Marks & Spencer Drawn Into Online Shopping Tax Row

Marks & Spencer has become the latest retailer to face questions over the tax arrangements of its online operation.

According to the Guardian newspaper, tax campaigners say the retailer has organised customer billing and delivery via European web site marksandspencer.eu in a similar way to Amazon.

The retailer ships goods to France, Germany, Ireland and other countries from the UK. But it invoices the transaction to Irish subsidiary Marks & Spencer (Ireland) Limited, the Guardian says, citing internal Marks & Spencer documents it has seen. Ireland has the corporation tax rates of 12.5 per cent, the lowest in Europe.

It says Marks & Spencer Ireland pays a wholesale price for the goods, subject to UK tax laws, but the rest of the retail price - which is often more than 50 per cent on clothing and home wares - is paid against Irish tax rates. The process is known as transfer pricing.

The Guardian described how an internal email earlier this year questioned the need for the arrangement as UK tax rates fall and raised concerns over potential 'reputational damage' to Marks & Spencer should details of the arrangement leak to the media.