Exclusive research for Money reveals which retailers are paying their fair share

Amazon, Starbucks, Google, Apple, Boots, Caffe Nero, travel operator Tui … the list of companies named in the debate over tax avoidance grows ever longer. So where can shoppers spend their hard-earned money and know that the company isn’t funnelling the cash offshore and paying virtually no corporation tax? Figures prepared for Guardian Money by Ethical Consumer magazine reveal where you can shop with confidence.

Top of its list is Lush, the high street hand-made cosmetics chain and multinational with operations in more than 40 countries. Yet it has chosen not to use devices such as tax havens and “transfer pricing” to hide profits. Researchers at Ethical Consumer found that it paid 42% tax on its £21m profits in the UK last year, giving £8.9m to the Treasury. Amazon, meanwhile, revealed to the Commons public accounts committee last month that it had sales in the UK of £2.9bn, yet paid just £1.8m in tax.

If Amazon enjoys the same level of profit margin as Lush, and paid tax at the same rate, then Amazon would be handing over nearly £100m a year to the Treasury – enough to build five secondary schools.

Other store chains scoring highly in Ethical Consumer’s research were John Lewis, which paid 35% tax on its profits last year, Marks & Spencer (27%), Next (26%) and Debenhams (22%). Ethical Consumer examined the percentage of actual tax paid on profits and only included companies that did not have “high risk” subsidiaries in tax havens.

Lush co-founder and managing director Mark Constantine accuses Amazon of operating a legal but “basically corrupt business model” and reveals how top business people, like himself, are repeatedly touted complex schemes to skirt taxes, such as running profits through Ireland or Luxembourg. “I could spend all day in meetings with accountants and tax experts who show you how you can pay less. In one year, one of our competitors paid just 2%. But it just doesn’t feel right.”

He says tax avoidance in Britain has become such a part of boardroom culture that executives are focusing on these schemes and taking their eye off the main job – running their businesses.

“We are big in Japan and have a lot of Japanese staff. There, they absolutely refuse to fiddle their taxes. From the bottom of the company to the top, the staff would absolutely refuse to do it. What we need here is a return to a climate where businesses are not focussed on strange machinations to avoid tax but, instead, on the important things that make you a commercial success.”

But the government needs to take the lead, he says. “It has to set the rules and vigorously enforce them. In some ways, I’m embarrassed that our business came top in the Ethical Consumer survey. Other businesses probably think we’re stupid. We even looked at taking the tax rates paid by all of our competitors over five years, averaging that out and paying 10% more. But even that would have involved us in schemes we didn’t want to get into. It’s the government that’s got to get a lot more vigorous.”

But shoppers don’t have to wait for the government to act – many have already begun their personal boycotts. Margaret Hodge MP was so angered by Amazon’s aggressive policies that she has already publicly declared that from now on she will stop using it. A poll that ran on the Guardian’s website earlier this week asked readers if they would be boycotting Amazon this Christmas: 53% said they would, but 47% said no. Typical of the comments from those people against was: “Blame the government for not legislating against tax evasion. Don’t blame the companies for saving money.”

Today Ethical Consumer, an independent co-operative that produces guides, ratings and best-buy advice, is launching a broader “Boycott Amazon” campaign. Tim Hunt, who calculated the figures on tax for Guardian Money says: “With this research we hope to give consumers some better options. What we have produced is by no means a definitive list. For example, there will be many small independent retailers paying the proper amount of tax who deserve recognition. However, we wanted to produce a list of widely available brands to make it as easy as possible for consumers to avoid using Amazon.

“Over the past few weeks and months there has been an increasing demand to find alternatives. People are rightly angry and are looking to shop with retailers, both online and on the high street, that pay their fair share.

“The companies we are recommending are paying a much higher rate of tax on their profits than Amazon, and contributing a more proper amount to the public purse. During this time of swingeing public service cuts, we feel that this is vitally important as every penny counts.”

But what of the hundreds of traders that use Amazon Marketplace? Amazon is just a platform on which they sell their goods, and many have voiced serious concerns about losing business from a boycott, even though they pay their fair share of taxes. Ethical Consumer says: “There’s no reason why tax-paying traders should take a hit from our boycott. If you see an item on Amazon that you’d like to buy, simply find the name of the company online and then go to the company’s website and buy directly.”

You can get a four-week trial subscription to Ethical Consumer magazine and access to its website at ethicalconsumer.org/subscriptions