It's possible to think this is slightly misleading about Apple's tax bill

Clearly it’s possible to think so because we do think so:

Apple used an employee stock option scheme to reduce the tax bill of its retail division to £796,000 last year.

Well, let’s say that we’d not quite put it like that.

The company’s UK retail arm, which spans 38 shops, made pre-tax profits of £38.2 million on sales of £971.5 million in the year to September 25. The tech giant minimised its tax bill by £9.2 million after an increase in its share price led to a £30.3 million share-based payout to employees — a tax deductible expense.

There’s a little oddity here. Paying the staff is, obviously enough, a cost of being in business. So, it’s equally clearly a tax deductible expense. Paying staff with shares is a standard part of the tech industry structure.

We’re also all entirely happy with share based compensation of course. It’s reducing the expropriation from the workers if they get a share of the capital value of the profits extracted from their labour, isn’t it?

But there is that oddity. If the staff were paid wages then that would reduce the reported profit of the company. But if they’re paid in shares then the reported profit stays high, the costs of the shares are a deduction against those profits. The end result is - largely enough - the same. Gross profit is so much, staff compensation is so much, taxable profits end up being the same and so does the tax bill. It’s just that the profits are reported in slightly different ways and so it looks as if there’s some grand deduction from tax as a result of the share based compensation. When it’s entirely normal that staff compensation is deducted before gross profit becomes the net that is then taxed.

It is true that the corporation tax bill is reduced by paying staff in shares - but it would also be reduced by paying them in wages. We’d thus suggest that it’s possible to think this misleading reporting on Apple’s corporation tax bill.

Richard Murphy, professor of accounting at Sheffield University’s management school, said he believed that Apple had claimed the full available tax relief from the scheme, without reflecting all the related costs in its accounts.

Ah, yes, we’d gently suggest that the Sunday Times be ever so slightly more selective in their choices of source on taxation stories. Some people are better at explaining the details of reality than others.