back to article Google 'will be pulled back in front of MPs' on its UK tax affairs

Enormous advertising firm Google has said that any suggestion that its veep Matt Brittin was less than accurate when testifying to Parliament on the firm's UK corporation tax affairs is "wilfully misleading". The Chocolate Factory told The Register that it has written to parliamentary Public Accounts Committee chair Margaret …


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  1. The BigYin
    Thumb Down

    Another PR stunt by MPs

    It makes them look good, but it achieves nothing. If they want to stop Google's antics there is a simple answer: change the law.

    They won't do that because too many MPs (and their pals) also avoid tax by using the similar tricks.

    1. Anonymous Coward
      Anonymous Coward

      Re: Another PR stunt by MPs

      UK MPs can't change global laws and they can't do anything that makes global businesses look at the UK and go "we're not going to set up a base there". Any changes need to be done in all developed nations simultaneously.

      This is for Google to be moral and stop being so mean. Every company in the UK employs people that use PAYE, so claiming you employ people who pay tax is bonkers. Does that mean that if I pay a builder who pays his taxes to extend my home that I can then dodge tax?

      Just because something is legal doesn't make it moral. Smoking drugs, sleeping with children and prostitutes probably isn't illegal in some countries. If you think something being legal is so great then you would have no problem telling your work colleagues such exploits on your holiday? Oh, didn't think so.

      1. tony

        Re: Another PR stunt by MPs

        Tax shouldn't come down to Morals, they're pretty abstract and most people disagree without even getting close to the realms of the state and Godwinism.

      2. Anonymous Coward
        Anonymous Coward

        Re: Another PR stunt by MPs

        I wish people would stop using the words "moral" and "taxes" together. Except maybe as antonyms.

      3. Khaptain Silver badge

        Re: Another PR stunt by MPs

        @anon 12:58

        People that sleep with both "children and prostitutes " !

        People have got some strange habits.

      4. The BigYin

        Re: Another PR stunt by MPs

        > UK MPs can't change global laws

        Well they can via treaties etc, but not immediately. What they can do is alter UK laws.

        > they can't do anything that makes global businesses look at the UK and go "we're not going to set up a base there".

        Then they should shut-up about "morals", tax and stop wasting everyone's time.

        > This is for Google to be moral and stop being so mean

        Google is obeying the law AFAIK. Right or wrong, that's the deal. Don't like it, change the law.

    2. Anonymous Coward
      Anonymous Coward

      Re: Another PR stunt by MPs

      If the MPs and their pals avoid tax using these methods, cite some sources, they won't be back in office and they'll have to resign.

      If, however, you're just making it up, because you want it to be true, don't. If things like this are made up they add to noise and MPs get away with more dodgy behavior because it can't be separated out of the noise.

      1. The BigYin

        Re: Another PR stunt by MPs

        "If the MPs and their pals avoid tax using these methods, cite some sources,"

        I know for a fact it has been repeatedly reported in the "Private Eye", but I can't find any on-line sources right this second (and I don't want to mention names without being sure).

        It's not illegal, they've not committed any crime. They're just being hypocritical - which is par for the course with an MP.

      2. Steve Mw

        Re: Another PR stunt by MPs

        Knock yourself out

    3. Turtle

      @The BigYin: Re: Another PR stunt by MPs

      "If they want to stop Google's antics there is a simple answer: change the law. They won't do that because too many MPs (and their pals) also avoid tax by using the similar tricks."

      "Similar" does not mean "the same". It's kind of doubtful that the MP's rely on the same loopholes as Google. And even if most of the MP's *do* rely on the same loopholes, it should still be possible for them to rewrite the laws so that they can make Google pay some real money in taxes, while still safeguarding their own loopholes.

      And if they did do that, if they did safeguard their own loopholes, while forcing Google to pay meaningful taxes, would you be worse off than you are now?

      1. The BigYin

        Re: @The BigYin: Another PR stunt by MPs

        MPs cannot accuse Google of immoral acts whilst they themselves do similar things.

        Changing the law to get money from Google and protect themselves is also immoral.

        They have one clear choice and they are not taking it. Too busy with this circus which achieves nothing.

        I would be better of if the UK had proper tax enforcement. The purported £2billion from Vodafone would have been a good start. But no; one handshake and all gone. The culprit in all this faced no censure!

        Actual banking regulation would be good too.

        Our MPs are long on words but very, very short on action.

    4. Cucumber C Face

      Re: Another PR stunt by MPs

      change the law OR change the tax rate to compete with Ireland.

      Why should UK based businesses pay more than any business based (nominally or actually) in Ireland?

      1. The BigYin

        Re: Another PR stunt by MPs

        Yeah, because Eire's economy it's a doing sooooooooo well.


  2. J P

    One may well ask why, if Google is underpaying tax, PAC is asking about it*, rather than passing it onto the Treasury Select Committee, or maybe even HMRC..? Well worth reading: from @BenSaundersCTA - the rational explanation for tax professionals' exasperation with PAC.

    *The remit of the PAC here Last time I looked, relevant bits were 148(1), 152(1),(2) and then 137A

    1. The BigYin

      The last tax settlement HMRC got was a cosy dinner and a handshake (thanks Hartnett).

  3. Jason 24


    Surely this is as simple as checking what bonuses are paid to these "non-sales" people? If their bonuses are changing month to month then there's a fair chance this is actually commission being paid to the staff, which means they are sales droids, regardless of where the deal is technically rubber stamped?

    1. Matt Bryant Silver badge

      Re: Commission?

      That would make zero difference if the salesperson was in the UK or Ireland, it's where the order is placed that counts. For example, we buy kit from vendors in the States for offices all over the World. Whilst we may talk to vendor salesgrunts here in the UK, the deals will be placed and registered in the US and therefore count as "sold" in the States. We pay taxes on the sale in the US, not the UK. Another example is that you can go on the Web and place an order on a Japanese website and sale will be taxed in Japan, not the UK, which is actually higher tax than the UK, but you cannot claim it back by saying "well, I clicked the order button in the UK".

    2. Anonymous Coward
      Anonymous Coward

      Re: Commission?

      Not a lawyer and all that, but whether or not people in UK are salespeople is irrelevant, I would think. They might well be UK people paid by an Irish company to drum up sales and negotiate on the behalf of the Irish company; the deal is still happening with the Irish company. As long as the contract is with the Irish company, it is irrelevant who the go-between are, or even if they are paid on commission; they could even belong to a third-party company.

      1. Jason 24

        Re: Commission?

        You're both quite right in what you are saying and I certainly wasn't implying otherwise, tax is paid on where the sale is made.

        Google is, it would seem, is trying to say that they have absolutely no sales at all in the UK. Only sales people work on commission, so if bonuses are changing that a very good sign of commission being paid, meaning that Google is lying to us here.

        I don't know where it gets us exactly, but it shows them being dishonest in these statements at least. It's up to our politicians to decide what to do with this information.

        1. Anonymous Coward
          Anonymous Coward

          Re: tax is paid on where the sale is made

          When you state that tax is paid on where the sale is made, would you by any chance mean sales tax (or rather, VAT)?

          Because the part Google is accused not to pay enough of is income tax, which is paid wherever the company making the income is incorporated.

          That I know, nobody is accusing Google not to pay enough VAT. In fact, since Google is selling services, it might well be that there is no VAT on the transaction.

  4. Gordon Pryra

    Lot of talk to stop them doing anything.

    If they really wanted to do anything then they would just let loose the HMRC dogs (like they do with smaller companies)

    Cheap PR stunts like this leave me with the feeling that they have a vested interest in not changing the way things work yet need to be seen to be doing something (until the newspapers get board or they find a smaller company to make an example off)

  5. nuked

    This is a company who (allegedly) drove vans round Europe stealing personal information from wireless networks and then (allegedly) took active measures to conceal the intent behind this exercise.

    And a distortion of their UK-based office activity is at all surprising?

    Google consistently demonstrate that they are outside of the law, due to their value and influence, and unless a sizeable nation slaps them back into place, they will continue to do whatever the hell they like.

    1. Anonymous Coward
      Anonymous Coward

      Plus then talks about people abusing privacy by flying their own unmanned drones around. You couldn't make it up.

    2. Paul Shirley

      In reality Google have consistently demonstrated that they buy very good legal advice before doing anything, set corporate policy and external contract terms from it, then walk right on the edge of what's legal based on it.

      They've also been remarkably good at getting light punishments when employees overstep policy (the WiFi slurp) or contractors ignore their contracts (Java v Android). Probably because the legal system and regulators seem to believe those many mistakes are just that, not malicious.

      Who do you want to believe: poorly informed chatter from outsiders, impotent politicians and Fairsearch sponsored lies OR the professionals that actually investigate each incident? Google aren't good guys but they aren't evil either, just doing what they can legally get away with for their own good first but with less of the corrupt shit we've come to expect from the Microsoft,Apple&Oracles of the world.

      1. Anonymous Coward
        Anonymous Coward

        In reality Google have consistently demonstrated that they buy very good legal advice before doing anything, set corporate policy and external contract terms from it, then walk right on the edge of what's legal based on it.

        Except when it comes to Data Protection laws, in my opinion they are several miles beyond the red line there. Whoever told them they can go about ignoring privacy as they do in the US has seriously failed to do his or her homework, but that's partly because it's fairly new ground - few have ever engaged in such mass aggregation of personal data so laws, regulators and certainly fines are still catching up.

        Getting creative with taxation, however, is a well established routine. The self-righteousness of the MPs is just noise for the press without a clear statement of where they may have broken the law.

        1. Anonymous Coward
          Anonymous Coward

          privacy etc.

          Just going to leave this here:

      2. Anonymous Coward
        Anonymous Coward

        @Paul Shirley

        So tell us, what's it like living under a rock?

    3. Turtle


      "Google consistently demonstrate that they are outside of the law, due to their value and influence, and unless a sizeable nation slaps them back into place, they will continue to do whatever the hell they like."

      And the very surprising thing about this is that they are just an advertising company, for heavens' sake. They are not a company that produces anything that anyone really needs, a physical good of some sort that no one else could produce. They are wholly parasitic on other people's content as ad-bait. Google's £2.5bn in revenue in UK is simply a tax, the cost of which is added to whatever goods and services you buy. It's very much like the operation that those extortionists at ICANN have got: most businesses have to buy their own names and trademarks as keywords simply to prevent other entities from hijacking them.

      (And although no one here really cares, I'll point out that this Google tax is a highly regressive tax that affects the poor disproportionately. Furthermore, I'll point out that Google further harms your economy by destroying the value of creative work [of i.e. photographers, musicians, film-makers, journalists, coders] solely for the sake of ad-bait and making it extremely difficult to earn a living from those pursuits.)

  6. Anonymous Coward
    Anonymous Coward

    what is actually being said!

    Enormous advertising firm Google has said that any suggestion that its veep Matt Brittin was less than accurate when testifying to Parliament on the firm's UK corporation tax affairs is as "wilfully misleading" as our UK tax return!.

  7. Dazed and Confused

    A missunderstanding of roles

    These MPs seem to be suffering, as so often, from a basic misunderstanding of the roles of those involved in this little charade.

    On one side we have the MPs. There job is to write the laws which govern how much tax people and companies pay.

    One the other side we have the representative of a public quoted company. Their job is to maximise the profits for their share holder (our pension funds) whilst playing by the rules the MPs write.

    If the MPs don't feel that a company is paying enough tax then they should pass any evidence of wrong doing to the relevant authorities with a view to those authorities pressing charges for law breaking. Or if the MPs don't feel they are in a position to suggest illegality and yet still feel that Google aren't paying enough tax then they are simply standing there shouting at the top of their collective voices

    "Hey Look Everyone, We're useless incompetents, we've not written good enough laws"

    So guys, which is it to be?

    1. Anonymous Coward
      Anonymous Coward

      Re: A missunderstanding of roles

      They're not breaking laws. They are using trickery to avoid it. Thus denying the UK of funds for vital infrastructure that they rely upon (transport, infrastructure etc) to do their business.

      Legality != morality. Next time you go to Amsterdam to legally smoke some herb and sleep with some hooker I suggest that when you come back you tell your boss about it and see how far you get.

      1. Anonymous Coward
        Anonymous Coward

        Re: A missunderstanding of roles

        While he's in Amsterdam, he could go to visit the company that Google move all their non-US income through, I'm sure they'd be willing to give him a tour round the extensive offices and to meet all the staff. Except, there aren't any staff, not a single employee, they funnel all of the billions they make through this company to a tropical tax haven where there is no corporation tax. For this, they give a couple of million in tax to the local authorities.

        Radio 4's documentary of the week is about corporate tax avoidance and what it costs, it's well worth a listen to.

      2. Natalie Gritpants

        Re: A missunderstanding of roles

        Just to confuse the AC even more, most drugs are illegal in Amsterdam but not because they are immoral.

      3. Dazed and Confused

        Re: A missunderstanding of roles

        A) I never said that I approved of what they were doing, I just said that MPs write the rules, that is what they are paid to do. While company officials maximize profits, that is what they are paid to do.

        B) "They are using trickery" No, they are playing by the rules, Saying they are using trickery is bit like saying using the Motorway to drive from London to Manchester at 70MPH is using trickery to avoid the 30MPH limit.

        What you call tricks are things that the MP's, or the predecessors, have written into the law.

        I'm all for these companies coughing up a reasonable amount of tax, but you can't blame someone for playing by the rules of they didn't write. If the lazy bastards want someone to blame they should look closer to home.

  8. Cthonus

    "they're doing no more negotiate subject to approval of the board in Ireland," he said ungrammatically, whilst balancing a copy of Fowler's Modern English Usage on his nose and whistling "My Way" backwards.

  9. Ian 62

    So if I understand this right...

    You could build a factory, employ a bunch of people, make stuff and sell stuff.

    But so long as the PO and Invoice went through my Ireland office I dont need to pay tax on it in the UK?

    Hmmm, property in Ireland is pretty cheap at the moment. Wonder if I could buy a shed with a phone line and a post box. And become the Ireland HQ for every business in the UK.

    For a small fee I'll help them be 'efficient' with their tax avoidance.

    1. Ian 62

      Oh and thinking about step 2..

      My UK factory could have to buy the manufacturer rights from my Ireland UK. Which ofcourse is an expensive thing. So my UK factory actually runs at a loss, and as its a manufacturing business, please Sir, may I have some grants to fund it? Oh, and if I make it an arms factory can I have even more?

      1. David Neil

        Pretty much

        All the inward investment funds are doing is paying bribes to companies in the hope they can recoup more in taxes

        1. Shagbag

          Re: Pretty much

          No. You have overly simplied the facts.

          1. Rent the factory, don't build it. You can claim tax relief for rent, I'm not sure if you can get capital allowances for a building you built. Even if you can, paying rent may give greater tax releif.

          2. Don't employ people, use contractors (which is a whole tax avoidance question in itself).

          3. If you incorporate the business in Ireland, you'll need to prove that Central Management and Control is not located in the UK where you are. Otherwise you've fucked up. Big time.

          By all means try out your 'simple' tax scheme, but unless you know what you're doing (and I suspect you dont'), you'll soon end up behind bars being pounded in the ass by Mr Big.

          1. Matt Bryant Silver badge

            Re: Shagbag Re: Pretty much

            "....Rent the factory, don't build it..... Don't employ people....." Yeah, but you can probably get all types of European and other grants for building a factory in one of the PIIGs. And if you employ locals then they'll probably not get too nosey about your tax returns incase you threaten to close the factory and go elsewhere.

  10. Ian Michael Gumby

    From the article:

    "He said ‘if [customers] want to buy advertising from us they are encouraged to do so by our people in the UK - they will buy it from our expert team in Dublin ... the people on the ground [in the UK] are helping people make the most of the web and the people in Ireland are helping to operate the systems and sell advertising to the businesses that want to work with us'.



    The man on the ground in the UK may be a representative, but Google is saying that the sales transaction is occurring with the guy in Ireland who is handling the paperwork.

    So the man on the ground isn't doing the sale, just providing information about the product and company. At least that's google's perspective.

    The reality however is different. The man on the ground is the sales person. This is clearly a tax avoidance scheme and you can bet that Google will sue their auditors for a failed scheme. Oh and this isn't the first time such schemes were created.

    Don't bash the MPs for doing their job. Time for Google to cough up the cash.

    1. Shagbag

      Don't bash the MPs for doing their job

      But they're NOT doing their job. That's the point. MPs should be changing legislation to stop this type of activity. Trying to 'shame' a corporation into paying more than they're legally obliged to do so is a exercise in timewasting. Business is business and Moses is Moses.

      Bash the MPs for not doing their job.

      Don't forget - these MPs pontificating about the immorality of legally avoiding taxes are the same MPs that threw up the "I've done nothing illegal" defence when they were caught with their snouts in the trough over parliamentary expense claims.

      The clear double-standard is repulsive as does no service to the PAC.

      1. Ian Michael Gumby

        Re: Don't bash the MPs for doing their job

        Its a clear and simple tax dodge that fails the simple sniff test.

        If this was done in the US, the IRS would have a field day. Oh wait, they did with Amazon's Affiliate programs. The Affiliate is in NJ, not Amazon even though Amazon is doing the fulfillment from their warehouse in Indiana so Amazon should pay taxes in NJ. (This is just an example. I don't know if Amazon has a presence in NJ or not.)

        I also agree about the double standard. Which is why I universally hate all politicians just on principal. Lawyers too and you will see me cheering when the revolution comes and they line up all of the lawyers first. ;-)

        The point is that what Google is doing doesn't pass the sniff test.

    2. Yet Another Commentard


      Not quite, but close.

      In Google's case there is a bill from Ireland that neatly cancels out most of the UK profit. That bill is for "sales made for and on behalf of the UK" or something similar. (For Starbucks read "use of intellectual property" and replace "Ireland" with "Lichtenstein" below).

      Once the profit is in Ireland (I think it does this for much of the EU), in turn Ireland receives a bill from Google in the Netherlands which neatly cancels out its profit. Google NL has no employees, and is a brass plaque on the wall of an anonymous office block.

      Google NL then gets a bill from Google's headquarters in, wait for it, Bermuda. All of the profit is therefore pooled into Bermuda where it is taxed at ... zero percent. Once taxed (dependent on the treaty with the US, where the top company is) it won't be taxed again (yes I know it was taxed at 0%, that's still taxed), so arrives in the US net of tax. It's how many offshore jurisdictions work, this is known colloquially as a Dutch Sandwich, which sounds far more risque than it actually is.

      Your substantive point is correct, if the chap on the ground is doing the legwork then the bill is not real, and not at "arms length" and therefore void, pulling profit back to the UK and subject to its laws. If that is the case, then it should be punted to the HMRC Commissioners to investigate, and if needs be prosecute/fine/ whatever.

      There is a small irony here, but I am sure a google of "transfer pricing" will explain more. I would not suggest googling "dutch sandwich".

      For other readers, there is an interview with Hodge in this month's Economia magazine (it's the Accountancy publication for the UK) and the FT this week has done an interesting series on how all this works, including the case for doing it and why its a Good Thing(tm).

      From my point of view these are bad laws poorly implemented and poorly enforced. I can't find it offhand, but a study I read recently set out that this sort of nonsense in many poor economies removes sufficient tax revenue that if collected correctly it would remove the need for incessant and wasteful economic aid from the older economies.

      The whole thing, internationally, has to be re-negotiated with respect to the needs of all countries, not just the UK/US and the G8 needs to take responsibility for helping out other economies dealing with this too.

      1. Ian Michael Gumby

        Re: @IMG

        Well thats the thing.

        Sure you can create a bill from Ireland and have the person in the UK sign a contract with Google Ireland but that doesn't stop the transaction from occurring in the UK.

        Google clearly has a presence in the UK, Whatever you call the office its essentially a sales office thus the transaction is local to the UK.

        The tax dodge should fail under existing laws.

        With respect to Starbucks, they got a bit clever saying that they were buying their coffee beans from a supplier in the Netherlands. (I think it was the Netherlands.) As it turns out, its a wholly owned subsidiary set up to sell coffee to only Starbucks at a 20% mark up. So you have Starbucks selling coffee to itself as a way to capture the 20% revenue at a lower tax bracket, increasing the costs in the UK so that they either make little or break even in the UK.

        Again its a tax dodge, however it would be a bit harder to stop.

  11. Anonymous Coward

    I'm looking forward, again, to something along the lines of "That's capitalism. We make as much money as possible and pay as little tax as possible. I'm not confused about this."

    I don't get the conflation of tax and morality in this debate.

    Paying tax (or not) is not a moral question. You pay because the government says you must or go to jail.

    It's not even as though the government has a very good reputation for spending the money appropriately or efficiently.

    There's a good reason why these companies try to divert their tax elsewhere and that's because our tax rates are so high. That's the real problem right there.

  12. Yet Another Anonymous coward Silver badge

    In the blue corner ....

    MPs are going to 'name and shame' Google by publishing the details of it's tax avoidance in a parliamentary committee reported in Hansard paragraph2, subsection3, clause 4.....

    In the red corner :

    Google are going to splash details of MPs (perfectly legitimate) tax avoidance and creative expenses claims all over ... the internet.

    1. Anonymous Coward
      Anonymous Coward

      Re: In the blue corner ....

      Google are going to splash details of MPs (perfectly legitimate) tax avoidance and creative expenses claims all over ... the internet.

      I don't think it will get that far. An interesting side effect of being the biggest data aggregator on the planet is that the organisation potentially has factual data on the less savoury habits of the people it is up against, and given the enthusiasm displayed so far to do whatever maximises profit I cannot see this setup leave such leverage unused. It's cheaper and more effective than lawyers of lobbyists. All Schmidt needs is a white cat to stroke during meetings and they're all set.

      Problems? What problems?

  13. All names Taken
    Paris Hilton

    and the moral is ...

    ... UK Treasury and HMR want your wealth now, immediately and forthwith.

    This includes your personal wealth, corporate wealth and the HMRC and Benefits people might add on a bob or two (that is a shilling - dime/dollar to our cousins) (and not harley Davi Bob which although elegant and outstanding is another thing altogether innit)

    Yep, UK civil servants wants your dish - all of it and it wants it now!

  14. FlatEarther

    Race to bottom: Tax Lawyers beating bankers

    The thing that exposes the mindset of these dudes is the quote from the tax laywer:

    "they're perpetuating and fuelling that concept that there's a fair share of tax"

    The horrors that anyone should even suggest such a concept.

    1. Shagbag

      Re: Race to bottom: Tax Lawyers beating bankers

      What constitutes 'Fair' is a value-loaded question.

      Is it 'fair' that a hard-working, rags-to-riches person should pay more tax than the average employee when he/she:

      1. Pays for 100% private health insurance and does not get a tax rebate for not using the NHS?

      2. Pays for 100% private education of his children but does not get a tax rebate for not using state education?

      3. Never went to University but still has to pay/paid for those that did?

      Is it fair that a family of 6 can live in a £1m+ property paid for by the taxpayer and that family pay no tax?

      Is it fair that families with children get a tax credit? Is it fair to the young, single male that he has to pay for this through his 'fair share' of tax?

      There IS no such thing as a 'fair share' of tax. It's just a dogma from the State.

      1. El Andy

        Re: Race to bottom: Tax Lawyers beating bankers


        1) He does, however, benefit from there being less sick people around, reducing the possibility of him catching disease. So yes.

        2+3) Everyone benefits from a better educated society. We invest in other people's education (and not just ours or our own children) because the overall benefit to society.

        4) Most of these stories of £1m+ properties etc are fabricated/distorted to persist the belief that anyone receiving any kind of benefit is an ignorant, wasting, sponger. However, the counter argument, FWIF, is that it is harmful to society overall to create pockets of wealth and pockets of destitution. So pushing less well off people out of areas like London (which is where most of these heavily over-valued properties are) is not necessarily beneficial to the nation as a whole.

        5) Again, we invest in children because, in the long run, it is beneficial to society as a whole if children get the best possible start in life.

        The real issue with a 'fair share' when it comes to companies like Google though, is that they are using various UK services and infrastructure that are paid for by UK taxpayers in order to make their profit. What they aren't doing though, is paying their contribution to keeping these going. That is what makes the behaviour of tax avoidance "immoral"

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