John Lewis warns Amazon’s tax avoidance will drive UK companies out of business

The UK Government must address the “Amazon tax issue” or risk driving law abiding UK based retailers out of business the managing director of John Lewis has warned.Andy Street said Amazon would “out-invest” and “out-trade” UK companies if the Government does not take action to force the online retailer to pay tax fairly in Britain.

“There is less money to invest if you are giving 27 pc of your profits to the Exchequer,” Mr Street told Sky’s Jeff Randall. “Clearly, if you are domiciled in a tax haven you’ve got much more money. Amazon will out invest and ultimately out trade us. And that means there will not be a tax base in the UK.”

Mr Street said that both HMRC and the Treasury had to look at ensuring that money “earned in a particular country” was “taxed in that country”.

The comments come in the wake of Amazon’s showdown with MPs, who this week called the online retailer “immoral” for diverting profits to Luxembourg and demanded the company send a more “senior” executive to answer further questions.

The Public Accounts Committee, led by Margaret Hodge, scolded Andrew Cecil, head of public policy at Amazon, for stonewalling the Committee with “unacceptable nonsence.”

The company has sparked outrage because despite having warehouses in the UK and employing 15,000 people, it drives all of its sales through Luxembourg.

According to conservative MP Charlie Elphicke, last year Amazon’s UK sales amounted to £3.9 billion but the company paid just £1.9 million in tax – the equivalent of just 2.5pc of its estimated profits, based on its global operating margin.

The Committee has now demanded Amazon produce all the details of its Luxembourg holding company before November 20.

Amazon also has to give a clear breakdown of how much it earns in the UK and what proportion of its EU sales originate in Britain.

Google and Starbucks were also at the PAC hearing and have been asked to produce further information. Starbucks will have to disclose the terms of its “sweetheart” tax deal with Dutch authorities and prove that it was asked by the Netehrlands to keep those details secret.