Crackdown forces Apple to pay extra $250 million after probe

Apple has handed over more than $250 million in backdated taxes after a probe. Photo / 123RF

Apple has paid £137 million ($257m) in backdated taxes after a probe by UK authorities.

The iPhone maker handed over the cash after an investigation into how much it paid the taxman from 2011 to 2015, according to the Daily Mail.

New accounts show it was in line for a tax credit of £7.3m ($13.7m) over this period. But the US tech giant has now settled a £136.98m ($257m) bill with HM Revenue and Customs for tax that the UK says it should have paid in these years, an Apple spokesman confirmed.

It came after officials questioned whether Apple was paying enough UK tax on profits made from European sales.

Inquiries centred on London-based Apple Europe Ltd, which has nearly 800 UK staff and provides business support and marketing services to Apple's other companies. HMRC argued it was not paid enough commission for these services, meaning its profits ended up being lower than they should have been.

Apple Europe reported sales of £644.7m ($1.2 billion) and profits of £51.1m ($95.9m) for the years 2011 to 2015 but paid no UK corporation tax. It was instead due a £7.3m ($13.7m) tax credit.

But Apple said the "extensive" probe meant it would pay backdated corporation tax and bigger contributions in future.

Accounts for the 18 months to April 2017 show Apple Europe made £656.2m ($1.23b) in sales and £297.3m ($558.4m) profit. In addition to the backdated taxes, Apple paid £55.3m ($103.8m) in tax in this period.

A spokesman insisted the company paid all the taxes it owed and the major change was due to its increased UK activities.

He added: "As a multinational business and the largest taxpayer in the world, Apple is regularly audited by tax authorities. HMRC recently concluded a multi-year audit of our UK accounts, and the settlement we reached is reflected in our recently filed accounts. It covers corporate income tax for prior years due to the increased activity in our business in the UK."

Apple was expanding its workforce, paid £2b ($3.7b) to British suppliers last year and supported 300,000 UK jobs, he added.

The firm has unveiled plans for a new London HQ at grade II-listed Battersea Power Station, where 1,400 staff will occupy all six floors of planned office space.

The spokesman said: 'We are proud that Apple is an engine of economic growth in the UK through the fast-growing iOS App Economy and our own expanding workforce... Apple pays all that we owe according to tax laws and local customs in the countries where we operate.'

An HMRC spokesman said it did not comment on individual companies. But she added: "Multinationals must pay all taxes due and we don't settle for less.

"Last year alone, HMRC secured and protected over £8b ($15b) in additional tax revenue from the largest and most complex businesses."

Apple previously came under fire over tax after accounts showed its UK retail arm raked in sales of more than £1b ($1.8b) in 2016 but only recorded £17.6m ($33m) profits. It paid £13.8m ($25.9m) in tax.