you can't offset a new car. As a company you can offset costs on your revenue from other companies but not from any connected to yourself or any in tax havens.

    If you do business in a country then you should pay that countries tax.

    Would that not work?

    1. xerocred

      "If you do business in a country then you should pay that countries tax."

      No it won't work.

      Well as my personal experience example above. Imagine you are a small SME selling stuff all over the world - do you really want to have to do a full corporate tax return in every country you sell to just because you sold 10 widgets costing $300 there? Then if you have no sales the next year you'd still have to do the tax return to prove you sold/earned nothing. And, say, for others selling to the UK you were late submitting tax return or made a mistake you might get nailed a penalty that could be far in excess of the value of sales.

      How would you apportion 'profit' to each country? you'd have to include the cost of compliance with local tax laws and subtract what the local tax account is charging you.

      For my company, we would sell a few 100K's worth of stuff (ideally, but maybe only $250 yes, really!) to different countries... I personally dealt with 8 countries our profit margins was not like Apple. Should my salary be attributed to the country I reside and pay tax in or from the region I oversaw or be apportioned equally across the countries or in proportion with the sales volume?... Or do you suggest I have to pay salary tax in 8 different countries too? Think about it for a moment and the current system is simplest and workable - maybe not perfect but there's nothing better. Maybe if the OECD normalizes tax rates there will be less gaming the system and it will work..

      So there are loads of reasons it won't work.

  17. Anonymous Coward
    Anonymous Coward

    A fair valuation

    That's about 0.000001p per fake virtual facebook "friend" - wouldn't pay more for it :-)

  18. Zog_but_not_the_first
    Devil

    No doubt...

    There will be apologists explaining how it's all perfectly legal, discharges duties to shareholders etc., but you would have to be some sort of **** not to see this as deeply wrong.

    1. codejunky Silver badge

      Re: No doubt...

      Checkout Tims comment a little bit further up to see how else it can be seen but not wrong.

    2. Anonymous Coward
      Anonymous Coward

      Re: No doubt...

      No, you'd have to be that sort of whining grievance riddled git to imagine it WAS that deeply wrong.

      You're just not getting tax incidence and who actually pays. You're all bound up in, it's not fair wah wah wah. Why SHOULD FB pay a lot of extra tax, just so you don't have to pay , even though you and every other user and worker for facebook will pay instead. And that's fair ? Grow up boyo.

  19. Anonymous Coward
    Anonymous Coward

    I wish

    Their marginal tax rate was 100000% (or higher). Ok so I refuse to use Faceblock so if it disappeared off the face of the earth tomorrow then I'd still go Meh!

    If they are doing the 'license' fee trick then F**k Them and every company that does the same.

    If that was outlawed then I'd cheer.

  20. ukgnome

    Has anyone set up a just giving site - I feel the need to help out this ailing company.

    1. hplasm
      Happy

      Has anyone set up a just giving site

      I might give a shit...

  21. JimP

    We need a law about these types of computer "product". It's been said enough times that if it's free then it's you and your data which are the product, and that resides wherever you do. As such, if there is any tax to be paid, it should be paid in the country the product is in, and an export tax levied on exporting that product. Time for the EU to step up to the plate as I don't expect certain other nations who benefit from this to do anything about it.

  22. John Lilburne

    So how many commenter use FB accounts?

    and why are you there?

    1. Tom 7 Silver badge

      Re: So how many commenter use FB accounts?

      I have one. But its a bit like having a village square (or Mall in modern parlance) where I can meet my friends and have a chat. I'd rather we met on Diaspora or something far more suitable but someone sent a free bus to get them all there.

      I just hope in 10 years time people will have their own Open Standards Compliant diaspora type hub either with their FTTP* or self hosted in the mist.

      * sorry - my version of a hoverboard, one I've ridden alas.

    2. Anonymous Coward
      Anonymous Coward

      Re: So how many commenter use FB accounts?

      It's by far the easiest solution for managing events ( eg: $sport match on saturday, whole team is invited, click the button if you're playing ).

      I'm ~30, so pretty much all my friends are on it. The odd outlier can be reached by SMS, but facebook is so ubiquitous, that pretty much my whole social life revolves around being *organised* on facebook.

      The main function of the service which seems to be moaning and taking pictures of food, I can live without, and is something to flick through while waiting for a doctors appointment, etc.

  23. Come to the Dark Side

    "Its most recent Companies House filing shows the company as making a pre-tax loss of £28.5m last year, but the firm also paid its 362 UK staff a total of £35.4m in share bonuses.

    The share bonuses amount to £96,000 on average per UK Facebook employee."

    From the BBC so no guarantees on reliability but seems at odds with this stories £96,000 overall.

    1. Anonymous Coward
      Anonymous Coward

      Well....

      The freely available company accounts clearly show in Note 16 that £35.4m has been allocated to employee share based payments so the the average, if there are 362 employees, is about £97,000

  24. This post has been deleted by its author

  25. Cynic_999 Silver badge

    They are paying what they are legally obliged to pay, no less. Do you seriously expect companies to treat the government like a charity and give them more money than they are legally obliged to pay? As a previous poster said, if you don't like it blame the rules of the game (set by government) not the players. Though you may find you like the consequences of changing the rules even less.

    In any case, the total revenue to the government from the UK operation is far more than that - every UK employee would have paid income tax and NI on their salary, and almost every UK employee would have paid VAT on what they bought with the salary they had left, and council tax on their home.

    The UK gets tax from the profits made by overseas subsidiaries of UK companies and loses out where the reverse is true - it's swings and roundabouts.

    1. Anonymous Coward
      Anonymous Coward

      It's amazing that so few people on here seem to understand it's swings and roundabouts.

      Like the corporate giants of BP http://www.bbc.com/news/10282777 or HSBC 7.9B http://www.ft.com/cms/s/0/db89a232-ecf7-11e4-bebf-00144feab7de.html#slide0 that make huge money overseas but bring it back to the UK and pay tax here.

      Many fail to understand by nailing Facebook for a bit of profit attributable to the UK they might end up losing world wide profit of many other proper firms to other governments that apply the same rules.

  26. john devoy

    Yet another huge company shuffling the books to appear to make no money, they had money to buy oculus for over $2 billion though.

  27. Camilla Smythe

    Dumb Fucks.

    Last time I was up at A&E everyone else decided that once their ailments were fixed they would connect via FaceBook. You know?

    Hi I have just broken my arm. 257 Likes.

    We'll be around to take you up to A&E in a bit. Just got to Like Something Else. 3054 Likes.

    Nice cast. Love your Instagram Photo. 40,567 Likes.

    I sort of felt left out and asked the nurse if my nose bleed might be fixed by a full frontal lobotomy so they put plastic balloons up my nose and inflated them to a four day full on headache size. Then they deflated and fell out with the nosebleed still in place so I discharged myself and walked out whilst the duty Doctor followed me through the corridors and down the stairs warning people to show me no sympathy because I was not a member of Facebook and they would not be able to follow and 'Like' my recovery.

    Having avoided all 'the pods' on the walk/stagger home I went to bed with a finger on the offending nostril and spent the rest of the night sniffing clots until one, or part, of them finally caught. Follow up was Post Body Snatchers Neck Filler involving Liver and Kidneys along with multiple fags to restore my haemoglobin levels.

  28. Boris the Cockroach Silver badge
    Flame

    Its really called

    "Taking the piss"

    I have to pay PAYE and NI, I cant escape them as I'm employed and my employer deducts them from my wages before they are transfered to the bank (whether he sends the money onto HMRC is another matter).. also that tax is NOT repeat NOT paid by my employer I pay it, if income tax rates were 70% he'd still pay me the same as if income tax rates were 1%, my labour is a fixed cost regardless of tax rate.

    Facebook UK are making sales, I dont care if they are being sent via Ireland, the cayman islands and the secret moonbase. A UK company calls facebook UK and says "I want to buy advertising space" Facebook UK give them the price and its paid making Facebook UK a profit, and you can be damned sure the tax on the yearly profits is more than 4 000 quid.

    So if I have no choice about being forced to pay my share of taxes, why the f*** are our government letting big companies get away with paying less tax than I FUCKING DO!.

  29. Wolfclaw

    So it cost FB and extra £1000 for it's accountant to find a way to avoid paying tax, a worth while investment !

  30. Anonymous Coward
    Anonymous Coward

    In terms of tax, am I right thinking (pessimistically) that if each employee earned £30k, the total annual wage bill is 10.86m? 11% employers contribution, not deducted, 1.2m, 10% employee, £1.08m, let's say 20% PAYE, 2.17m.

    Total tax take for HMRC is approx £4.45M, and most of the dosh left after will be spent domestically on mortgages, sky, Costa, kronenbourg, etc.

    I didn't download the accounts, but this seems reasonable. They must value UK IT innovation to operate here. It's a shame the focus is on pocket change.

  31. Sebastian A

    Has the wealth trickled down yet? Are we all above average now?

    1. codejunky Silver badge

      @ Sebastian A

      "Has the wealth trickled down yet? Are we all above average now?"

      Yes, just look at the majority of the world. We are even moderately successful against the developed world too. Look at our poor and look at the majority of the worlds.

      1. JHC_97

        Re: @ Sebastian A

        I think he means from 1969 and 1980 when the tax on the wealthy was massively slashed and we were told we would all get richer as a result.

        The last 30 years has seen a massive jump in the wealth of the extremely wealthy and in real terms a drop in the income of the middle class. This is unprecedented in a period of technical innovation such as the internet (see motor car, steam engine etc for earlier tech advances).

        1. codejunky Silver badge

          Re: @ Sebastian A

          @ JHC_97

          "The last 30 years has seen a massive jump in the wealth of the extremely wealthy and in real terms a drop in the income of the middle class."

          It has also seen an incredible drop in price for most goods while increasing the range of products available for almost everyone. Vast computing power dreamed of only a few years ago is available to most peoples budget.

          Wealth and income are also different things so being wealthy is not the same as a high income. Having a high income often doesnt mean high wealth. There has also been the head first consumption of debt which will certainly drag down the wealth of people using it badly. We had one of the longest booms in recent history which really will increase the wealth of people who invest in assets instead of just spending it all.

          The idea that trickle down doesnt work is an opinion and not one I agree with. I have never been employed by a poor person.

  32. Bladeforce

    Classic Case of..

    ..global economy that benefits the Yanks only. Always onto a loser with this "global economy" when every country has different taxes. Never going to work just like the EU's open border policy

  33. Pellinor

    What's happened here seems to be due to Facebook's employee share scheme (which I believe is actually restricted stock units, but the principles are the same).

    I don't know any details of Facebook's scheme, but with RSUs generally the employer says to employees that if you meet performance criteria you may get a certain number of shares. At the end of the vesting period you get issued a proportion of these (depending on how well you did), which will be worth a fair amount (especially if the share price has been increasing, which Facebook's has been).

    Although there's no direct cost to the company (all they do is issue shares), for accounting purposes it gets treated as if the company has paid you a bonus. For tax purposes, the company gets a tax deduction equal to the current value of the shares you've received; you get taxed on the same amount; and there's NI on it too.

    So here we seem to have have Facebook with a loss of £28.5m, after an RSU charge of £35m, and so underlying profits of £6.5m. There is however no corporation tax on these profits as the £35m tax deduction wipes out the taxable profits.

    If the RSUs weren't issued, there would be corporation tax of around £1.3m payable by Facebook,

    As they were, there is income tax and NI of around £20m or more, payable by the employees and the employer. There's also a big tax loss in Facebook UK, which will save maybe £5.7m of tax in the future.

    Overall, by shifting profits from the company to the employees, Facebook has increased the Treasury's tax take by £13m or more. And, incidentally, put the rest of the value in the hands of UK employees, rather than the company's shareholders generally.

  34. Anonymous Coward
    Anonymous Coward

    Bonuses sound pretty mean

    Even by UK standards....

  35. Anonymous Coward
    Anonymous Coward

    Corporate theft

    People sleep rough because of these bastards!

  36. Green Nigel 42

    Corp Tax conudrum Zucks

    This situation is not unique to the UK, though our Byzantine tax system clearly does not help us (thanks Gordon Brown, you added a sizeable chunk to it).

    What to do then, tax at the point of sale/transaction, nope punishes our smallmedium sized exporters with excessively detailed tax returns.

    Leave as it is. Again no, unacceptable to SMB's who have to pay the prevailing corporation tax, whilst the big boys don't whilst also benefiting from economies of scale.

    International trading agreement, TIPP & TPP might have some support if it addressed this issue of legalised theft (I assume it doesn't as I can't check as its a secret deal).

    Cutting Corporation tax all together,as being unenforceable and unfair. Then raising other taxes to compensate, (pile it on to the plebs such as you and me, after all what are we going to do about it in the next 4 3/4 years!). It might be tempered if the Tax system could be rationalised to an acceptable level for all.

    So what are we left with, personal boycott, sign petitions (via Facebook!!), complain to your MP?

    As I said this whole situation Zucks.

  37. VascoLSN

    Idea

    The UK government should nationalise the UK operation. I'm sure global Facebook will be glad to get rid of such a poorly performing unit.

  38. Zmodem

    nobody in the uk cares for facebook, its still all forums you can post whatever you like on, with line spaces, to go with all the "pirate" radio station going over DAB and sky and shoutcast and icecast, you can login with google+ to go with youtube music videos and live events

  39. isomosi

    HMRC - struggling to leave the dark ages

    Strikes me that we've been let down by our tax collectors. The world has been moving on for some years and the global and digital nature of business transactions hasn't been a stealthy transition - rather it's been an "in your face, obvious to all" journey; well observed and documented. Except, that is, by HMRC. So now, in 2015, when our tax laws are antiquated, geography bound, anachronistic and ineffective - we blame google, facebook, amazon et al when in fact we should be blaming our own tax collection body for failing over a number of years to read the runes and update our tax laws to reflect the world in which we live.

    I echo the sentiment expressed by one of the organisations concerned - there's no "moral" obligation to pay tax. It's a legal obligation. No private individual overpays tax because he/she feels a moral obligation. If we have additional money, and a conscience, we support charities. We pay the amount of tax that the law requires us to pay. HMRC needs to get its finger out and make sure our tax laws are modern and relevant rather than moaning about how big corporate should somehow get a sense of injustice. Come on Lin - jump into the present

    1. Anonymous Coward
      Anonymous Coward

      Re: HMRC - struggling to leave the dark ages

      "HMRC needs to get its finger out and make sure our tax laws are modern and relevant "

      ?

      The big six/five/four bookkeeping companies (the ones that warned us about 2008, right) and their Parliamentary puppets make the law, not HMRC.

      1. Zmodem

        Re: HMRC - struggling to leave the dark ages

        they should sort out housing benefit too, if you have a part time job, they keep taking your wages away making you pay more and more rent so you never more then £40 a month better off then you are when your on job seekers allowance, but if your middleclass and have a full time job, you can have £10,000 savings, tax credits and housing benefit

  40. Anonymous Coward
    Anonymous Coward

    Anybody still reading?

    Apologies if you've heard it before....

    These Interweb companies making money from UK users but paying no significant tax in the UK (not just Facebook, and maybe not just Interweb companies either but they're easiest to sort out).

    Presumably if they're making no money from the UK they wouldn't really mind their UK operations being forcibly closed down for a little while (e.g. accidentally put Facebook on Cameron's big-ISPs-only internet blacklist, kill four* birds with one stone).

    The companies involved couldn't even complain about loss of trade because they've already claimed they're making no money from this country therefore there's no loss to complain about.

    Seems fair, right?

    Anonymous. Because.

    * Four:

    1) If you make money from the UK you pay tax in the UK. You have been warned. HMRC can be very flexible, so long as you don't totally take the mickey. Ask any non-dom.

    2) Government-dictated interweb blacklists are a silly, no actually very dangerous, idea

    3) Big ISPs aren't the only game in town

    4) Without Facebook, life will go on, just differently.

  41. Dave 15 Silver badge

    Fine

    So when the good old treasury sends its folks around to me I will pony up the shaving from the edge of a penny and claim I am paying the same % as these guys.

    Frankly it is time the treasury started actually doing something about it.

    Simple answer from my view is a single flat tax on all income whether personal or company. If the company gets paid anything at all in the UK then it pays the flat tax on it... don't give a fig if it is profit or not. I don't pay tax on the profit I make from going to work... I have to pay for my car, for the fuel (soon it seems for the car parking space at the office) for the christmas party invite (unless it is cunningly hidden as a company meeting), for coffee or lunch if its provided in the office etc etc etc

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