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Topics include: Direct to consumer / E-commerce / Data & privacy / Martech

Net-A-Porter accused of paying less tax than it should by turning its profits into loss

Internet shopping giant Net-A-Porter is the latest firm to be embroiled in a tax scandal with Channel 4 reporting that the chain raked in sales of £435m in the year to March 2013, but posted a loss of £24.7m.

Net-A-Porter has been accused of paying less tax than it should

Channel 4 claimed that Net-A-Porter used clever planning and "perfectly legal mechanisms" to transform profits into a loss.

According to the report the loss was created, in part, by the way "it chooses to pay its senior executives" - through shares - with the losses then used to reduce the future tax bill.

Tax Research UK's Richard Murphy said: "In this particular company's case, we don't know where it's making its profits, we don't know where it's paying its tax.

"We don't actually even know it's paying its tax because there is no cash flow statement in these accounts because there is a Swiss parent company."

Murphy explained that this means Net-A-Porter doesn't have to include information "to tell us if this tax, which it says it owes, is even being passed over to the revenue…frankly I can raise very many more questions on these accounts than I can provide you with answers."

Former member of the Treasury select committee, Labour MP John Cryer, said that Net-A-Porter's alleged tax dodging "stinks" and that "HMRC should pull the finger out and have a look at exactly how this system works".

"HMRC, in my experience, are a little bit too easy on big companies with lots of money," he said.

In response to the allegations Net-A-Porter told Channel 4 that the account "fully reflect the company's business in the UK".

UPDATE: Net-A-Porter has contacted The Drum with a statement on the allegations raised by Channel 4.

The statement reads: "The Net-A-Porter Group Limited accounts fully reflect the company’s business within the UK. The Net-A-Porter Group is fully liable for UK Corporation Tax on the results of these UK operations. The NET-A-Porter Group Limited is not a publicly listed company and its parent, Richemont, does not comment on the financial performance of individual businesses within the Group‎."

“The Net-A-Porter Group Limited is a business with a global reach and operations in the UK, the USA and Hong Kong. The Net-A-Porter Group Limited employs over 1,500 people in the UK, its largest geographical concentration of personnel.”

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