Netflix accused of ‘superhighway robbery’ over tax affairs by senior MP

Streaming giant Netflix has been accused of “superhighway robbery” over its tax affairs.

Dame Margaret Hodge hit out at the US company, which has enjoyed a huge hit with royal drama The Crown, for taking “the UK taxpayer… for a ride”.

She told the Commons that the Digital Services Tax should be extended to cover streaming services such as Netflix, so that “tax abuse” will stop.

Margaret Hodge
Margaret Hodge has been a thorn in the side of big businesses who avoid taxes in the UK (PA)

Her comments come as the streaming giant confirmed a fifth and final series of The Crown, starring Imelda Staunton.

The California-based company has also enjoyed recent hits with Sex Education, The Irishman and Marriage Story.

Dame Margaret said Netflix does not pay tax in the UK and has pocketed nearly £1 million in tax reliefs in the last two years.

She cited figures from a report from Tax Watch UK, which looked at the most recently-filed accounts for Netflix’s 19 UK subsidiaries, according to Companies House.

She told MPs: “This is superhighway robbery. The UK taxpayer is being taken for a ride.

“We are actually handing over cash to Netflix while they stash their profits offshore…

“It is time to stop the ‘something for nothing’ aggressive tax behaviour of these big companies. I say enough is enough. These tax abuses must stop.”

Responding, Treasury minister Jesse Norman said while he could not comment on specific companies, the UK has taken a lead on tackling tax avoidance around the world.

He said: “The Government does recognise that some multinational businesses have sought to avoid paying their fair share of tax in the UK by entering into contrived arrangements to divert profits to low tax jurisdictions.

“The effect of this is to deprive the Exchequer of revenues needed to fund the public services on which we all rely.

“It’s completely unacceptable, which is why the Government has taken robust action designed to inhibit or prevent it.

“Internationally, the Government has been at the forefront of efforts to ensure that multinational companies pay their fair share of tax.”

He added: “I would just remind (Dame Margaret) as she denounces the company in question, which I have no brief for either way, that they have in fact invested something like or are planning to invest something like £232 million in Shepperton Studios, and that is not a trivial act and something I think we should be aware of.”

Mr Norman said businesses should be “incentivised” to invest in the UK’s creative economy, noting: “It is equally right that HMRC should subject large businesses to an appropriate level of scrutiny and my understanding is they are actively investigating around half of the UK’s large businesses at any given time.”

The report claims the business received tax relief in the UK of nearly £1 million over 2017 and 2018, paying no corporation tax on profits made.

A Netflix spokesman said that “international taxation needs reform and support (for) the OECD’s proposal for companies to pay more tax in the countries where their operations help generate value.

“In the meantime, we comply with the rules in every country where we operate.”

He added that the report contained “a number of inaccuracies”, including that Netflix has a Caribbean-based entity, although the report only covers the most recent accounts with Companies House, which are only up to 2018.

Netflix added: “We significantly simplified our tax structure last year. Netflix continues to invest heavily in the UK – spending more than £400 million on local productions in 2019, which helped to create over 25,000 jobs and training placements.”

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