The announcement means the Californian company joins the likes of Google and Facebook in the list of foreign technology companies who have been accused of avoiding paying UK tax.
Apple has been accused of side-stepping UK tax rules by using foreign subsidiaries in Ireland and the British Virgin Isles – having foreign subsidiaries in these locations means Apple can avoid Britain’s heavy taxation costs.
Experts believe British sales could have accounted for around 10% of Apple’s worldwide sales of £63 billion in 2010.
Following the accusations, Her Royal Majesty’s Revenue and Custom are now believed to be considering launching a full scale investigation into the claims. In addition to Chancellor George Osborne’s pledge to clamp down on “morally repugnant” tax dodging in last month’s Budget, a HMRC spokesperson also promised to crack down on “unacceptable corporate structuring”.
The claims against Apple come just a week after online retailer Amazon admitted it was being investigated by the HMRC over claims of tax dodging in the UK. According to reports, Amazon is alleged to have not paid a penny in corporation tax over the past three years despite recording sales of almost £8 billion in Britain.
Although Earnst And Young tax partner Chris Sanger claims that multinational corporations such as Apple will have to “justify themselves” to tax authorities across the world, he believes it will be hard to calculate the correct amount of tax that needs to be paid by companies with foreign subsidiaries.
“When the bulk of research and development, investment and innovation comes from the US, it’s quite right the UK won’t take its [tax] fill,” he commented.