05/04/2012 12:41 BST | Updated 05/06/2012 06:12 BST

Amazon Tax Scandal Splits Book Sellers - And Lovers - In London

Since its launch in 1995, Amazon has swept aside both competition and controversy to become the world’s largest online retailer.

But this week the company appeared to play into its critics’ hands when it was reported that it is being investigated for failing to pay corporation tax on more than £3.3 billion worth of earnings in the UK alone.

To find out how badly the news has damaged Amazon’s already fractious relationship with their humble rivals on the high street – and whether book lovers on the street are appalled enough to take their business elsewhere – we set out into those forgotten enclaves of London, where books are still bought and browsed within bricks and mortar...

“It’s outrageous. It just sounds like a crime to me,” says Sasha Ilyukevich, who works at Quinto Bookshop on Charing Cross Road.

“I can’t say I am surprised at all though – it’s typical corporate behaviour isn’t it? Acting with no integrity, just wanting to make money.”

Sasha, who has worked in his store since 2004, uses Amazon personally to sell his band’s music (until they get big, at least) but insists his shop isn’t interested.

“Amazon is actually pretty amateur. We sell our stock via them a website called ABE books, who do online book selling properly, “ he says.

A few shops down the road, however, and Tom Adair of Any Amount Of Books says his shop has entered into a ‘mutually beneficial’ selling relationship with Amazon that reflects the reality of surviving in the modern marketplace.

“We sell thousands of titles on Amazon, mainly academic texts, collectables and titles now out of print. They take 15% of every sale we make, which is usually around four to five items a day – a fraction of what we sell in the shop. I suppose we’re reinforcing them as a company by selling through them, but we don’t resent them at all.”

Tom, who has been selling books to central London’s visitors for 10 years, was surprised to hear his business partner is being investigated for tax avoidance.

“It’s a shock because they monitor us so closely. They issue us a lot of ‘customer metrics’ and targets and can be quite heavy-handed if we miss orders or anything like that. In the early days they even suspended us briefly.

“It’s all quite interesting, though I am sure they’ll correct any mistakes they’ve made pretty quickly. I mean, it’s pure capitalism isn’t it?”

Meanwhile, down in South West London, Ed McGarry, the co-owner of Clapham Books, described the news as “annoying”.

“It’s impossible to measure the trade we lose out on because of Amazon. They’ve always been there. But then in this business, it’s something new every 6 months. Last year the recession hit us, now it’s e-readers.”

Since taking over the shop in 2006, after its previous owners took it into liquidation, McGarry said he’s been relying on improving the community aspects of his shop, including author events, to help compete.

“Amazon is great if you know exactly what you want, but most of our customers – I’d say 75% - just want to browse, so we like to give them extra reasons to come in and do that.”

Standing proud in central London is the famous Foyles bookstore – once the official ‘world’s largest book shop’ – now as much a tourist attraction as a never-ending treasure trove for book worms.

After quizzing their staff for a while, they issue us a formal statement straight from their CEO Sam Husain, whose annoyance at what he perceives as Amazon’s unfair practices is palatable.

"Foyles, like other UK-based companies, is liable to UK Corporation tax on all its profits. It is obvious that any organisation that is able to factor a tax benefit into its pricing model clearly has a price advantage.

“While it may appear to be in the consumer's interest to benefit from lower prices, if these are financed by lower taxation it raises the question of whether the UK consumer is losing out on the tax contribution that would otherwise flow through the economy.”

"We have also been concerned for some time now about Amazon's price advantage on eBooks, conferred by paying a lower VAT rate of 3% because the business is registered in Luxemburg[...]. This is another unfair advantage for Amazon.”

So, that’s the booksellers accounted for. But what about the people on the street? Do they really care if Amazon is playing unfairly? Or do they just want to keep getting their books at bargain bucket prices?

Brad Haynes, a user experience designer from London, said: “I’d have thought they’d struggle to get away with it, a company of their size. Still, Amazon is a valuable service and they sell stuff at a fair price, so I’ll continue to use them regardless.”

Susan Glinska, who works in publishing, was less certain.

“Although this sort of tax avoidance seems rife in corporate business, I’m still a little surprised to hear Amazon may be guilty of it too. I think of them as a good, honest company,” she said.

“If it turns out they are guilty I may be persuaded to stop using them. But then I much prefer the comfort and the human touch of a real book shop anyway.”

Mark Preston, a screenplay writer from London, said:

“When I heard it I thought ‘bloody hell!’. They’re clearly not operating on a level playing field with smaller book shops. I was shocked, but not surprised – bigger companies will always try stuff like this.”

“My friend was telling me today that the owner of Amazon has found the Apollo 11 space rocket in the sea and wants to bring it to the surface. I told him - yeah, and the British tax payer is footing the bill for it!"

What do you think? Do Amazon’s tax problems put you off using the company? Let us know in the comments below.