Facebook 'cancels out' £4.2m UK corporation tax - expert

Facebook (NasdaqGS: FB - news) 's UK business may not owe anything to the taxman, despite a substantial rise in its corporation tax exposure compared to the £4,327 bill it reported for 2014.

While a complex set of accounts said it incurred a £4.2m tax charge, the sum remained a fraction of the £210m in UK revenue reported by the social network.

Facebook also reported a tax credit within the business of £15.5m.

It is unclear whether the figure, which relates to stock options for employees, meant that it effectively paid nothing to the taxman as credits can be used to offset bills.

One tax expert, contacted by Sky News, described the filing at Companies House as a "conspiracy of opacity".

Another said it was clear that the company had, legally, been able to cancel out the corporation tax bill.

Facebook lodged the figures months after pledging it would stop routing most UK sales through to a profit base in Ireland (Other OTC: IRLD - news) where corporation tax is charged at a lower rate.

The voluntary shake-up of its tax affairs, effective since April, was seen as a response to widespread criticism of its 2014 corporate tax figure which was less than the average UK worker would contribute through income tax and national insurance at the time.

Facebook is among a string of multinational firms criticised over the size of their UK tax bills.

Prime Minister Theresa May has indicated she wants more rigorous tax fairness when it comes to firms operating in the UK.

Facebook said in March that advertising revenue from its largest customers, initiated in Britain, would be taxed in the UK from the start of the 2016/17 financial year.

Richard Murphy, of Tax Research UK, said the tax notes in the 2015 UK accounts amounted to a "massive exercise in opacity".

He added: "Given that tax is known to be the focus of concern for this company, we are left guessing as to many issues relating to its tax because of a lack of disclosure."

Crawford Spence, professor of accounting at Warwick Business School, said: "Due to complex share accounting rules, Facebook has been able to cancel out this tax charge completely, as well as insulate itself from approximately £11m of future tax bills."

Sky News has asked Facebook for clarifications on the accounts and is awaiting a response.

A Facebook spokesman said earlier: "We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high-skilled jobs.

"We pay all the taxes that we are required to under UK law."