3 Mar 2016

Facebook gets more from HMRC for adverts than it pays in tax

Six times as much money is being paid to Facebook for advertisements telling people to pay their taxes, than the multinational company itself pays in tax.

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Facebook HMRC tax earnings

Facebook receives more money from Her Majesty’s Revenue and Customs for ads urging people to pay taxes than they pay in corporation tax here.Facebook said: “We are compliant with UK tax law and in fact all countries where we have employees and offices.”

Posted by Channel 4 News on Thursday, 3 March 2016

Channel 4 News can reveal that while Facebook paid just £4,327 in tax in 2014, the following year HMRC paid them £27,000 for adverts placed on the site.

The figures released under the Freedom of Information act reveal that, despite the company’s low tax bill, the HMRC is increasingly turning to the social networking site to advise people how and when to pay their own taxes.

The £4,327 figure that Facebook paid in corporation tax in 2014 is actually over £1,000 less than the average worker paid into the HMRC coffers over the same period.

A UK worker, who with an annual salary of £26,500, would contribute a total of £5,393 through income tax and national insurance.

Facebook was able to pay this amount in 2014 because it made an accounting loss of £28.5m in Britain – after paying out more than £35m to its 362 UK staff in a share bonus scheme.

Operating at a loss within the United Kingdom the company was able to pay less than £5,000 in tax to the HMRC.

Globally, Facebook made a profit of £1.9bn on revenues of £8.2bn in 2014.

HMRC has also spent £5,000 in advertising on twitter between February 2015 and January 2016.

Overall Government departments spent £489,329 in 2014-15 on ads with the social media giant’s UK arm – 113 times Facebook’s corporation tax bill.

Chancellor George Osborne has pledged to crackdown on tax avoidance by large companies in the UK.

In January he agreed a £130million tax deal with Google, another tech giant that has come under pressure over its low corporation tax bills.

The deal comes after HMRC, Britain’s revenue service, spent several years investigating whether the tech group had skirted its tax bill by allocating profits to its European base in Ireland.

However no such deal has been done with Facebook.

A spokesperson for the HM Revenue & Customs said: “Like all large organisations we find that an increasing number of those we serve communicate through and get their information from social media

Our investment in social media is carefully evaluated to ensure we are getting maximum value for the taxpayer.”

Facebook said: “We are compliant with UK tax law and in fact all countries where we have employees and offices.”