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This is quite hard to understand but the gist is that HM Revenue and Customs has allowed Google to say part of its tax payment was covered by share options to staff that the company claimed were exempt. But HMRC has ruled that out in previous negotiations with other major US corporations.

So the taxman has mistakenly allowed Google to get away with paying £97 million on £7.2 billion of profit between 2005 and 2014. That’s a rate of just 1.3 per cent.

And George Osborne wants you to think that is a good deal.

George Osborne’s claim that the government secured a major corporation tax deal with Google appear to be unravelling after it emerged that a quarter of the £130m recovered by HM Revenue & Customs related to the US company’s share options scheme.

Filings by Google’s UK subsidiary show that £33m of the funds paid to the Treasury followed a wrangle over share options handed to staff, which the US business had argued were exempt from UK tax.

The company’s accounts show that the government was only able to claw back less than £100m in corporation tax from Google for the 2005-2014 period, and not the £130m the chancellor claimed. MPs and foreign governments have criticised the deal for allowing Google to generate billions of pounds in profits from its UK business and pay little corporation tax.

Richard Murphy, a tax expert who advises the Labour leader, Jeremy Corbyn, on economic policy, said most major US corporations had attempted to depress their tax bills by charging subsidiaries the cost of share options to staff, and that all had been ruled out by HMRC.

He said it was unclear why HMRC had failed until now to force Google to comply. “What was already a poor deal for the government is now looking even worse,” Murphy said. “And it looks like HMRC’s mess-up. I would say it clearly shows that HMRC is under-resourced and is struggling to cope in negotiations with major corporations.”

Source: Google tax deal under fire as it emerges figure included share options scheme | Technology | The Guardian

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