After an extensive audit of Apple’s accounts in the U.K. by Her Majesty’s Revenue and Customs (HMRC), Apple has agreed to pay out an extra 137 million British pounds ($185 million), which it describes as a “corporate income tax adjustment.”
This payment covers the years up to September 2015, according to The Guardian, and also includes interest on the unpaid tax. HMRC got Apple Europe, one of the company’s U.K. subsidiaries engaged in marketing and sales for other Apple subsidiaries to agree to the extra charges, after pointing out that it had not received an appropriate commission on sales leads generated for the Irish-based subsidiary. Apple’s European headquarters are in Ireland.
Apple released a statement saying: “We know the important role that tax payments play in society. Apple pays all that we owe according to tax laws and local customs in the countries where we operate. As a multinational business and the largest taxpayer in the world, Apple is regularly audited by tax authorities around the world. HMRC recently concluded a multiyear audit of our U.K. accounts and the settlement we reached with HMRC is reflected in our recently filed accounts.”
The payment came to light after Apple Europe filed accounts on Monday, January 8, that showed a pre-tax profit of 297 million pounds covering the 18 months up to April 1, 2017, and 57 million pounds paid tax, with an additional 137 million British pounds in back taxes. Tax payments from Apple Europe are also set to increase going forward, following this new understanding with HMRC.
It’s not the first time that Apple has fallen foul of the taxman in Europe. A three-year investigation into Ireland’s relationship with Apple found that the company had received too many tax breaks there and it was ordered to pay more than 13 billion euros in back taxes (currently around $15.5 billion). The European Commission rejected an Irish appeal and insisted the tax benefits were illegal under European Union rules because other businesses have had to pay tax at a much higher rate than Apple. Though Apple has reportedly started paying that bill it is still hoping to get the decision overturned.
In recent years, Apple has also been hit with a $118 million fine for underreporting income in Japan and a $348 million fine for tax evasion in Italy. After all the fuss about Apple funneling business from Europe through Irish subsidiaries, the Paradise Papers revealed that it had switched many of them to the island of Jersey, which is a largely self-governing “British Crown Dependency” capable of striking its own tax deals, as a new way to shelter profits.
Apple is the most profitable company in the world with more than $250 billion in the bank.
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