Twitter accounts point to UK sales heading offshore
Posted On: September 23, 2014
Twitter is funnelling much of the revenue it generates in Britain through an offshore sales structure, newly published annual accounts suggested today.
Twitter UK has filed abbreviated 2013 accounts for a small company under Companies House rules, which are usually applicable to a business with an annual turnover of less than £6.5 million or which employs fewer than 50 staff.
Yet the annual report for the ultimate parent company Twitter Inc, published earlier this year, disclosed for the first time the scale of its operation in the UK where it reported sales of $66.5 million (£40 million).
That suggests a large proportion of Twitter’s revenues from Britain are processed offshore — most likely in Ireland, where Twitter UK’s immediate parent company is based — which could reduce its UK tax bill.
Twitter UK’s accounts show the company set aside £7.4 million as a “share-based payment reserve” for staff and made a profit of £962,000.
No turnover figure was disclosed and there was little other detail.
Twitter declined to comment on the accounts or its sales operation in Ireland.
But a source close to the social media giant pointed out Twitter UK did not necessarily have a turnover of under £6.5 million last year.
Companies House rules allow abbreviated accounts for a number of reasons, including the size of balance sheet.
Google and Facebook use Ireland and Amazon uses Luxembourg as a central hub to process international sales and avoid UK corporation tax.
Twitter’s tax bill is likely to remain low in the short term because Twitter Inc has been loss-making.
The UK is Twitter’s biggest market after America and is responsible for 10% of group sales, largely from advertising.