Google: Thanks for the billions in revenue, UK. Here are your taxes, that's ... £11m

Google paid Britain £11.2m in corporation tax in 2012, the company confirmed today. That's slightly more than the £7.3m the ad giant coughed up in 2011. But the latest figure, confirmed by Google to The Register this afternoon, will no doubt enrage the search king's critics - including Labour MP and Parliament's Public …

[arrbee]

Given that we're busy turning the UK into the world's largest tax haven with all the benefits that provides (*), I don't see that we have much to complain about in these cases.

(*) such as boosting London property values, so keeping our finance corps nominally solvent

[LarsG]

Another couple of years, loop holes will be closed....

Only joking...

Governments are frightened of big businesses, they are the ones that pull the strings.

[Anonymous Coward]

Great I got a tax rebate

Yep, a huge £17.94...

Three weeks later

A tax demand for £21.56 because of an underpayment.

HMRC know their stuff they do...

The bigger you are the less likely you will fit in the pan

The smaller you are, the easier to fry

[Shagbag]

Starbucks

And Starbucks are still trading. I guess Peggy Hodge's outrage was just grandstanding after all. Ergo: the majority of taxpayers just don't give a shit.

[MrXavia]

It is simple, drop taxes to 5%,

Google made about 38% profit (£12.95bn revenue, with £4.95bn profit), so 38% of their UK revenue of £3bn according to this article, means £1.14bn profit, at 5% thats £57Million, 5 times the tax paid already...

Surely it is better to give them an incentive to pay taxes at a low rate, than fight them, since fighting will just mean costs go up.. Google will spend millions fighting any higher taxes.....

Dropping corporation tax would benefit everyone in the long run, more jobs as corporations move to take advantage of it, small & medium businesses have more money to invest in growing and less money spent on lawyers to try and cut their tax bill...

But remember that on £3bn revenue, that equates to 300Million in VAT if they were all VATable transactions...

[Tim Parker]

Good grief Team Register, you need to chat to your Tim "There's a great deal less tax evasion going on than the current zeitgeist might lead you to think" Worstall. As he'll tell you

(a) companies can't actually get away with not paying these taxes, and if they do that's actually fine as they're allowed to and - Lordy - what else are they supposed to do, and

(b) it doesn't actually happen anyway - or at least not nearly as much as we think, hardly at all, almost negligible - and anyway refer to (a)....

[Trevor_Pott]

Shut up, prole. Here's a Dinosaur In Space to distract you.

[Tim Parker]

"Shut up, prole. Here's a Dinosaur In Space to distract you."

:o)

Strangely i'd looked at that immediately beforehand - it's marvellous, top mum that.

[nematoad]

"Shut up, prole"

Attack the argument NOT the person.

Or didn't University teach you that?

By the way the dinosaur is excellently made.

[Trevor_Pott]

@neamtoad

Is your sarcasm detector broken or something? I was agreeing with him.

Calling him a prole is a way to reference his/my/our increasingly proletariat role in society. We are not members of the inner party nor even members of the outer party. Our job is to "shut up, prole" and like it.

Seriously, you would think that of all readerships I shouldn't have to explain that here. *sigh*

My faith in the readers is really collapsing of late.

[Anonymous Coward]

Re: @neamtoad

This is a prime example why more people should pick up the phone and stop firing off emails willy-nilly during the business day. Most of us are not linguists so while we may have a little voice in our heads with the intended inflection for our missive we cannot get it down on paper as we don't have time or skill to set it into context. The only alternative is to state the bleedin' obvious with the classic pseudo HTML/XML sarcasm tags. If not we end up with lots of emails flying back and forth while the original meaning is hammered out, all the time a 30 second phone call would have cleared it up immediately.

[NoOnions]

Re: Telephone

Especially true with my American colleagues. Talk about divided by a common language!

[jonathanb]

Re: @neamtoad

That is what the icon to the right of this posting is for ...

[Steve Evans]

It's not evasion, it's avoidance.

The latter is completely legal, and lets face it, what we would all do given half the chance.

All they've done is followed the rules HM Gov set out. They've just got a good accountant. You wouldn't seriously expect them to ignore the good accountant and get a shit one that makes them pay more than they legally have to would you?

I'm sure there is some far more criminal tax dodging going on by members of the house.

[ratfox]

What about VAT?

I have heard that there is no VAT paid on services such as those offered by Google. But would this be not a proper way to make large companies out of the country pay for running a business in the country?

PH, because she probably knows more than me about these money matters…

[Andrew_b65]

Re: What about VAT?

VAT is paid by consumers, not businesses. It's a sales tax.

These large multinationals need to be taxed on the profits they make instead of being permitted to hive them off into tax havens with fake accounting practices. They are literally siphoning money out of our economies with impunity. To make it worse, our UK government further aids their profitability by topping up low wages with tax credits and housing benefits. I advocate at least sending large corporations invoices for tax credits paid to their employees simply in order to make ends meet. Either that, or put the minimum wage up to £15-20 per hour or something.

Most businesses expect to make too much profit. We're in a recession, but they continue to make high margins by raising prices and freezing wages. In their actions, they prolong the recession and compound the misery for anyone earning a living.

[Anonymous Coward]

Re: What about VAT?

> fake accounting practices

I understand that they are very real.

[kryptonaut]

Does not compute

The company has previously defended its tax arrangements in the UK by claiming that it helps the British economy by hiring staff here, who in turn pay taxes to the government.

When I spend money at the shops I also help the British economy by paying VAT and providing employment for checkout staff, so maybe I shouldn't have to pay income tax either.

[JDX]

Re: Does not compute

Yes, and Google employ people, providing them the money on which to be taxed, spend in shops, etc. There is an argument that all tax should be point of sale.

[Anonymous Coward]

Re: Does not compute

Well unfortunately I can't agree with that one, VAT while a large cost is only 17% of receipts... but that is still double that of corporation tax receipts...

So in reality corporations only pay 7% of tax in the UK....

Surely dropping corporation tax to 5% or similar could actually increase revenue as corporations keep their money here instead of moving it away?

the key thing is to ensure that VAT is paid on all the purchases made from google & the like!

[TRT]

Thanks El Reg!!!

I tried doing a Hummingbird web search on Google's accounting declarations, but for some reason it just couldn't find it...

[Anonymous Coward]

This is what happens when you support Linux.

[hollymcr]

Blatant law abidance by international corporation shocker

Yet again, we have a big international corporation steadfastly following the letter of the law. To be fair I'm guilty of doing exactly the same myself most of the time. But Google (and Apple, eBay, Amazon, Starbucks, etc etc) shouldn't be allowed to get away with it!

If this continues unchecked, at some point a government might have to earn its keep by either changing the law, or by changing the tax rates to make us competitive. But should we really have to expect our governments to do their job, when it's much easier to expect our corporations not to do theirs?

[Anonymous Coward]

Re: Blatant law abidance by international corporation shocker

They do change the law, as quickly as they can and they have made our taxes more competitive, to the point of taking the piss out of most of the rest of the EU in my opinion. The trouble is that most of the tax laws (ab)used in these tax avoidance schemes are required for international trade to function and free trade within the EU is a condition of entry.

[Anonymous Coward]

Re: Blatant law abidance by international corporation shocker

"Yet again, we have a big international corporation steadfastly following the letter of the law."

Not so. In fact what they are doing is illegal, and not just in a vague "oh, well, I suppose you could look at it that way" sort of way. There are specific laws against using fake transactions to move revenue out of the tax regime of the UK, and they do get imposed from time to time, depending on whether the head of HMRC has been taken to the required number of lunches or not.

If you "minimise your taxes" by paying your wife for the use of your house and work from home, so that you have no official surplus, then you will be up before the beak toot-sweet. This is the basic idea behind Google and Amazon's scheme - payments which exist only for the purposes of making the payments, to companies whose sole reason for existence is to accept those payments which the paying company in reality get's the full value of since, duh, it's the same company.

All totally illegal, and clearly so.

[Anonymous Coward]

Re: Blatant law abidance by international corporation shocker

If that is illegal, then why aren't they getting in trouble with the UK government? You're basically saying that lawbreaking is being ignored. Or, more likely, what they are doing is legal, and you're just unhappy that the law doesn't say what you think it should.

The latter is the case for a lot of laws dealing with corporations, but wishing something were the law doesn't make it so. Legislators do. Good luck getting them to change the law, I guess they're worried that Google will quit doing any business in the UK and they'll lose even that measly 11.2 million.

[peter_dtm]

Robert Long 1

But if you divorced your wife

and

she lives in a different country

and

she is charging you rent to stay in HER house (the one the courts gave her despite you having paid for it)

then she would be quite entitled to declare the income as a seperate entity; and you would be quite entitled to say you are paying rent

and if you could work out a tax/business case for claiming said rent as a business expense

well you'd be home and dry

[hollymcr]

Re: Blatant law abidance by international corporation shocker

@Robert: "All totally illegal, and clearly so"

You speak with the certainty of someone who knows the law inside out, but without reference to the acts in question, which makes me suspicious.

If they are breaking the law, and if (as you say) HMRC have decided not to go after them, then there are plenty of other organisations (press amongst them) that will do the investigation and make the results public.

I believe that a lot of people want this to be true, almost certainly enough people to vote for a government to make it so. Governments (of all flavours) are either incompetent or complicit - I suspect the latter.

The bottom line is that generally speaking these large corporations *are* paying tax on their profits. They're just being selective about where they pay them, and taking corporate profits makes this possible.

IMHO, taxing activities taking place in the country (employment, sales, etc) is the simplest way to ensure that tax lands where it "should".

[Anonymous Coward]

Re: Blatant law abidance by international corporation shocker

> IMHO, taxing activities taking place in the country (employment, sales, etc) is the simplest way to ensure that tax lands where it "should".

Well they do, and it's called "sales tax" or VAT for the uninitiated.

This issue is entirely different and it is a tax on companies doing business.

Google is operating in Ireland so they are taxed on that basis.

It's one of the big problems with having a global economy but local governments with their own separate laws. They are fundamentally incompatible.

[Dr?]

Re: Blatant law abidance by international corporation shocker @hollymcr

UK Government does have a history of not perusing full payment of illegal tax evasion by large companies. Vodafone were let off paying only a fraction of what they owed after they breached tax rules following the purchase of a German Engineering firm. The British press in the same case showed they were not too bothered in reporting either the tax evasion nor the HMRC's lack of efforts in pursue payment. This maybe because the owners of certain British Newspapers are also involved in tax avoidance which may or may not be legal (The Barclay Brothers prop. Daily Telegraph and The Spectator, GMG owners of The Guardian, Northern Shell owners of The Daily Express and a few porno mags and channels.).

I have no idea whether the Google's tax arrangements are legal or not. But I wouldn't suggest judging it just on the actions of HMRC and the reporting of newspapers.

[Anonymous Coward]

Re: Blatant law abidance by international corporation shocker

"paying your wife for the use of your house and work from home"

huh? don't quite get your point here...

but it does bring up an issue I have with our government, they promote family life yet piss on single home earners...

Why can't they just introduce a joint tax allowance for married couples??

I don't get why if person A in a marriage earns £100K and person B earns £0 it should be any different if person A and person B both earn £50k each... but it is...

[Kubla Cant]

Bears, Pope and so on

Margaret Hodge and others can foam at the mouth and bite the carpet, but this is simply what multinational companies do. The only ways to get a multinational to pay more tax in Britain are:

(a) charge a low enough tax rate to undercut other economies

(b) offer advantages that make it worth paying a comparatively high rate of corporation tax.

The problem with (a) is that everybody pays the lower rate, so the tax take goes down by more than the extra you get from the multinational. The problem with (b) is that it's difficult to devise benefits for a multinational like Google whose business has no real location.

[Anonymous Coward]

Re: Bears, Pope and so on

There is the inherent advantage that they are making £5bn from us. Google can't be scared away from that by making them pay the proper tax. What is required is for the government to get some balls and get the laws in place to enforce it rather than penny pinching benefits from the disabled.

[Anonymous Coward]

Re: Bears, Pope and so on

sorry that is $

[Anonymous Coward]

Re: Bears, Pope and so on

"What is required is for the government to get some balls and get the laws in place to enforce it rather than penny pinching benefits from the disabled."

Actually it needs to do both. We spend about £13 billion a year of disability benefits, which in GDP terms is twice the OECD average, and reflects fifteen years of Nulab using "disability" as a cover for unemployment, so that we've now got over 3m people claiming disability benefits.

Round here' it's bleeding obvious that nothing like 1 in 20 people is sufficiently disabled to need to claim disability benefits, so I can only conclude there must be entire towns of disabled located up north, or somewhere else remote. Unless self inflicted morbid obesity counts as a disability.

[Anonymous Coward]

Re: Bears, Pope and so on

a) Does it occur to you that they might be housebound so you won't see them milling about on the street? b) where does your 1 in 20 figure come from because that is completely incorrect? c) what basis do you have that any significant proportion are not truely disabled?

[Anonymous Coward]

Re: Bears, Pope and so on

b) where does your 1 in 20 figure come from because that is completely incorrect?

Good thing you're AC, because your claim that I'm incorrect is utter shite. DWP figures show that there were 3.3 million claimants for disability living allowance, ONS data shows UK population 63.7 million. Using the magic of mathematics, anybody other than a retard will see that my statement is correct, indeed, if anything I was erring on the side of caution. If you weren't such a tit you'd have been able to check this for yourself on the internet. Possibly you're getting on your high horse over the total number of disabled in the population, which isn't anything to do with the point I was making.

a) Does it occur to you that they might be housebound so you won't see them milling about on the street?

What leads you to believe that I'm basing my judgement on random observation of people in the street?

c) what basis do you have that any significant proportion are not truely disabled?"

I didn't say they were (although I did infer it, I agree). The fact is that we have an outlier rate of disability claimants of working age compared to all comparable developed economies, yet we don't have any particular circumstances that might cause or explain high levels of disability. We have a large population and most of us don't marry our cousins, so there's no exceptional birth or genetic defect rates. Our roads are amongst the safest in the world, so no excess levels of road casualties. And we have offshored almost all heavy industry, and the accidents that go with it, and we have an active and effective health and safety culture for the bit that remains. You could suggest that our wars have increased the number of disabled, but sadly the out of control handout culture that started this mess now means that the clowns of ATOS try and control new claimant numbers by turning down servicemen who are genuinely disabled as a result of our various wars, and even if we correct for that it doesn't materially alter the basic numbers.

[Dr?]

Re: Bears, Pope and so on @Ledswinger

The £13 billion is for what was called disability living allowance. It is incapacity benefit, at a cost of £5bn that is paid to those who are unemployed due to disability (or other physical/mental problems) and so this amount that if anything that would be used to cover unemployment.

The living allowance covers the cost of mobility and care for disabled people. Considering that a mobility allowance is paid to those who are blind and that there are 2 million blind people in the UK, it is quite conceivable that 1 in 20 may need to claim some form of disability benefit.

[Yet Another Anonymous coward]

Re: Bears, Pope and so on

c) say that if you aren't paying any taxes in this country you can't use any of it's services.

[James Micallef]

Re: Bears, Pope and so on

well, no, there is also

(c) change the tax law so that corporations can no longer legally export their profits. It's WAAAY beyond my pay grade to come up with a detailed solution* , but doesn't need to be complicated**.

1) Introduce an EU-wide mandatory company ownership registry so that the ownership of all EU-registered companies is public (or at least known to tax and law enforcement authorities). Any non-EU company can voluntarily submit it's ownership information to the registry. Ownership needs to be disclosed up to the ultimate owner, no matter how many levels up it goes. Any and all payments made to companies outside the registry cannot be deductible for tax purposes. This has the advantage that it can be introduced as an anti-money-laundering measure, and hey, if the ultimate beneficial owners have nothing to hide, they have nothing to fear, right?

2) Introduce industry standard benchmarks of reasonableness on intra-company payments. For example, if the commodity market price for coffee is X, Starbucks UK can pay Starbucks Switzerland up to 120% of X for coffee. Paying 200 or 300% is tax evasion. Structure the law so it is the company claiming the deduction that has to prove to the tax authorities that the deduction is allowable. For example, for Google Bermuda to charge Google Ireland $11bn a year for IP, they need to prove that either Google Bermuda developed that IP themselves, or else that Google Bermuda paid for that IP at a fair market price relative to the 11bn a year they want to charge for it.

Yes, it will probably cost a few hundred millions to set up and administer, but it will increase tax revenues by many billions, most of which will be coming from the richest people on the planet, who have become so rich partly because teh laws they lobbied and paid for allowed them to avoid so much taxes

*hey, isn't that what politicians and civil servants are paid for?

**in fact, the simpler, the better

[mertron1]

google 'argue'....wow their actually trying to make a point as to why they cheat the system and withhold millions to countries around the world...u gotta laugh eh'....jokers...!!

[JDX]

That's slightly more than the £7.3m the ad giant coughed up in 2011.

Last time I checked, an increase of 53.4% is more than slight.

[Ben79]

Re: That's slightly more than the £7.3m the ad giant coughed up in 2011.

1.534 x not much is still not much.

[theblackhand]

Re: That's slightly more than the £7.3m the ad giant coughed up in 2011.

JDX - you'll be please to know that I value your comments so highly that I have decided to increase the payments I make to you by 53.4%

Now we're all happy.....

[Anonymous Coward]

And I'm trying to tell HMRC have got their sums wrong in coming up with a tax underpayment of £130.

Jump on the little guy who goes to work, but make it nice and comfortable for the big boys to take the piss big time.

Oh well, at least it keeps some Welsh people doing something else rather than bothering sheep :)

[Brent Longborough]

Stop moaning already...

And tell yer Members of Parliament to fix the laws, as in "do your job".

[Crisp]

Re: Stop moaning already...

I just phoned David Cameron to tell him just that!

He said "Who are you and how did you get this number?"

[PJI]

Re: Stop moaning already...

We need to remind these buggers that they are elected and paid by us to manage things for us. I think all ministers should show solidarity by getting a significant pay cut and a bedroom/second/third home tax. They should pay their own transport costs and try claiming tax relief per kilometre, with full receipts. Where the family occupies state housing - e.g. 10 Downing Street, they should pay proper rent for the use of the property by the rest of the family, nannies etc. and decoration allowances should follow similar rules to those in other state housing, where the rooms are not those used for state business.

Wherever possible, all travel should be on public transport and private medical insurance is, I hope, at the cost of the minister and not the state.

I suspect such measures would do wonders for fairness to the rest of the country.

It is curious that the British government sees fit to use employees of American firms, such as Google, as advisers and consultants rather than those of British or at least EU firms and, at the same time, appears to condone the systems that permit blatant tax avoidance if not all out tax evasion.

Coat icon: looks to me as if it is a thief going through my coat for what he can get - appropriate in this case.

[Anonymous Coward]

I feel slightly dirty defending google on this

I know a US company that was invited to open offices and employ people in the UK, it went from a few contractors to about 60 full and part time staff and consequently it pump a lot of money and employment into the UK.

On the advice of the UK government it was set up as a marketing operation to be more tax efficient, additionally they get business help from dedicated people in the UK government which they wouldn't get as a UK business.

They did it partly because the offer from the UK government was very attractive and beat what was on offer from Ireland and Holland so it strikes me as odd that the same government is pissing and moaning in soundbites about something that not only is legal but they actually advise foreign companies to do.

[Anonymous Coward]

Re: I feel slightly dirty defending google on this

it strikes me as odd that the same government is pissing and moaning in soundbites about something that not only is legal but they actually advise foreign companies to do

I wish I could say it surprised me, but it doesn't. It's politics of the 21st century, and says a lot about our politicians. Quite what they expect to achieve by stating that paying taxes is a 'moral' thing is beyond me. It's got fuck all to do with morals, it never did have. Taxes are only paid anywhere because it is a legal requirement, if the taxes aren't being paid you a) change the tax laws or b) enforce the tax laws. Anyone complying with the laws is fully entitled to tell you to go fuck yourself when you try to paint them as 'bad/immoral' for complying with the laws.

[Alan Denman]

£11.2m more than Apple !

Yes, Amazon, Google and Apple are all scumbags

The more worrying thing is that our politicians might well be corrupt.

The 'heads in sand' from the lot of them is so scarily inept that workfare has almost become the solution !

[Don Jefe]

Re: £11.2m more than Apple !

If you are only now beginning to have some doubts about the moral character of elected politicians I would like to be the first to welcome you to Earth. I hope you enjoy your visit.

[Steen Larsen]

We are too stupid here in Europe

We are too stupid in Europe, and, sorry, I include the UK when I say Europe.

First we miss out badly on tax payments on revenue originating in Europe.

Second, we miss out on competitiveness. How on can European companies compete with foreign companies that are taxed so little when we are happy to tax our own share holders and companies in the 60% region!!?

Thirdly, the big multinationals store all the saved taxes in huge off shore slush funds that they can use to buy any competitor that might arise, against all odds, inside Europe.

Talk about shooting yourself in the foot!

Which other region on the planet treat their own companies so bad compared to foreign companies!?

[Potemkine]

Re: We are too stupid here in Europe

Yeah, we're damn stupid in Europe! Forbidding slave labor, forbidding children to work 16 hours a day to force them to go in school instead, trying to cure people instead of letting deseases taking care of the poors, we are way too stupid. Why can't we just gouge people as the others do?

[Anonymous Coward]

Re: We are too stupid here in Europe

"Yeah, we're damn stupid in Europe! Forbidding slave labor, forbidding children to work 16 hours a day to force them to go in school instead, trying to cure people instead of letting deseases taking care of the poors, we are way too stupid. Why can't we just gouge people as the others do?"

I think you've missed the OP's point, and you've also missed the fact that European companies are enthusiastic exporters of jobs to Asia and low cost central Europe locations.

[Potemkine]

Re: We are too stupid here in Europe

you've also missed the fact that European companies are enthusiastic exporters of jobs to Asia and low cost central Europe locations.

You mean some european companies already exploit slave laborers and children across the World, to exploit the poor many so the rich few have more and more? Brilliant! So we are not that stupid in Europe, we still realize that we can sell our moral values for 30 pieces of silver. I would be stupid not to follow the trend, I'm starting a virtual shop for cheap human body parts right now. I already have a promotion: pay for two child hearts and get the third one for free!

[Steen Larsen]

Re: We are too stupid here in Europe

You are completely missing my point. I just say that we are too stupid when we implement such taxation rules where we tax foreign businesses less than we tax our own citizens/businesses.

I am glad we protect the children, try to cure people, tale care of the poor, etc. We could do more of this and pay less taxes if we closed this huge tax loop hole for foreign businesses.

[codeusirae]

Who else ..

"Google paid Britain £11.2m in corporation tax in 2012, the company confirmed today."

And just who else didn't pay their corporation tax ?

[All names Taken]

Says it all?

Ad on the page linked:

http://info.moneyweek.com/urgent-bulletins/the-end-of-britain/

It seems to make sense (UK wealth dependent upon imperial colonies, lost colonies, lost wealth?)

Perhaps in the next 20 years or so UK will be something like Duchy of Hooton Pagnell in international image but more like a downgraded form of Tower Hamlets in reality?

[HMB]

Re: Says it all? (moneyweek)

Meh....

"How to make it, how to keep it, how to spend it." - 4 Week Free Trial!

Alarm Bells

On the upside, I've got a special hydrophobic, oleophilic, hypoallergenic cream that will make your skin seem like a baby's! (It'll give you nappy rash) I source it from genetically engineered, wild, organically farmed, hand reared serpents.

[Anonymous Coward]

I ditched Google after the Snowdon debacle but was thinking about it for a while.

I use a Mozilla phone - no spying or shady data mining, ditched gmail.

Much better!

[Neil <random number>]

I'll get my coat

So Colin since you ditched google are you now a happy Camper ?

[The Godfather]

nowt strange...they're all at it

Check any foreign owned company in the UK (specifically the US owned ones) and they're all the same and all at it.........hitting Google given the profit they generate is a bit harsh.... they work around the rules because the routes are clearly marked and permitted.

[02X7Cm]

Re: nowt strange...they're all at it

The thing is, all home-grown UK multi-nationals are also doing the same thing. Who doesn't want to funnel money to tax havens if they can?

There isn't a solution to this problem because you can't stop a foreign company from charging a local company a royalty/service charge equals to the amount of profit in order to funnel money to a country with less corporation tax / back to their home country.

The only real solution is to encourage more home-grown multi-nationals who would be more likely/willing to funnel money "back home", but even that's questionable now-a-days where people generally aren't nationalist or patriotic to the point where they'd give up profit for the benefit of where they live/were born into. Especially once they go publicly traded, they'd be pressured to prioritise profit over everything else by investors.

[James Micallef]

Re: nowt strange...they're all at it

"you can't stop a foreign company from charging a local company a royalty/service charge equals to the amount of profit..."

Actually in fact, tax authorities CAN do exactly that if they had the balls to. Just ask any private contractor how many hoops they have to jump through to prove that the expenses they claim are in fact legally claimable. Maybe the law is different for different expanse categories but in principle it should be possible, and if not can be changed easily*

If coffee is selling on the open market at $1/kg** and Starbucks UK are paying Starbucks Switzerland $2/kg for their coffee, that's tax evasion. If Google Ireland are paying someone for use of IP, that should be Google US because that's where the IP was developed.

*in the sense that its easy to close the loopholes. It would be tremendously difficult to get the bought-and-paid-for politicians to vote for that change

**made-up numbers

[Anonymous Coward]

Re: nowt strange...they're all at it

maybe its great coffee??

Oh wait you said Starbucks right???

So no, not great coffee, but crap that would not ever be let inside my coffee grinder...

I could mention the beans I use, but I do not want the price of it to rise so I wont, but I will say if anyone thinks Starbucks make good coffee... think again I've not had one guest I've made a coffee for not tell me it was a great coffee, but they have all agreed Starbucks coffee is barely drinkable...

[Boris the Cockroach]

B******ks... (rymes with rollocks)

"The company has previously defended its tax arrangements in the UK by claiming that it helps the British economy by hiring staff here, who in turn pay taxes to the government. "

That money paid to the staff gets deducted from the google accounts before profits are declared, corparation tax is a tax on profits, therefore if the profits figure stays the same, the tax demand remains the same and it matter not a jot how many staff are employed.

But then google has deep pockets and can afford clever lawyers and accountants, more than the IRS can, and the IRS can afford better lawyers and accountants than you can... therefore lets go after the guy who under paid his taxes by $50.. rather than the big boys dodging billions by shuffling money to shell companies in off shore locations

[EssEll]

Makes me want to spit

As others have said, this is perfectly within the rules, and might even be why HMRC keeps coming after the little man (or woman - but "little woman" sounds bad these days) for their £20K corporation tax. Maybe HMRC are so upset they cannot get their hands on Google's dosh that they come after Joe Schmoo with added vigour..

Oh God, defending HMRC. Someone just shoot me now.

[MrXavia]

Re: B******ks... (rymes with rollocks)

I think we all know that profits are revenue minus expenses... (and if you do not, your too young to be reading the reg, go back to bed you have primary school in the morning)

But their point is they employ people here who pay taxes, and the more people they employ the more taxes are paid... and YES that does help the economy, not as much as I think they are making out, but it helps...

i am not defending google, but I can understand why they do it.

[Karcsi]

Simplify the rules - it's the only way.

HMRC do have the powers to enforce what they consider to be the right amount of tax if they believe that transactions have been devised to circumvent the principal of the tax. If Google are set up in the way El Reg describes, that would suggest HMRC would have a open and shut case. Otherwise, wouldn't we all set up companies in Burmuda to which our company paid royalties.

OK, the money would have to stay in Burmuda, otherwise we would have to pay UK tax on the dividends. But a company doesn't have that problem and the big shareholders (the execs) prolly spend more than half the year in some tax haven anyway.

As someone else mentioned, we should tax revenues at the point of sale. It's much easier to administrate, harder to avoid, and much more recession proof.

[HMB]

Re: Simplify the rules - it's the only way.

You can't make tax simple and easy, it would put a lot of accountants out of work. Nobody would want that.

Poor accountants :(

[Ken Hagan]

Re: Simplify the rules - it's the only way.

"As someone else mentioned, we should tax revenues at the point of sale. It's much easier to administrate, harder to avoid, and much more recession proof."

Are you sure you don't mean "point of delivery"? Point of sale merely encourages everyone to buy through a subsidiary online shop located in Bermuda. (Amazon and others already sell loads of stuff "from" the Channel Islands.)

It's not the way you tax, it's whether you tax. All these multinational loopholes depend on finding a scheme where money is transferred out of a jurisdiction where it is a tax liability and into a jurisdiction where it isn't.

Forcing multinationals to have a point of legal presence in each country where they do business, and banning "charges" between subsidiaries and (foreign) parents for "services" such as "the right to sell under my brand" would probably stop most of this mularkey. Tax-liable revenue in each region would be in proportion to the amount of business done there. Most reasonable people would reckon that was fair. Tiny islands in the middle of the ocean would be upset. Major economies would not.

As a convenient side-effect, this would also help smaller governments hold larger multinationals accountable to local law. ... Which is another thing that most reasonable people would reckon was fair.

[Anonymous Coward]

Re: Simplify the rules - it's the only way.

I see Corporation tax as pointless, it is the consumer that pays either way, so stick it all on income tax, sales taxes and duties...

get rid of blood money (inheritance tax), Corporation tax(a way for tax lawyers to make money) stick VAT up to 25% and ensure that large multinationals are liable to collect VAT (maybe say greater than 1Million turnover from British consumers and even if your sales are not based in the UK you HAVE to charge VAT)

[Amorous Cowherder]

Comical

It's so stupid, only paying £11m, to be comical. I would say it's gone beyond a joke but sadly it hasn't got that far yet!

[Potemkine]

Just a matter of perspective

When someone steals an apple, he's a thief.

When someone steals billions, he's a financial genius.

[Anonymous Coward]

I'm at two minds

Do I want google to pay a lot, lot more, to be subsequently wasted on another gov multi-milion failure (aka improvement project)? Or do I want Larry, or Harry, or whoever is at a helm of google (auto-pilot?) to get a mufti-milion bonus for having employed skilled people to game the UK tax system?

p.s of course the opposition (Labour, at the moment, and whoever's off the trough next time), would claim that the un-paid google taxes are equivalent to building 7500 new hospitals and 3,000 new schools, and hot water at no charge to 1.6 billion pensioners, but these are just images to juggle prior to this or that election. That said, on the third hand, precedences and lapses stimulate copy-cats, and the whole fabric of society would, etc. Well, in that case, let's keep it as it is, i.e. prols pay the taxes, and the rest lawfully avoid them :)

[Anonymous Coward]

staff pay taxes to government

aka: "Outsourcing - the final frontier: we don't pay taxes, our employees do!"

[TopOnePercent]

F.F.S.

Wow. There seem to be a lot of commentards with really strong feelings about international coporate law and taxation, about which they appear wholly ignorant.

Goog, Appl, etc aren't breaking the law. They just aren't.

Sure, what they are doing can rightly be construed as taking the piss, but that isn't specifically illegal.

A radical idea might be to put down your copy of the guardian (who also dodge taxes through the offshore scott trust), stop moaning, and copy their corporate structures yourselves. HMRC might take you to court. Might. But thanks to the way our courts work with precedents, if they close the loophole for you its also closed for Google, Costabucks etc.

Writing to your tax hodging MP probably won't work as they have family trusts setup using the same offshore devices you're complaining about.

[Anonymous Coward]

Re: F.F.S.

@TopOnePercent - that's not how it works. As a citation I will supply you with IR35 which prevents IT contractors who are directors of their own limited companies from claiming travel and training expenses unless they meet certain conditions with the nature and number of their contracts but does not impose the same restrictions on large IT consultancies. The differentiator is the size of the limited company in this case.

[Alan 19]

change the law then

Can't stand the spectacle of Patricia Hodge beating people up, that's just rabble rousing and grandstanding. It's the politicians' fault, all they have to do is change the law. Exactly the same tax code is used against everyone else to ensure every last lawful penny + interest is extracted from them. Nowhere does it say that you have to organise yourself to pay the most tax possible. The smallest owner/ manager of a limited company is arguably avoiding tax (PAYE/ NIC) whilst paying themselves tax-free dividends, so let's do away with one man bands too. Preferably put up a sign saying MNCs Go Home too. As Messrs Google and Amazon and others said, they pay all tax per the law and if the law changes they'll comply with that too. Starbucks made a 'donation' of tax, how does that work? Tax is not voluntary it's compulsory.

[NumptyScrub]

Re: change the law then

quote: "The smallest owner/ manager of a limited company is arguably avoiding tax (PAYE/ NIC) whilst paying themselves tax-free dividends"

Dividends are not tax free. If a UK citizen gains £20,000 in dividends from their shares in a company, they are required to pay something called "income tax" on that £20k income gained during the tax year. The company itself also has to pay corporation tax on any dividends it pushes out. If you don't think this is true, ask your acountant about it :)

Note: it can still be more tax efficient overall to push director salary as dividends instead, since the company only pays corporation tax on dividends. For PAYE salary it also has to pay employer contributions on top of the employee contributions, so if those contributions would total to more than straight corporation tax, you can actually save money (on the company books) by paying it as dividends instead. The employee however ends up paying basically the same either way (IIRC, I am not an accountant).

What you are likely trying to refer to is owner/directors claiming things as expenses (company operating costs) which are actually personal purchases, e.g. purchasing a new TV for themselves and claiming it as a company expense (under "corporate entertainment"), or a second shiny new car under corporate lease, which is actually for the director's partner and will never get used for company purposes. It is more tax efficient to have the company purchase everything it can get away with, as it becomes pre-tax operating costs rather than taxable income (either salary or dividend).

Actually, also ask your accountant about something called "unreceiptable expenses", as those are claims you can make without needing to provide a receipt at all. Anyone not claiming the absolute maximum available for unreceiptable expenses is arguably not doing it right; there is no burden of proof at all for those, so it is effectively free money that HMRC are letting you have.

[stitch]

"When payroll taxes and VAT are included, Google has claimed its total contribution to the UK last year stood at £156.1m"

If Google are paying VAT, that means they're not VAT registered and their turnover must be less than £79,000.

If that's the case I should think they're paying rather too much corporation tax. HMRC should leave the little guy alone.

[pmbollen]

What is the big surprise?

If governments in Europe wanted to curb tax evasion they would. They just don't and use the Irelands, Netherlands, Luxembourgs, Switzerlands, etc., in or near the EC, which allow for convenient excuses. If only the others did the right thing...

[Lloyd]

This again

It almost mirrors my workplace, lots of finger pointing apportioning the blame to others for following the rules whilst patently ignoring that the problem lies with the rules and rule-makers themselves not with those abiding by them.

[Alex Walsh]

Apart from employers national insurance, google doesn't pay any of that tax they've laid claim to. PAYE and employees national insurance are suffered by the staff and VAT is an end user tax.

[SirDigalot]

i wonder

if soon they might post a huge loss somehow, for this specific office, once all the evading can no longer be performed for whatever reason, then all of a sudden there will be no tax to pay at all or even a rebate because "lawks! we paid all that tax last year!" I have no clue but seems like they can think of something like that, or just tell HMRC to sod off, tends to work when you are to big to [give a crap]

[EssEll]

Quote: "If Google are paying VAT, that means they're not VAT registered" - ...nope, you lost me there.

[Andrew Davenport]

Oh Goody!!

I employ people, therefore i shall stop paying tax because they pay every tax under the sun!

Oh thats right, my company is not big enough to scare the government :-(

But seriously, it is a scandal, if you do business in a country in any way you should be bound by the tax laws of that country, i would not expect to do business overseas and not have to adhere to their regulations.

Yes ok so they have a good accountant but the sums of money we are talking about are huge which does bring the morality question into play. This same tax is the tax that supports the public sector and public services that their taxed employess use.

[All names Taken]

Haves and HaveNots

Well, you see:

The are the Haves and they like to have and they want the HaveNots to have not?

And there are the HaveNots and they have not but would like to have and hope that the Haves will share some of what they have so the HaveNots might have slightly less of having not?

In another case the socio-politoco-economic system devised by humans seems to support the egotism of the Haves in maintaining what they have and yet avoiding the deaths of too many HaveNots for having not?

[Munkstar]

Given the chance

As a PAYE muppet I can only look on with envy. When you see what successive governments do with your tax £, spending it yourself seems wise. As long as no Google employee is subsidised by the tax credits system there's less to moan about ....?