Google has defended its UK tax activities, claiming that the £130m deal with the government is the right amount to pay and criticised Whitehall for its complex tax systems.
The search company’s finance and EMEA executives were grilled by MPs on the Public Accounts Committee about the deal with HMRC under which Google will pay £130m covering a 10-year period in which it generated several billion pounds in the UK.
Matt Brittin, president of Google’s EMEA Business and Operations division, and Tom Hutchinson, vice president of finance, defended the deal and blamed HMRC for the six years it took to come up with a tax bill for Google’s activities in the UK.
MPs from the major parties have been scathing about the amount, describing it as paltry and an example of Google freeloading on tax payer-funded UK infrastructure.
However, Brittin was adamant that Google had paid the amount of tax requested by HMRC.
“We’ve been through an intensive audit that tells us the right amount of tax to pay. We want to pay the right amount of tax. We believe in paying our taxes. We’re paying the tax bill the tax man has told us to pay in the UK. We can’t pay more,” he told the committee.
The committee pointed out that Google could indeed pay more than the tax bill it had been presented with.
Brittin continued to claim that Google’s tax practices are fair and just. “We want to be in the position where we are seen to be paying the taxes that are due,” he said.
Hutchinson added that Google agreed to the amount it was asked to pay under UK tax law and that no negotiation on the figure took place.
“There was not a number that was thrown out by HMRC and not a number we negotiated down,” he said.
The committee did not seem convinced by this and asked why, if Google is paying fair taxes in the UK, it has a complex web of financial structures that involve tax havens such as Bermuda.
Brittin and Hutchinson remained adamant that Google’s £130m tax bill was nothing more or less than the sum it owed the UK.
Hutchinson described HMRC's tax processes as complex and inefficient. “I would love to have these rules simpler. There’s a debate about tax issues and tax policies, not the amount [Google agreed to pay],” he said.
However, the committee called out the Google executive for having an equally complex tax structure in the US.
One of the main problems with Google’s tax structure, as far as HMRC is concerned, is that the company’s business is registered as several separate companies in different countries that report smaller profits on which they pay a smaller rate of corporation tax.
For example, Google’s European headquarters is in Ireland, where it is subject to lower corporation tax than in the UK and therefore lower tax bills.
The committee acknowledged that HMRC may have been slow and obtuse when processing Google’s tax affairs, but was also baffled as to why it took Google six years to come up with a tax amount. He suggested that Google’s finance team might be a bit “thick”.
Google remained adamant that its tax processes are fair and proper, but the MPs were sceptical about Google’s call for clarity when the company has equally complex tax structures.
Google recently reported huge profits, so it is no surprise that its tax deals should come under fire from the government and the public.
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