Gap is the latest US company to face questions over its approach to paying taxes in the UK.
The retailer has paid almost no corporation tax - once rebates are taken into account - since 2011 despite sales of more than £1bn, the Evening Standard reports.
An analysis of its accounts revealed Gap’s three UK-registered companies made net losses between 2012 and last year, allowing it to reclaim more than £4.2m from the taxman and set this against future profits.
The accounts suggest Gap has been shuffling profits between these three businesses and its parent company in San Francisco. This strategy, although legal, has reduced its potential liability to HM Revenue and Customs.
Gap has 132 stores and turnover of more than £300m a year in the UK. It also owns Banana Republic, which has eight UK stores.