Sports Direct hopes to pay MORE tax in UK
SPORTS Direct, the retailer run by controversial billionaire Mike Ashley, has been given the green light to pursue a legal case that his firm hopes would see it paying substantially more tax in the UK.
The case relates to the overseas sale of goods from its website on which it charges and pays millions of pounds in VAT.
EU rules require Sports Direct and other firms to pay VAT in dozens of member states, based on where shoppers are when making purchases.
But Sports Direct believes it has developed a structure that would allow it to simplify the complex tax requirements and instead switch to paying more VAT in the UK.
It has set up a delivery firm, Etail Services Limited, which offers delivery at the shopper’s request and which it hopes means Sports Direct’s responsibility for paying the tax is confined to the UK.
It is not clear if Sports Direct would benefit from lower VAT payments as it does not break down internet sales by country and VAT rates vary.
But observers said it would save on the costs of dealing with dozens of tax authorities by dealing chiefly with HM Revenue & Customs over VAT. The Revenue said Sports Direct must continue to liaise with overseas authorities.
But a judge has awarded Sports Direct the right to appeal that decision.
He also said a ‘cheaper and simpler’ route to resolution would be to seek clarity from the European Court of Justice on the correct interpretation of the relevant EU legislation.
Paddy Behan, senior partner at Simmons Gainsford Indirect Tax Services, said: ‘The distance selling rules have been a problem for UK firms for years.
‘This case is an argument about where Sports Direct pays tax and whether it pays it in the UK, with resultant cost savings.’