Matthew Freud has attacked the pittance Facebook pays in UK tax after footing a bill for almost £3m last year, as he pocketed more than £11m from his PR and marketing agency group.
The PR chief took home £11.2m last year, a third more than he did in 2013, while his business Freud Communications paid £2.96m in UK corporation tax.
Freud said that it was wrong that hugely successful companies such as Facebook which, it has emerged, paid just £4,327 in corporation tax last year, and many of his rival foreign-owned PR firms did not pay a “fair share” of tax for their British operations.
He called on the government to act so that British businesses which follow UK tax rules are not “disadvantaged”.
“We are proud to be a growing UK creative business,” said Freud. “Our success means that we paid £3m in tax last year, 684 times more than Facebook. Many of our competitors, like Facebook, avail themselves of perfectly legal mechanisms for reducing their tax bill. We don’t, but would urge the government to consider what it can do to level the playing field so that British businesses paying their fair share of tax in the UK are not disadvantaged.”
Freud Communications, which has clients including Pepsi and US studios Universal, Warner Bros and Fox, made £7.6m in post tax profits last year.
As the sole shareholder of the company, Freud effectively pockets those profits, plus an extremely healthy £3.6m dividend, meaning he took home £11.2m last year.
Freud Holdings, the UK parent company of Freud Communications, paid tax of £2.96m last year.
The financial filings, published on Thursday, also show that Freud made a £9.5m profit from the sale of company offices in Newman Street, Soho, and a move to nearby Stephen Street.
Despite Freud’s hefty personal earnings it was not a vintage year for Freud Communications. The PR and marketing operation saw pre-tax profits fall 10% year-on-year to £7.7m as operating profits declined 8.6% to £7.58m.
Total turnover, 78% of which comes from the UK operations, fell 4% to £37.3m.
Staff wages and salaries were stable at just over £14m as employee numbers dropped from 241 to 224.
Directors - listed as Rebecca Hirst and Andrew McGuinness, who was appointed chief executive last year - took home £523,900.
George Osborne, the chancellor, has pledged to crack down on tax avoidance by global firms by swiftly legislating to enact a new set of rules drafted by the Paris-based Organisation for Economic Co-operation and Development (OECD), which has become a hub for global tax reform in recent years.
The so-called BEPS rules are aimed at cracking down on “base erosion and profit-shifting”: the practices used by many global firms to minimise their tax liabilities by recording profits in low-tax jurisdictions.
The chancellor has repeatedly cut corporation tax, which is levied on company profits, but he insists that in exchange all firms must pay their fair share to the exchequer. The main corporation tax rate was 28% when Osborne arrived at the Treasury, and is 21% today.