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Sophia's Blog

Apple’s two UK subsidiaries pay just £9m in taxes for 2020 despite annual sales of £1.1bn

The US technology firm Apple paid even less tax in the UK last year even as it recorded £1.1bn of in-store sales despite country-wide lockdowns.

In its latest annual results filed at Companies House this weekend, the firm’s two UK arms – Apple Retail UK and Apple UK – posted sales of £1.1bn and £372m respectively for the year ending 26 September 2020.

However, as it also recorded more expenses, the iPhone maker paid only £9.2m of tax in the UK for the two divisions in 2020 – even less than the previous year’s bill.

According to accounts prepared by tax advisory EY, Apple’s UK retail operations posted £337m gross profit – almost exactly the same as 2019’s levels – but thanks to higher costs, logged a lower operating profit of £29m, compared with £37m in 2019.

The company, once known as Apple Computer Sales UK, was forced to close its UK stores due to rolling lockdowns across the country, suffering a 20 per cent slump in revenues to £1.1bn in 2020, down from £1.4bn the year prior.

Though the retail arm’s total tax bill came in at £4.5m for the full-year period, it chose to defer £1.8m of this under a payment scheme, paying just £2.7m this year. Apple’s other UK arm reported that annual operating costs had risen by 26 per cent year-on-year, reaching £330m for the year ending 26 September 2020, due to what are described as “increased activities performed by the company”. Apple UK’s tax bill for 2020 came in at £6.5m.

The group, which is one of the world largest companies with a value of more than $2trn (£1.4trn) has 38 stores and employs 7,115 staff in the UK, and it is not the only US tech company to make billions in sales but pay so little in corporation tax to Her Majesty’s Revenue and Customs (HMRC).

Many US firms take advantage of UK tax laws that allow billions in sales to bypass UK service subsidiaries and be funnelled to European head offices in tax-friendly locations.

Apple points out that when combined with figures from Apple Europe, which is also based in the UK and published its accounts this weekend, it suffered a 3 per cent decline in turnover to £2.3bn but a 16 per cent growth in operating profit, up to £592m on 2019. Apple Europe’s sales increased to £810m in 2020, up from £689m the year prior.

The total tax payments made in the UK for the three entities have grown from £91m in 2019 to £97m in the most recent year.

A spokesperson for Apple said: “As the biggest taxpayer in the world, we pay all taxes owed in accordance with each country’s laws and regulations everywhere we operate in the world. We also have been open about our strong support of the OECD’s development of a new inclusive tax framework.

“Beyond tax payments, Apple invests in the UK to further innovation and drive economic growth, including supporting 330,000 jobs across the country. In response to Covid-19, Apple additionally made voluntary financial contributions, and donated equipment and close to a million units of PPE to the NHS.”

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