The British arm of the social networking giant officially made a loss in Britain in 2012
Facebook was slammed today when it emerged it paid no corporation tax in the UK last year – despite raking in an estimated £223million.
Accounts have revealed that the British arm of the social networking giant, Facebook UK, officially made a loss in Britain in 2012.
That meant the company’s tax bill was zero.
The figures showed that its turnover here was £34.6million. But experts claim the real size of the firm’s UK business could be more than £200million.
Facebook pulls in those vast amounts of money mostly from advertising.
But those figures do not show up on the UK accounts because Facebook’s sales here are put through the books in Ireland, where corporation tax is lower.
This practice is perfectly legal under the rules of HM Revenue & Customs.
However Facebook still came in for a barrage of criticism.
Margaret Hodge, chairman of the Commons Public Accounts Committee, said: “This is yet another example of what appears to be deliberate manipulation of accounts of economic activity to deprive the British taxpayer of a rightful tax contribution, according to the profits they make in the UK.”
Richard Murphy, of Tax Research UK, questioned whether sales from UK advertising should be recorded here.
He said: “If it did I suspect it would be profitable.
“So is this company avoiding tax? Yes, because it is not recording its sale income in the UK.”
Mr Murphy estimated UK advertising sales were more than £200million last year.
Independent analysts eMarketer estimated the figure at £223million.
Accounts filed at Companies House show Facebook UK’s turnover grew sharply, from £20.4million in 2011 to £34.6million last year.
Losses narrowed from nearly £14million to just over £2.4million.
While it paid no corporation tax last year, it recorded a charge of nearly £185,200 in 2011.
Facebook, led by Mark Zuckerberg, has more than one billion followers, including 33 million in the UK, and is valued at £77billion.
Results showed the firm’s US parent company generated a £3.1billion worldwide turnover last year.
Around half of that came from outside the US, where it recorded a £353million loss and paid company taxes of £13.7million.
Facebook said: “We pay all taxes required by UK law and we comply with tax laws in all countries where we operate.
“We take our tax obligations seriously, and work closely with national tax authorities around the world to ensure compliance with local law.”
Insiders claimed one reason the UK posted a loss last year was a provision for share-based payments to staff when the company floated on the stock exchange.