The news of Amazon’s changed tax arrangements, with UK sales no longer diverted to Luxembourg but booked through a UK office accountable to HMRC, feels like a truly significant moment. The retail giant’s avoidance of fair tax payments on its UK sales has been a justly bitter grievance to other booksellers since it was revealed by The Bookseller in 2012.
It’s now two-and-a-half years since Margaret Hodge, proving considerably more efficacious as chair of the House of Commons Public Accounts Committee than she ever was as libraries minister, tore strips off Google, Amazon and Starbucks representatives over corporation tax levels paid in the UK, trying to force a change of tack through sheer public humiliation (though only Starbucks crumbled). Since then we have seen constant lobbying from the Booksellers Association; resourceful indies making a sales advantage out of the blatant disadvantage with a BA-supported “We Pay Our Taxes” campaign; a Warwick Books petition attracting 170,000 signatures; and so many other developments that we could almost have run a news stream just on variations of this story.
The hubbub has influenced public opinion and book-buying habits, with indies seeing an upsurge in support, yet the simple financial imperative of a cash-strapped government bent on maximising revenue was probably the decisive factor here. Amazon claims the change was prompted by a regular review of its business structure, but the move steers it out of the danger zone for incurring the Diverted Profits Tax, just one month after it came into force. Handy.
Booksellers remain somewhat sceptical of how the situation will ultimately play out, noting that a level playing-field with online retailers is a long way off until there is a reform of business rates.
Meanwhile, some battles have to be fought directly, one to one. News also out this week that Penguin Random House UK is in tough terms negotiations with Amazon comes as no surprise, following the prolonged tussle involving Hachette US last year and the end of a hard negotiation round with HarperCollins just last month. The struggle for sustainable terms is necessary; why was PRH formed, if not to have the heft to negotiate strongly with the most powerful forces in retail, intent on maximising margin? We must hope though for a reasonably prompt resolution that does not see PRH distracted for months from its core focus, or its authors finding themselves — as Hachette writers did last year — in the firing line.