back to article could reopen Google's £130m HMRC tax deal, says Parliament

The government may reopen its £130m tax settlement with Google due to concerns that HMRC "appears to have settled for less corporation tax than other countries are willing to accept", an official report has warned today. The Public Accounts Committee report Corporate Tax Settlement into the six-year tax negotiation with Google …

  1. Tromos

    It's time this was laid to rest.

    Once again it is being said that the rules are responsible for an unfair outcome. So stop playing around with Google (as they are far from being the only ones taking advantage), write off past losses, and CHANGE THE SODDING RULES.

    1. Flocke Kroes Silver badge

      They did change the rules

      Over 500 pages of new rules because politicians thought making noises about Google's tax bill would get votes. The new rules are a load of vague waffle, and the only way to come up with a number is to discuss it with HMRC until you reach some sort of agreement. If I wanted to create a tax law to increase bribery and corruption, a weighty tome of vague waffle sounds perfect.

    2. jonathanb Silver badge

      Re: It's time this was laid to rest.

      The rules were changed -

  2. NotWorkAdmin

    Let me guess

    "HMRC does not know how much its own six year investigation of Google’s tax affairs cost"

    Most likely £130m.

    1. Flocke Kroes Silver badge

      Re: Let me guess

      Imagine you are a tax investigator for HMRC. You could ask for what the other countries are taking from Google and finish the deal, or for half as much and get another six years of pay for changing the date on your last report.

    2. Crisp

      Re: Most likely £130m.

      You're suggesting they broke even?

      I'd be willing to bet that the cost was a lot higher.

  3. zaax

    If they didn't break any rules / laws what is there to look at other than new laws?

  4. 2460 Something

    Is the only reason that Google is the scapegoat for the pathetic excuse that is HMRC because of their size? HMRC does lots of back-room deals with big businesses to wipe out tons of unpaid taxes. Big businesses pay large amounts of money to 'tax consultants' (a number of whom also appear to have been employed by, or recently employed by HMRC) who help them 'legitimately' reduce their tax liability.

    But why wouldn't they? All of these intricate laws appear to be perfectly crafted to allow as many loop holes and misunderstandings as possible, if it is going to cost £200k in salaries to save £millions they would be doing a disservice to their shareholders to act in any other way.. If they really wanted to do something useful and productive they need to re-write them from scratch. Yes there may still end up being loop-holes but these should be few and far between as opposed to the Swiss cheese that our current legislation relies upon.

    The real problem here is bad legislation coupled with HMRC doing back-ally deals that have no oversight or accountability.

  5. Anonymous Coward
    Anonymous Coward


    I used to be proud to work for the Inland Revenue. There was a bit of a Millwall thing going on ("No-one likes us, we don't care") but there was a pride to be taken in being part of an organisation that fairly and professionally assessed and collected the tax due from everyone. My code was used by dedicated professionals acting with a clear sense of purpose and justice. Now the hamstrung HMRC limps along picking at the low-hanging fruit of self-assessors and PAYE bound taxpayers who can't easily escape, while Google and Vodafone thumb their noses at the inspectors. It's pathetic.

  6. MarkW99

    The problem is not so much UK rules as the UK-Irish double taxation treaty which specifies that if Google says that it is selling from Ireland then the sales will be taxable in Ireland provided that the activity of the UK company is "preparatory" or "auxillary". The UK company gets paid a commission which is comparable to whatever commission would be paid to an independent company to do the same work, but the bulk of the profit ends up in Ireland. The treaty rakes precedence over UK laws, so changing UK laws won't make any difference. Renegotiating the treaty requires the consent of the Irish. Are they going to do this in a hurry? I think not.

  7. Pellinor

    The report just shows that the PAC fundamentally misunderstands the relevant law, how companies operate, and how tax enquiries work.

    A few examples:

    - The £130k actually collected by HMRC is compared to amounts asked for by other countries, and found wanting. But amounts which have been asked for are always going to be overstatements. It's like saying someone undersold their house, if they sold for £200k and a similar one was on the market for £300k, as clearly theirs would be worth £300k too. But the £300k is an aspiration, and there is no guarantee that it is at all realistic.

    - The report refers to the previous PAC report, which found that "to avoid UK corporation tax Google relied on “the deeply unconvincing argument that its sales to UK clients take place in Ireland, despite clear evidence that the vast majority of sales activity takes places in the UK”". The "clear evidence" is that a Google employee told the PAC that he thought there was sales activity going on. It seems extremely unlikely that this person (not a tax person) understood the definition of "sales activity" for tax purposes, which has a lot of nuanced precedent about it; so I'm not at all sure why the PAC thinks that their impression should be more reliable than HMRC's.

    - On the issue of transparency vs confidentiality, they seem to miss the point completely when they say "We have not, for example, seen any evidence to prove that confidentiality results in more tax being raised than would otherwise be the case". That's not why you keep things confidential!

    1. Roland6 Silver badge

      A bird in hand is worth two in the bush

      Agree the PAC have done themselves no favours with this report. Totally failing to see that HMRC has achieved a settlement that it (HMRC) and Google are happy with, whereas everyone else is still arguing...

      Re: Underselling your house

      It's like saying someone undersold their house, if they sold for £200k and a similar one was on the market for £300k, as clearly theirs would be worth £300k too.

      In the UK, you shouldn't forget there can be a difference between the price you sell your house for and the price declared to the Land Registry for public record.

  8. Gordon 10

    Hey Hillier

    "We are not convinced HMRC has achieved this and it must work with overseas tax authorities if we are to see lasting and effective change in the international tax system,” added Hillier"

    Hey Hillier How about legislating to fix the gaping holes in our tax laws and renegotiating our current tax treaties.

    That's a politicians job not HMRC's other wise for all your pontificating you are part of the problem not the solution.

  9. John Lilburne

    Pour encourager les autres

    When Henry I discovered that coiners had been cheating by manufacturing sub standard sliver pennies, he invited them all round for Christmas get together at Salisbury cathedral where he ordered that their right hand and gentiles be cut off.

    Most people approved of his actions.

    1. gazthejourno (Written by Reg staff)

      Re: Pour encourager les autres

      Cutting off non-Jews, what a bastard!

    2. Mike Shepherd

      Re: Pour encourager les autres

      As I understood it, accounting arrangements can be set aside where the main purpose is to avoid tax e.g. where a foreign subsidiary bills a UK subsidiary a large sum for goods or services which are clearly worth much less. I don't know why this doesn't apply in this case, but I'd be happy to have Page and Brin dealt with by the Henry I method.

      1. Anonymous Coward
        Anonymous Coward

        Re: Pour encourager les autres

        I'd rather see the politicians who allow this to be dealt with by the Henry I method, starting with every single one of them who is not as transparent about their own tax affairs as they want companies to be, followed by every one of them that has ever claimed an allowance or expense us ordinary people can't get.

        Not siding with Google on this, at all, but there is a troubling thing here: "HMRC "appears to have settled for less corporation tax than other countries are willing to accept", ". So HMRC rules are based on appearances of settling for what others are willing? In other words, they aren't rules?

      2. Pellinor

        Re: Pour encourager les autres

        Mike Shepherd - you are entirely correct: if the accounting entries aren't reasonable compared to an arm's length situation then they get over-ridden by the market rate. In fact the company is obliged to do so if it feels that the accounting rate is wrong. The problem is establishing whether the charges are reasonable, and if not what they should be.

        This did apply in this case: Google UK used one rate, which it claimed was reasonable, for the amount it billed Google Ireland; HMRC said it should have been charging more; Google conceded the point and paid tax as if it had charged more.

        The problem is that this didn't address what some people consider to be the central problem, which is that Google's UK income is from providing marketing support to Google Ireland when the latter sells to UK customers. There is a school of thought saying that the sales are made in the UK, not in Ireland, and so Google's UK income should in fact include all those sales. HMRC looked at this question, and concluded that the sales are made in Ireland. Which is not entirely surprising, given that the rules around this area are pretty clear and well understood so it would be strange if Google had got things wrongway.

        1. Red Bren

          Re: Pour encourager les autres

          "given that the rules around this area are pretty clear and well understood"

          How do you know? Did you google them?

        2. jonathanb Silver badge

          Re: Pour encourager les autres

          The argument is actually that Google Ireland had a permanent establishment in the UK, and should therefore be paying UK tax on its sales.

  10. Anonymous Coward
    Anonymous Coward

    As an american firm with shareholders...

    they are obliged to make themselves "tax efficient" again an issue with the rules, and not the corporate morals of Google.

    All a smokescreen so google can be included with bank bashing and any other organisation that makes money regardless of its public good, or lack thereof and make a queue of politico's attempt to be the one that "beat" google...

  11. allthecoolshortnamesweretaken

    "HMRC does not know how much its own six year investigation of Google’s tax affairs cost, but admitted that it had been “a very expensive and resource-intensive process”."

    No comment.

  12. amanfromMars 1 Silver badge

    IT's Mad, Bad, Rad, Sad World out there..... take care. Who dares win wins.

    Whenever one considers the tasty information that one provides Google with whenever one is searching for delights, goodness knows what sort of leverage can be applied to have one doing as one is bid rather than as one maybe should.

    And to imagine that such a facility and utility would not be used and abused is a dangerous naivety which will punish one severely.

  13. adnim

    Google said:

    "It is not possible to judge whether a £130 million tax settlement agreed between Google and HMRC is fair to taxpayers."

    Taxpayer with non-billion pound turnover per annum says: fuckoff.

  14. Colin Tree

    Tax money transfers

    Tax the money transfers, not the profits.

    A company or person transfers money for an online transaction.

    Or pays for a service in this country, invoiced in another country.

    Hey presto, tax was paid, was that too simple ?

    A company with its head office in the Cayman Islands still gets taxed

    when it moves money from the local branch to head office.

    Every transfer costs tax, which makes it cheaper to simplify the company structure.

    The tax can even be shared by the countries at each end of the transaction,

    taxed when you spend and when you receive.

    1. jonathanb Silver badge

      Re: Tax money transfers

      There is withholding tax if you transfer money to the Cayman Islands in this way. That's why the money goes via Ireland.

      The problem with a transaction tax is that you can avoid it by reducing the number of transactions.

      For example, if you want to get a kitchen fitted, you could give a kitchen fitter a load of money, and tell them to buy the stuff and get on with it. Alternatively, the kitchen fitter could tell you want to buy, you pay the supplier direct, and you pay the fitter for their advice and installation services.

  15. codejunky Silver badge


    While I am sure this will please anyone who thinks the law applies to the plebs and anyone else needs cooking on an open fire like witches (or taxing to their grave and beyond). However Google followed the law. Not just ours but the international trade treaties we have in place. The treaties and laws enforced by the EU even. So apart from trying to gain electoral favour by going on about the big bad banks, big business, starbucks and google what on earth are they going to achieve?

    Times like this I miss Tim's articles

  16. Graham Marsden

    Did the agreement say...

    ... "Full and final settlement" or words to that effect? Because if it did, they're going to have to find something which was definitely *not* included in the original agreement...

  17. TheDillinquent

    Isn't about time

    that the Fraud Squad took an interest in HMRC? The Google settlement stinks of corruption.

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