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Apple pays HMRC an extra £137 million after 'extensive' audit

Apple Europe had received much less income than it was due, resulting in a lower tax bill, says taxman

Apple has paid the UK government another 137 million in added tax following an HMRC audit that found it had substantially underpaid one of its subsidiaries.

The "extensive audit" covers corporate tax for a number of years up to September 2015, during which time Apple Europe, which provides sales support, marketing and other services to fellow Apple subsidiaries, wasn't paid fair value for its services, according to the taxman.

As a result, Apple Europe paid an additional 136.9 million in tax, on top of 57.4 million for the 18 months leading up to April 2017, according to a strategic report filed with Companies House.

An HMRC spokesperson said: "We do not comment on the tax affairs of individual companies. Multinational companies must pay all taxes due and we don't settle for less.

"Last year alone, HMRC secured and protected over 8 billion in additional tax revenue from the largest and most complex businesses."

The audit was first revealed by The Financial Times, which reported that it was down to Apple Europe's increased activities. Apple Europe's Companies House filing shows that as of April 2017 it employed 791 staff, up from 605 in 2015.

IT Pro has asked Apple whether it has changed how much it pays its Apple Europe subsidiary following the audit, but the subsidiary's Companies House filing shows that in September 2015, it paid just 1.3 million in tax on profits of just 14.7 million. In contrast, pre-tax profits for the 18 months up to April last year stood at 297 million.

Apple has already fallen foul of the EU over back taxes, when the European Commission ordered Ireland to collect 13 billion in unpaid back taxes from the tech giant in the summer of 2016. Both Apple and the Irish government are separately appealing the decision, but Apple has deposited the funds in an escrow account awaiting the outcome of the appeals.

Now, both the US Senate and authorities in France are scrutinising Apple's recent admission that it slowed batteries down on older iPhones to help them cope with more modern software. Apple has denied slowing the batteries down to push people to upgrade to newer iPhones.

Picture credit: Mike Deerkoski

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