British music app Shazam paid no UK corporation tax last year despite making gross profits of £32.9million
It avoided any payment by claiming it had suffered 'recurring administrative expenses' of £47million
MUSIC app SHAZAM paid no UK corporation tax last year despite making gross profits of £32.9million.
The British-based firm avoided any payment by claiming it had suffered “recurring administrative expenses” of £47million.
It gave the same excuse in 2014 when it made gross profits of £33.2million but claimed expenses of £43.5million.
According to figures posted at Companies House this week, Shazam’s operating loss in 2015 was £16.7million.
But the accounts are vague as to what the “expenses” are, although experts say the “sleight of hand” allows Shazam to legitimately avoid paying tax.
Tax accountant Robert Leach said: “There is no explanation of what these expenses are. I would guess, and this is only a guess, that this is a payment overseas to avoid UK tax.”
Shazam did pay £167,593 in “foreign tax” in 2015, the figures show. But that was down from £963,137 in 2014.
It also had £33million investment from six unnamed subscribers despite being a loss-making business.
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The firm, whose chief exec is Rich Riley, has an alphabet share structure allowing different dividends to be paid to shareholders. Accountant Mr Leach added: “It is often used as a form of disguised pay to avoid PAYE and National Insurance.”
Shazam’s app allows its 100million-plus users to identify any song they hear from a brief sample and download them.
It was founded by two American students in London in 2000 and still has its HQ in the capital.
The highest-paid director netted £491,330 in pay and benefits. The group’s total assets soared to £46.8million by the end of last year. Its tax techniques echo those of STARBUCKS and AMAZON, which have also been criticised for avoiding UK tax.
But last night Shazam said its expenses are “in no way aimed at suppressing profits or the tax we pay”.
A spokesman said developing new technology required investment “most of which was due to salaries for additional staff”.
He added: “The salary costs and other operational expenses are not reflected in the gross profit figure.”