UK Markets close in 7 hrs 25 mins

Amazon wins £3m council tax rebate after row over the size of its floors in a Staffordshire warehouse

Michael Cogley
The tech giant's tax practices have been criticised by campaigners and politicians - Bloomberg

Amazon is set to receive a multi-million pound tax rebate after it prevailed in a legal row over the size of one of its warehouses.

The retail behemoth is expected to secure a refund of around £3.2m on the commercial rates it has paid on its premises at Gazeley Park in Rugeley, near Staffordshire. 

Cannock Chase Council said the refund will "severely deplete" its resources for this year's budget.

The rates charged by the council are calculated based on a square metre basis of "relevant" facility space. However, Amazon has successfully argued that its mezzanine floors did not count as floor area.

The refund will be back-dated to 2011, when the site was opened. The distinction has reduced the rates Amazon will be charged by 26pc, bringing its annual liability for the site down to £1.25m from £1.7m, according to calculations from the council.

Deputy leader of the council Gordon Alcott said that Amazon was a "highly valued employer" but that the reduction in rates was a “major blow”.

"The financial impact is of great concern to the council," he said.

"I feel particularly sorry for our town centres and retail traders where there doesn't appear to be a level playing field between the business overheads paid by these so-called bricks and mortar businesses against those paid by online traders."

Councillor Alcott added: "Amazon describes itself as providing fulfillment centres supplying goods direct to the customer and clearly the business rates system does not reflect this, treating such sites as basic warehouses. This means that Amazon is paying substantially less than retail warehouses, and a fraction of the cost per square metre of high street shops."

National chairman of the Federation of Small Business Mike Cherry said Amazon was in a position to "wage a costly legal case against an unfair business rates bill".

"The story is completely different for small firms that do not have the resources or time to fight cases where they feel they are being unfairly charged," he said.

"Instead, they are left to wrestle with the broken check, challenge, appeal system."

The rebate comes against the backdrop of Amazon paying low levels of corporation tax despite recording huge revenues in the UK. Corporation tax is applied to profits.

Figures contained a Companies House filing showed that the US giant’s logistics wing paid a total of £14m in UK tax in 2018, up from £4.6m the previous year. The increase in tax paid came as the division’s total revenues increased to £2.34bn.

Amazon had yet to respond to a request for comment at the time of writing.