Apple could be forced to pay millions of pounds in extra taxes in the UK after losing a legal battle over whether its smartwatch straps are an accessory that should be taxed individually or part of the device.
Ending a months-long legal battle, a tax tribunal in London has ruled that the straps are “pieces of plastic” and an “accessory”, not part of the technology.
For years Apple has insisted the plastic straps, sold with its smartwatch but imported separately, are an integral part of the electronic product.
Products imported into the UK are subject to import duties between 0pc and 17pc, with electronics generally being duty free. Apple doesn’t currently pay import taxes on its smartwatches and smartphones.
The decision, which ratifies HM Revenue and Customs’ classification of the strap as an “other plastic”, means Apple could lose its import tax exemption, with HM Revenue and Customs being able to levy duties of 6.5pc on the £49 sport wristband.