The UK's tax collection agency might not have had much luck squeezing money out of Amazon Web Services but the cloud division of Jeff Bezos' empire has managed to convince HMRC to sign off more multimillion-pound contracts.
According to documents just published by government, Her Majesty's Revenue and Customs handed a £41m two-year deal to AWS EMEA Sarl UK from 1 September 2020 for "hyper scale compute cloud service provision".
It is understood this latest agreement, a G-Cloud call-off contract, was penned before AWS put its name to the One Government Value Agreement (OGVA), a three-year Memorandum of Understanding between the company and public-sector procurement agency Crown Commercial Services (CCS). Under this, AWS sells services with a pre-defined discount.
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In addition, HMRC has awarded a £2m contract to AWS EMEA Sarl UK's Professional Services wing, again for two years. This involves the provision of consultants that will work on speeding up the adoption of AWS products and services. This started in August and ends 31 July 2022.
The UK government has a bewildering array of procurement frameworks, developed and run by CCS, which takes a 1 per cent commission on all public-sector spending. We asked the Cabinet Office if it has a record on the amount of money British taxpayers pay to the company.
We were pointed toward the website of one component, the G-Cloud, which stated that in the prior three financial years ending 31 March 20201, some £166.7m was spent by the public sector with Amazon Web Services EMEA Sarl; some £67.61m was spent with Amazon Web Services Inc; and £3.09m with Amazon Web Services Ltd. The Reg must reemphasise this is only spending with Amazon via GCloud.
The company has attracted ire from certain corners in recent years over its hyper-tax-efficient processes. For example, in 2019 it emerged HMRC had spent £11m with the company in the prior year, which was six times more than the amount it received in corporation tax from AWS.
Then last year, the company caught the attention of the Fair Tax Mark campaign and Labour MP Dame Margaret Hodge over the amount of tax AWS had continued to pay to HMRC.
AWS – and many other businesses with efficient practices – is operating within its legal boundaries. The global tax system needs shaking up, as many have pointed out. But, as we've said before, that still doesn't make tax avoidance ethical.
A spokesperson for AWS sent us a statement:
"Government departments using AWS are not only enjoying cost savings of up to 60% but are also supporting a vast ecosystem of smaller companies, across the UK, that offer products and services that complement and help customers take full advantage of AWS.
"Public sector organisations in the UK use the UK branch of AWS Europe which registers its sales in the UK and pays all applicable taxes, due on its profits, directly to HMRC. Amazon recognises that its status as a supplier to the public sector is a privilege which has to continually be re-earned through the quality of our services and the value for money that we bring for UK taxpayers. We know they will only remain customers for as long as we are able to deliver on both of those things." ®