Lawyer vows to take tax fight to Amazon after Uber campaign
Amazon’s tax bills will be the next target for the legal campaign group currently chasing Uber for its alleged sales tax liabilities in the UK.
The independent Good Law Project says the ecommerce and web services giant should be responsible for passing VAT to HMRC, rather than leaving this to its suppliers.
Many products listed for sale on Amazon Marketplace undercut high street competitors on price by as much as 50 per cent. However, this is often not because of efficiency savings or other cost-cutting measures of the retailer, but the fact that UK VAT rules state that firms which have a turnover of less than £85,000 do not have to charge the sales tax, and the Amazon Marketplace is the front for numerous small businesses that fall under this threshold.
No-one is expecting these small companies to pay more VAT than the law requires, but as the marketplace Amazon makes a profit out of each of these sales and so the Good Law Project argues Amazon should be paying the VAT and recouping it from smaller firms when required instead of hiding behind the idea of being a platform.
Amazon UK, which generates a yearly turnover of £2.35 billion, says it pays all tax required under UK law and has recently introduced simple tools to allow the sellers on its site to register and report VAT if and when they need to in order to comply with their own independent obligations to HMRC.
If the group does bring a case against Amazon, it will be the latest in a series of cases against multinational tech firms across the globe, where these billion-dollar firms are accused of not paying their fair share.
The Good Law Project itself is currently fighting a case against the global ride-sharing company Uber. The group claims Uber should face a sales tax audit, and has brought a judicial review against HMRC for failing to collect as much as £1bn in VAT.
Discussing the legal challenge, which is expected to hit headlines again later this week, Jolyon Maugham QC of the Good Law Project said: “Tech companies need roads to deliver their products. They need the legal system to protect their intellectual property rights. They need a stable political environment. They need an educated workforce.
“All of these things cost money, but they are not prepared to contribute to those costs.”
Uber says it already pays all applicable fees under UK sales tax law and argues it is a digital platform where drivers can book fares and not a taxi firm that offers car rides and therefore not liable to collect VAT on the cost of its rides.
An HMRC spokesperson said it was ‘simply untrue to suggest there were major inaccuracies’ in the way it applied tax rules to online firms.
These challenges follow a European Commission ruling from 2016 that forced Ireland to collect more than €14 billion in taxes and interest from Apple after it found that Ireland offered Apple “illegal state aid” with its sales tax deduction.
Photograph by Steve PB