Supply chain · 24 October 2017

HMRC under fire after ditching small cloud supplier for Amazon contract

London, England - September 10, 2011: Part of the Home Page of the website of the British tax website, 'HM Revenue + Customs'. Her Majesty's Revenue + Customs is a department of the British Government and is responsible for collecting taxes including Income Tax, VAT, Capital Gains Tax, Inheritance Tax, Excise Duty, Stamp Duty, Land Tax, Air Passenger Duty, Climate Change Levy, National Insurance etc.
HMRC has signed a new contract with Amazon Web Services to deliver cloud services

HMRC has been hit with accusations of “blatant hypocrisy” after it dropped a contract with a small UK cloud supplier to seal a new deal with online giant Amazon, putting the company out of business.

According to reports from technology magazine The Register, two years ago Salford-based cloud services provider DataCentred signed an agreement with HMRC via the government’s G-Cloud framework – the government procurement network set up to bring more small IT suppliers into the public supply chain and create a level playing field among firms of all sizes.

The magazine has now reported that DataCentred entered administration in August after HMRC decided to end the partnership, which represented 85 per cent of the firm’s revenue, and sign a new deal with Amazon Web Services.

Speaking to Sky News, Margaret Hodge, Labour Party MP and former chair of the parliamentary public accounts committee, said it was “a clear case of government saying one thing yet doing another”.

In one sense, HMRC’s new Amazon contract could undermine the government’s vocal commitment to working with more small businesses, having set a target of spending £1 in every £3 with small suppliers by 2020.

Read more: HMRC targets small businesses in tax avoidance crackdown

“They say they want to support small businesses but they give the contacts to the big boys and let small businesses go bust,” Hodge added.

On the other hand, it arrives after HMRC started to tighten its grip on tax avoidance – collecting an additional £474m in corporation tax from small business owners alone as a result of investigations in the 2016/17 tax year.

Amazon’s own tax practices have been widely scrutinised in recent years. The EU recently ordered the company to pay back taxes after an illegal deal with Luxembourg, and in 2016/17, Amazon registered a 54 per cent increase in turnover in the UK, yet saw its corporation tax contributions drop 50 per cent in the same year.

“They say they want to be tough on tax avoidance but they use our money to give contracts to some of the world’s biggest and most immoral tax avoiders.

“Surely this is blatant hypocrisy,” Hodge argued.

Ecommerce consultant Dan Barker took to Twitter to suggest there was irony to be found behind the deal.

Elsewhere, a former customer also expressed disappointment at the contract from the perspective of a small business owner.

MPs expose “dismal” HMRC response to online VAT fraud

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

From the top