By Alex Hern
‘Corporate income tax adjustment’ made as settlement after multi-year audit by tax authorities into iPhone-maker’s UK operationsApple Europe has agreed to pay more than £100m of extra taxes following an “extensive audit” by HMRC, the firm revealed in accounts filed on Monday.
The company said the payment of £137m, including interest on the unpaid tax, was a “corporate income tax adjustment” covering the years until September 2015 that “reflects the company’s increased activity”. It also notes that its income tax payments “will increase going forward” as the adjustment is incorporated into future tax bills.
HMRC reportedly pushed Apple Europe – one of the company’s UK subsidiaries that provides marketing services in the UK for its Ireland-based international headquarters – to agree to the larger bill by noting that it had claimed an appropriate commission on the leads it generated.
In a statement, Apple said: “We know the important role that tax payments play in society. Apple pays all that we owe according to tax laws and local customs in the countries where we operate.
“As a multinational business and the largest taxpayer in the world, Apple is regularly audited by tax authorities around the world. HMRC recently concluded a multiyear audit of our UK accounts and the settlement we reached with HMRC is reflected in our recently filed accounts.”
Apple primarily operates in the UK through two subsidiaries. Apple Retail UK Ltd runs the group’s stores and online retail operations in Britain, while Apple Europe Ltd, operates the back office functions, sales support and marketing.
In the 18 months leading up to 1 April 2017, Apple Europe Ltd reported pre-tax profit of £297m, and paid tax of £57m on that period’s earnings as well as the £137m in back taxes. In the year leading up to September 2016, the most recent accounts available, Apple Retail UK Ltd reported a pre-tax profit of just £17.6m on turnover of more than £1bn, and paid tax of £13.8m.
In late 2017 Apple agreed to pay a substantially larger tax bill of more than €13bn that it owed to the Irish treasury. Unusually, Ireland had argued against billing Apple, but was forced by the European Commission to collect the back taxes that the Commission argued constituted unfair state aid.