Tax me if you can: VMware UK tosses shrunken offering to HMRC

Just 11.52% on pretax profit. Virtualization juggernaut doing well in the distie stakes


Trendy social media firms and ad slingers often come under attack for hiring beanies to minimise their tax contribution, something they see as sensible commercial practice. VMware UK may fall into that bracket too.

Virtzilla's Brit ops paid an actual tax rate equivalent to 11.52 per cent or £1.997m on the £17.331m pre-tax profit it reported in the year-ended 2 February 2018, according to a online filing (PDF) at Companies House, er, hosted by AWS.

Turnover for the 13-month period was £297.5m, compared to £128.44m in the prior 12-month period to 31 December 2016, but this was not because VMware sold a load more software licences.

"The increased turnover is as a result of the company commencing as a limited risk distributor from 15 May 2017. Management are satisfied with the results for the year which reflect strong presence of VMware in the UK."

As well as acting as a limited risk distie for its shareholder, VMware International Ltd (VIL), the UK operation also provides EMEA management services to the VMware Group "along with conducting research and development services for the benefit of VMware Bermuda".

Before May last year, VMware's local biz had also provided sales and marketing "support" to VIL in the UK – VIL is itself based in Ireland for, er, tax purposes – but "ceased upon transition" to the new structure.

Despite this, headcount at VMware UK leapt to 746 from 515 in fiscal '16, and 601 of the staff were based in sales and marketing support up from 386. The highest paid director, excluding options, was handed £588,000.

Revenue for the year was broken down as such: licence and service revenue was £172.02m; intracompany marketing services came in at £87.7m; and £37.83m was intracompany R&D services.

The new financial year dates align it to ultimate parent Dell Technologies.

VMware said tax assessed for the year was "lower" than the standard rate of corporation tax, 19.23 per cent versus 20 per cent, but here is how it reduced that actual amount paid.

VMware UK reported a pre-tax profit of £17.331m, and so was due to cough £3.333m. But due to a share option decrease of £1.39m, £136k of expenses not deductible for tax purposes, tax rate charges of £19k and £101,000 for the transfer of assets, VMware UK actually handed £1.977m to the tax collector. At least the tax office didn't pay VMware to operate here.

The US administration doesn't seem to like the noise coming from British Chancellor Philip Hammond about a digital tax for the established tech giants: it would take 2 per cent of UK revenue from firms that turn over more that £500m in local sales. So that's VMware out then.

No doubt others who generate more than half a billion in sales locally will find cunning loopholes to (legally) avoid their fair share.

The Reg has asked VMware for comment. ®

Similar topics


Other stories you might like

  • World’s smallest remote-controlled robots are smaller than a flea
    So small, you can't feel it crawl

    Video Robot boffins have revealed they've created a half-millimeter wide remote-controlled walking robot that resembles a crab, and hope it will one day perform tasks in tiny crevices.

    In a paper published in the journal Science Robotics , the boffins said they had in mind applications like minimally invasive surgery or manipulation of cells or tissue in biological research.

    With a round tick-like body and 10 protruding legs, the smaller-than-a-flea robot crab can bend, twist, crawl, walk, turn and even jump. The machines can move at an average speed of half their body length per second - a huge challenge at such a small scale, said the boffins.

    Continue reading
  • IBM-powered Mayflower robo-ship once again tries to cross Atlantic
    Whaddayaknow? It's made it more than halfway to America

    The autonomous Mayflower ship is making another attempt at a transatlantic journey from the UK to the US, after engineers hauled the vessel to port and fixed a technical glitch. 

    Built by ProMare, a non-profit organization focused on marine research, and IBM, the Mayflower set sail on April 28, beginning its over 3,000-mile voyage across the Atlantic Ocean. But after less than two weeks, the crewless ship broke down and was brought back to port in Horta in the Azores, 850 miles off the coast of Portugal, for engineers to inspect.

    With no humans onboard, the Mayflower Autonomous Ship (MAS) can only rely on its numerous cameras, sensors, equipment controllers, and various bits of hardware running machine-learning algorithms to survive. The computer-vision software helps it navigate through choppy waters and avoid objects that may be in its path.

    Continue reading
  • Revealed: The semi-secret list of techs Beijing really really wishes it didn't have to import
    I think we can all agree that China is not alone in wishing it had an alternative to Microsoft Windows

    China has identified "chokepoints" that leave it dependent on foreign countries for key technologies, and the US-based Center for Security and Emerging Technology (CSET) claims to have translated and published key document that name the technologies about which Beijing is most worried.

    CSET considered 35 articles published in Science and Technology Daily from April until July 2018. Each story detailed a different “chokepoint” or tech import dependency that China faces. The pieces are complete with insights from Chinese academics, industry insiders and other experts.

    CSET said the items, which offer a rare admission of economic and technological vulnerability , have hitherto “largely unnoticed in the non-Chinese speaking world.”

    Continue reading

Biting the hand that feeds IT © 1998–2022