MPs attack deal to let Google to pay ‘relatively trivial’ £130m back taxes

If Tory MP Mark Garnier is right and Google’s UK turnover has been £1.8 billion per year, then its Corporation Tax bill could be anything up to £360 million a year (depending on the company’s costs).

In that context, a deal to pay just £130 million – from 2005 – is worse than “trivial”, as described in the Guardian article.

It casts further doubt on George Osborne’s long-disputed claim that he is seriously trying to tackle tax avoidance – and bring down the UK’s national deficit and debt.

Senior MPs have condemned Google’s deal to pay £130m in back taxes in the UK as derisory, with Labour calling for a National Audit Office investigation into the “trivial” settlement.

The search giant said on Friday it had struck an agreement with HM Revenue and Customs to pay tax that it has owed since 2005. Significantly, the company will also now start paying tax on revenue from UK-based advertisers.

Google, along with other multinationals, has used legal methods to lower its tax burden in European countries such as the UK – its biggest market outside the US – but has come under intense political pressure to change its practices.

The shadow chancellor, John McDonnell, said he would ask George Osborne for details of the deal in the Commons on Monday and criticised HMRC for letting Google pay a “relatively small amount”.

Source: MPs attack deal to let Google to pay ‘relatively trivial’ £130m back taxes | Technology | The Guardian

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12 thoughts on “MPs attack deal to let Google to pay ‘relatively trivial’ £130m back taxes

  1. mohandeer

    When Osborne promised to get £5 billion back into the coffers of taxes due the figure was so low it was laughable. Tax evasion and Corporate welfare “incentives” total well over £124 billion and probably a great deal more than this which Farnsworth managed to find. Now it seems he was never even willing to claim back that much.

  2. mohandeer

    The £124 billion did not include the HB incentives and the UTO identified over £92 billion in historic tax evasion. Haven’t got the articles anymore since laptop crashed and lost data but Farnsworth’s work was covered by Aditya Chackrabotty of the Guardian.

  3. Dez

    Pathetic. However if the calcs were based on legit tax regs and ways of working then we need to employ much smarter tax experts rather than run of the mill civil servants who have not got an appetite to do anything drastic for fear of upsetting their masters and political leaders. About time we employed a few poachers who do not go on to join the gamekeepers when they retire….or is it the other way around?

  4. hayfords

    It sounds like the deal was the best that could be done. Google have done nothing illegal, They have based their business in another country which is reasonable as they are essentially a US company. Sticking strictly to the letter of the law, Google could have paid no extra back taxes at all. it is not the fault of companies like Google. It is due to the international laws and tax arrangements.

    This is not a new problem. Just think of all the foreign companies that have done business here for generations. Ford, Chrysler, Renault, Citroen, VW, Audi etc have paid virtually no tax ever here. IBM, Honeywell, Xerox are the same. Our companies do the same. ICI, BP and lots of UK multinationals don’t pay tax in most of the territories that they do business in and pay their corporation tax here. There is no way to assess the corporation tax liability based on their turnover. It is only payable on profit. Google cross charges fees to other countries thereby reducing their profit here. Ford used to do the same by cross charging major components such as engines to other countries at rates that they choose.

    You can pretty much guarantee that every large multinational company arranges their affairs to ensure that they can choose where their corporation tax liability is calculated. In most cases it will be in a country that has a low rate of corporation tax.

    Until there are changes to the international tax laws there is little that can be done about it except by arrangement.

      1. hayfords

        Legally, Google did not have to pay anything as part of a deal as they had done nothing illegal. The best possible is anything they would agree to. The Revenue had no leverage as Google had followed practices which were permitted and still are. To be honest it is fortunate that Google are paying any back tax as none was owed. I can only imagine that the deal is seen by Google as good will to avoid bad publicity.

        I agree that the system should be changed, but there are repercussions. One is that we will lose tax from UK companies that will have to pay their corporation tax in countries where they do business. We sell lots of Land Rovers across the world and many are sold through Land Rover owned agencies in those countries. Firstly, should Land Rover pay corporation tax on those sales in the countries. Secondly, the problem is further complicated by the fact that the actual owners of Land Rover is Tata which is an Indian company, So maybe all the tax should be paid in India, which is probably where it is paid or perhaps in all the countries where they make sales.

      2. Mike Sivier Post author

        But of course George Osborne has been under pressure to outlaw the practices Google has been using – and he hasn’t bothered.
        From the point of view of the ordinary citizen, both are in the wrong.
        Your concern about taxes being paid in the countries where businesses are based is a good one – and perhaps an indication that the Tories should not have allowed so many of our going concerns to be sold off to foreign corporations in the past.
        Tory short-termism strikes again!

  5. paulrutherford8

    There was a programme on BBC2 last night about the Cayman Islands which mentioned the likes of Google and Facebook etc., called ‘Britains Trillion Dollar Island’, which all ought to watch.

    It shows a stark contrast between the rich and poor which is a definite warning to us all.

    Please watch and pass on widely.

    It truly is frightening.

  6. Barry Davies

    As our esteemed chancellor only has an o level in maths, he probably does not understand maths very well, after all it isn’t as if it is a hard o level to get these days.

Comments are closed.