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Facebook paid £4k in tax. HMRC then paid Facebook £27k – for ads
Free content ad network says it'll pay much more tax in future, though. So that's OK
Facebook is to pay millions more in taxes in the UK, a day after it was revealed that HMRC paid Facebook six times more to advertise on the site than the ad platform paid HMRC in taxes during 2014, according to reports.
Facebook is, it says, undergoing a major overhaul of its tax structure.
A spokesman for the free content ad network told The Register: "On Monday we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland. What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales."
It said the that profits from the majority of Facebook's advertising revenue initiated in Britain will now be taxed in the UK and the company will no longer route sales through Ireland for its largest advertisers.
"In light of changes to tax law in the UK," continued Facebook's spokesman, "we felt this change would provide transparency to Facebook's operations in the UK. The new structure is easier to understand and clearly recognises the value our UK organisation adds to our sales through our highly skilled and growing UK sales team."
In 2014 Facebook paid £4,327 in tax. However, according to a Freedom of Information response to Channel 4 News yesterday, the company was paid £27,000 by HMRC the following year for to place adverts on its site telling people to pay their tax.
A Facebook spokesman told Channel 4: "We are compliant with UK tax law and in fact all countries where we have employees and offices."
HMRC told the programme: "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."
The British government has said it may reopen its tax settlement with Google if it appears that HMRC has "settled for less corporation tax than other countries are willing to accept.".
Google has also faced criticism for its £130m ten-year back tax settlement with HMRC. It was also widely reported that France is seeking €1.6bn (£1.2bn) in back taxes from U.S.
Facebook currently employs 850 people in the UK and is building a new headquarters in London. ®