Tory accuses tech firms over tax

Major technology firms including Apple, Amazon, Google and eBay have been accused of failing to pay their fair share of UK tax by a Tory MP in the Commons.

Former tax lawyer Charlie Elphicke said the Exchequer was losing out on hundreds of millions of pounds as a result of the use of legal avoidance measures. He called on the Government to refuse to do business with firms which did not meet their tax obligations.

Mr Elphicke, MP for Dover, who described himself as a "poacher turned gamekeeper", blamed Labour for failing to keep up with the technological revolution which enabled companies to operate in the UK but avoid the country's taxes.

He told the Commons: "The Labour government allowed massive, egregious and unacceptable tax avoidance for a decade on an industrial scale.

"It is a disgusting record in government. There was a massive change during that period, with the rise of the internet age, tax bases were threatened, the Labour government was asleep at the wheel and failed to reform our tax system to understand and take into account the new technologies and the new threats to our tax bases."

Giving examples of "massive and inexcusable tax avoidance by multinationals" he said: "Let's take the example of Apple. In the last financial year they had earnings of about £6 billion, estimated, in the UK.

"It has an operating margin of some 33%, the profit in the UK would be roughly £2 billion. That would be roughly tax attributable to UK profits of £500 million. How much tax did Apple pay? £10 million in the UK. Not £500 million, but £10 million. I think that that is unacceptable."

Amazon in 2010 had revenues attributable to the UK of £2.8 billion, he said. "It is estimated that it should have paid some £35 million in tax on some £125 million of profits. How much tax did Amazon pay? The answer is nothing."

Search engine giant Google should have paid around £180 million in tax, he claimed, but declared a loss of £22 million. Auction website eBay should have paid £50 million in tax, he told MPs, but actually paid £3.4 million. Facebook paid £400,000 in tax rather than the £14 million Mr Elphicke claimed it should have contributed to the Exchequer.

"This level of avoidance is unacceptable," Mr Elphicke said. But Jacob Rees-Mogg, Tory MP for North East Somerset, said the firms were doing nothing illegal: "The problem is the law, not the avoidance. The avoidance is legal but the law may be wrong."