Facebook pays just £238,000 corporation tax in Britain

 
Joanna Shields, vice-president EMEA of Facebook, who has been announced as one of four of the shortlisted finalists for the Veuve Clicquot Business Woman of the Year Award, which takes place on March 28th at Claridges in London. PRESS ASSOCIATION Photo. Issue date: Wednesday February 23, 2011. The Veuve Clicquot Business Woman of the Year award - now in its 39th year - celebrates entrepreneurial women who have made a significant contribution to business life. Photo credit should read: Anthony Upton/PA Wire
Gideon Spanier10 October 2012

Facebook’s London office paid just £238,000 in corporation tax in the UK last year, despite industry experts suggesting it made an estimated £175 million in revenue.

Annual accounts published today at Companies House showed Facebook UK Limited declared turnover of £20.4  million because it diverts most of its sales via Ireland to avoid British corporation tax.

Enders Analysis, an independent research firm, has estimated Facebook’s likely UK sales at £175 million last year as the world’s biggest social networking website has continued to attract advertisers.

However, the London operation swung to a pre-tax loss of £13.9 million against a £1.1 million profit in 2010 as it spent heavily on wages, even though staff numbers rose only slightly to 90 people. Facebook UK’s bill for staff costs and wages more than tripled from £7.9 million to £24.8 million — equivalent to £275,000 per head. Some staff such as London boss Joanna Shields, Facebook’s vice-president of Europe, Middle East and Africa, were likely to have earned more.

The staff costs included a £15 million “share-based payment charge”, which is understood to cover employees’ income tax and national insurance on shares they received before the company’s Wall Street stock market flotation in May.

Staff at Facebook’s Covent Garden office could receive an even bigger windfall over the next five years as they are in line for 7.3 million shares, potentially worth tens of millions of pounds. Even though Facebook’s share price has fallen sharply since the float, the world’s biggest social networking website is still growing — reaching one billion users last week. The site has 30  million users in Britain and Enders estimates its UK revenues could hit £240 million in 2012.

Facebook is able to avoid UK corporation tax because it says sales are processed in Dublin where it has a large international office.

Facebook declined to comment on estimates that it generated £175 million in the UK last year. A spokesman said: “As is normal for an organisation operating in dozens of countries around the world, we file reports about local operations. The information does not necessarily present a full account of overall global financial performance so it would be a mistake to draw any conclusions from these filings.”

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