Amazing. Staff count up just 2% and Microsoft adds more than £1bn to its UK financials
- Reference: 1624442467
- News link: https://www.theregister.co.uk/2021/06/23/microsoft_ltd_financials/
- Source link:
The figures for the year ended 30 June 2020 and filed at the [1]UK's Companies House in recent days showed an impressive increase in turnover from £2.8bn in 2019 to £4.032bn in 2020.
Gross profit also crested the £1bn mark (up from £876.8m in 2019), which translated to £212.9m profit before tax (up from £167.5m in 2019). The company also paid a bit more tax, sending £43.5m the way of Her Majesty's Revenue and Customs (HMRC), compared to £34.6m the previous year.
[2]
CEO Clare Barclay was nominated last week to the Confederation of Business Industry board as a Non-Executive Director where she will "work alongside the Director General on strategic and financial matters" and presumably share some of the accounting wizardry at the company's disposal.
[3]
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The company accounts also noted: "As permitted by Schedule 1, paragraph 68 of the Companies Act 2006, revenue is not analysed by geographical market as in the opinion of the directors the disclosure of this information would be seriously prejudicial to the interest of the company."
Its "principal area of business activity" is the UK.
[5]
As for how those revenues have been constructed, Microsoft breaks things down between "Product" (the distribution of software, peripherals and hardware to customers) and "Services" (which, as well as support and consulting, includes other segments such as the all-important Intelligent Cloud, Productivity and Business Process).
[6]It is with a heavy heart that we must tell you America's richest continue to pay not quite as much tax as you do
[7]Microsoft subsidiary makes $314.73bn profit and pays no tax in Ireland – despite registering there
[8]Dell Corp UK makes 1.46% net profit margin on £1.556bn in sales – 'satisfactory' apparently
[9]The clouds part, cash rains on Microsoft's UK money-making machine
[10]Tax me if you can: VMware UK tosses shrunken offering to HMRC
Product jumped from £1.2bn in 2019 to £1.576bn in 2020, an increase Microsoft attributed to its [11]transition to the Limited Risk Distributor (LRD) model from 2017 . VMWare also [12]shifted to the LRD model in the same year.
For those unaware, that's a supply chain structure reorg motivated primarily by corporate tax planning. It's not quite the bonzer increase seen by the change [13]back in 2019 , but not to be sniffed at nonetheless.
Services and other revenues went from £1.6bn to almost £2.455bn.
Despite the jumps in revenue, the company's employee count only went from 3,410 to 3,491. Microsoft reported its return on employee investment went from 28 per cent to 33 per cent.
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Tax-wise, the company noted a charge of £43.5m on those £212.9m profits and, having been credited by HMRC with £600k in deferred tax in 2019, this year took a £300k charge. A dividend of £255m was also paid out in December 2020. ®
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[1] https://find-and-update.company-information.service.gov.uk/company/01624297/filing-history
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YNNanj3jrpBObp1s-z7jMQAAAEs&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YNNanj3jrpBObp1s-z7jMQAAAEs&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YNNanj3jrpBObp1s-z7jMQAAAEs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YNNanj3jrpBObp1s-z7jMQAAAEs&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.theregister.com/2021/06/09/tycoon_tax_affairs/
[7] https://www.theregister.com/2021/06/03/microsoft_subsidiary_ireland/
[8] https://www.theregister.com/2018/11/12/dell_corp_uk_23m_profit_on_15bn_sales/
[9] https://www.theregister.com/2020/06/22/microsoft_uk_financials/
[10] https://www.theregister.com/2018/11/02/vmware_tax_in_blighty/
[11] https://www.theregister.com/2020/06/22/microsoft_uk_financials/
[12] https://www.theregister.com/2018/11/02/vmware_tax_in_blighty/
[13] https://www.theregister.com/2019/04/04/microsoft_uk_financials/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YNNanj3jrpBObp1s-z7jMQAAAEs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://whitepapers.theregister.com/
212.9M profit
Across 3491 employees...
That's over 60K profit per employee - are any getting a payrise?
Re: Payrise
Well, the senior management will.
Are they sure they can afford it?
I would hate to pressure Microsoft into paying more than their fair share in tax.
Re: Are they sure they can afford it?
Hmmm, the sarcasm is strong with this one... have an upvote!
Loan Charge for big companies
Schemes to hide profits are all known. Why won't HMRC request books of those big companies and start questioning charges that meet the criteria?
The why don't they apply tax for the last 10 years or so for a good measure?
Why HMRC has time to drag small business through the mud, but won't ever touch any of the big companies?
Gross profit also crested the £1bn mark (up from £876.8m in 2019), which translated to £212.9m profit before tax
That's creative accounting, isn't it?
an impressive increase in turnover £2.8bn in 2019 to £4.032bn in 2020 (...) The company also paid a bit more tax, sending £43.5m the way of Her Majesty's Revenue and Customs (HMRC), compared to £34.6m the previous yea
Turnover: +44% - Taxes: +25%
Very creative indeed.
You pax tax on profit, not turnover.
£212.9m profit before tax (up from £167.5m in 2019) is a 27% increase, so 25% increase in tax paid isn't so wide of the mark. In both cases that's a tax rate of ~20%.
You as in a small business owner without army of creative accountants? Then yes, you pay tax on your real profit.
However, when it comes to big multinational companies profits magically disappear through various schemes and the tax becomes a fraction of what they should be paying.
HMRC really has to up their game and request that FAANG & M produce their books for thorough scrutiny.
HMRC said repeatedly that they will not stand by arrangements designed to avoid tax, but so far they only applied that to small business (with miserable results)
Do you want an Eiffel tower? I've got one to sell.
Yeah, and companies don't do creative accounting to reduce gross profit to the max to get a profit before tax as low as possible. And Charges to reduce profit from a high turnover are always real and justified.
Re: Do you want an Eiffel tower? I've got one to sell.
companies don't do creative accounting to reduce gross profit to the max to get a profit before tax as low as possible
Of course they do, large & small. Individuals too. Why would you not? If governments want that to stop they should change the tax laws which enable it, the ball is firmly in their court.
Big tech in general is a problem
Not specifically about Microsoft, but about big tech in general, this looks an interesting read (I haven't read it, but plan on getting it soon): [1]spreading the thriving . From that review:
The book’s focus is on the implications of market power for people as workers, rather than as consumers – although it also notes the excess pricing power too. In sum, it reduces wages, both directly through monopsony power in individual labour markets and also because of the the macroeconomic consequences: with so many people in contingent work with low pay, aggregate demand is inadequate. (Some) firms are doing well but the economy isn’t. And this is the heart of Eeckhout’s argument: “The effect of the tide of market power is lowering wages across the economy.” I find this link persuasive. While there are many economists looking at the elements of this story, the way they are combined here is enlightening.
And I was just watching this link: [2]2008 & 2020: The Combination That Changed Capitalism Forever [Yanis Varoufakis] . Basically he's saying QE (ie magic money) has just pushed the can down the road, and the 2008 crisis is really continuing, with QE taking the strain. But is giving more power to companies to work with the financial markets independently of the real world. I know the derivatives markets (eg will the price of copper[1] go up or down in the next 3 months?) are an enormous part of the UK's economy. As is forex (foreign exchange). In other words making money on guessing whether the money someone has will go up or down.
Now to reel in QE will hurt consumers as we try to deflate the economy, or these large companies, with whom we link in very many other ways, eg via our pensions or insurance deals. So we seem to be in a bind.
Sorry, I know this isn't specifically about Microsoft but they definitely fall into the descriptions above. One last thought. If we are to do anything about these companies, I can tell you for free that we will have bugger all influence while we keep distancing ourselves from the EU. The EU and the US are both supersized (EU 450m people, US 330m; GDP: EU 15.6b, US 21.4b. See [3]data.worldbank.org ; note the EU GDP is missing 2.8b that is the UK's economy.) I suggest leaving the EU has been a big mistake, and we are out there in the world alone. That the EU need us more than we need them better be true, otherwise...
[1] £4,500 per metric ton the other week when I happened :-) to go to the local scrap yard -- wow!
[1] http://www.enlightenmenteconomics.com/blog/index.php/2021/06/spreading-the-thriving/
[2] https://www.youtube.com/watch?v=wwfM3IKaZgw
[3] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=EU-US-CN