16 May 2013

Google accused of doing ‘evil’ over UK tax affairs

Internet giant Google is accused of using doing “evil in using smoke and mirrors to avoid paying tax” by MP Margaret Hodge during testy exchanges before the public accounts committee.

Google says that as the billing for advertising sales are paid in Ireland, their UK workforce is not involved in sales.

However MPs were keen to put to Google Vice President Matt Brittin the evidence they had received from what committee chairman Margaret Hodge described as a “stream of whistleblowers” that employees in the UK had been paid commission for sales activity here in the UK.

“It was quite clear from all that documentation that the entire trading process and sales process took place in the UK,” Mrs Hodge told Mr Brittin, adding:

“I simply suggest to you again that you think about what you actually said on November 12 which was that ‘anyone who buys advertising from us in Europe buys from Google in Ireland, from our expert teams’. That is not what the whistleblower told us and that is not what the documentation demonstrated.

“I think you should think really carefully about what you said to us and whether or not that holds true.”

Mr Brittin said the evidence related to the period before he joined the company six and half years ago and that suggestions that Google was trying to “disguise” the way it operated were “just not true”.

However Mrs Hodge (video, above) described the payslips shown by a whistleblowing former senior salesman which showed the payment of a “modest” salary and three or four times that amount in commission for making sales and “closing deals”.

Read more from Siobhan Kennedy's blog: Google in the hot seat - but HMRC feeling the heat

Amyas Morse, head of the National Audit Office and Comptroller & Auditor General, told Mr Brittin the issue was not “going away” because people remained sceptical: “There are a tonne of people who are listening and saying we think they are selling in the UK,”

Referencing the informal motto of Google in its early days – “don’t be evil” – a plainly frustrated Mrs Hodge drew the Google evidence session to a close by remarking “you’re a company that says you do no evil, and I think you do ‘do evil’ in that you use smoke and mirrors to avoid paying tax.”

Political criticism

Labour leader Ed Miliband said there was an unacceptable “culture of corporate irresponsibility” among some firms.

Mr Miliband, who is due to attend a high-profile event organised by Google in a few days time, said today that he thought “people will be shocked by the evidence that Google is going to extraordinary lengths to avoid paying their fair share of tax.”

Read more: Amazon paid less in corporation tax than it got in grants

Business Secretary Vince Cable said that outrage at both Google and Amazon over tax is “absolutely justified”.

Speaking to Channel 5 News, Mr Cable said “Google, Amazon and some of these other companies are not actually acting illegally .. but what they are doing is using every opportunity they get to avoid paying tax, so there is an issue about ethical behaviour.”


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