Exclusive: Former chair of PAC suggests Netflix is avoiding tax and calls on Theresa May to take action
Margaret Hodge MP has suggested Netflix is using ‘artificial structures’ to pay less than its share of UK taxes, and called on Theresa May’s government to tackle corporate tax avoidance.
The former chair of the Public Accounts Committee, who famously took on Google and Amazon over their taxes, was responding to news Netflix paid only £400,000 in UK corporation tax last year, despite UK revenue £36.5 million and UK pre-tax profit of £1.8 million.
Hodge accused the Tory government of being all talk on tax avoidance, slamming the record of May’s predecessor David Cameron, and suggested the government might ‘use Brexit’ to ‘turn the UK into a tax haven’.
The Labour MP called for ‘tough international tax rules’ and a beefing up of HMRC.
The internet streaming firm’s UK operations are part of Netflix International BV, which is based in the Netherlands. A Sunday Times investigation reported Netflix paid zero UK corporation tax in 2014 despite £200 million in UK revenue, when Netflix International BV was based in Luxembourg. There is no suggestion Netflix has broken the law.
Hodge, speaking to Left Foot Forward, said:
“This looks like yet another digital company setting up artificial structures with the sole purpose of avoiding to pay their fair share of tax.
It’s time for the government to stop talking the talk and start walking the walk.
I hope the new Prime Minister does more than the previous Prime Minister and gives us actions not words.”
“We need tough international tax rules to stop this happening.
The government should not use Brexit as an opportunity to turn the UK into a tax haven, and HMRC needs to be toughened up.”
A Netflix spokesperson said: ‘In the UK, Netflix is financially contributing in different ways with corporate taxes, wages and tens of millions of pounds in VAT as well as funding dozens of UK productions for hundreds of millions of pounds.’ They added: ‘An income tax charge of approximately €441,000 makes an effective tax rate of approximately 22 per cent.’
Theresa May has vowed to crackdown on tax dodging with a 100 per cent fine and other measures, but some experts warn this doesn’t go far enough to close loopholes.
Apple was recently fined 13 billion euros for tax evasion, but was defended by UKIP leader Nigel Farage.
Margaret Hodge has been MP for Barking since 1994 and served as PAC chair from 2010 until March last year. She discusses her time on the committee in her book Called To Account.
Adam Barnett is staff writer for Left Foot Forward. Follow him on Twitter @AdamBarnett13Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.