Facebook pays out £4.7m in tax but bags £11.3m in credits

The UK division of Facebook ended 2015 with a credit totalling £11.3m ($14.05m) to offset against future tax payments, thanks to accounting rule changes.

The accounts for 2015, filed at Companies House on Sunday (9 October) show that the corporation did pay out £4.17m but was able to offset £15.5m of its bonus payments, resulting in the credit.

HMRC does not owe that amount to Facebook, but the San-Francisco technology company will be able to use that credit to offset against tax due on future profits.

The social network has vowed to pay more tax, following a furore when it was discovered to have paid just £4,327 in UK corporation tax in 2014.

To this end it has stopped routing advertising sales through its operation in Ireland for its largest clients.

The firm started booking the revenue in the UK from 1 April, a change that means it will pay millions more in tax over the coming years.

A letter sent to large UK corporate customers in March of this year by Facebook explained the changes.

"What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland. Facebook UK will then record the revenue from these sales," read the letter, according to the Telegraph.

"In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook's operations in the UK," the memo also said.

New accounts show that Facebook UK made a loss of £52.5m before tax for 2015, on sales of £210.7m.

This compared to £28.48m on sales of £104.9m in the prior year. For that year, Facebook paid £4,327 of corporation tax.

Losses after tax were £41.17m in 2015 from £28.5m in the prior year.

That was in part due to Facebook paying £71m towards a share-based bonus scheme, the equivalent of £104,105 for every member of its UK workforce. The bonus payment equated to £35m in the prior year.

A spokesperson for Facebook told the BBC: "We are proud that in 2015 we have continued to grow our business in the UK and created over 300 new high-skilled jobs. We pay all the taxes that we are required to under UK law."