MPs call for HMRC to punish Google's 'devious' tax activities

A panel of MPs has called for HM Revenue and Customs to step up its investigation into Google's tax arrangements.

The Public Accounts Committee (PAC) says it has been told by former Google employees that UK-based Google workers are involved in advertising sales, which would make Google liable for full taxation by HMRC. Google, meanwhile, claims its advertising operations take place in low-tax Ireland and not in the UK.

Despite the fact that Google employs sales forces in the UK, Google VP Matt Brittin maintains that none of them has the authority to execute transactions.

Chair of the PAC Margaret Hodge said, "Google brazenly argued before this committee that its tax arrangements in the UK are defensible and lawful. The company's highly contrived tax arrangement has no purpose other than to enable the company to avoid UK corporation tax."

The Internet giant made $18 billion (£11.5 billion) in revenue from 2006 to 2011 but only paid $16 million (£10.2 million) in corporation tax, which is based on company profits.

The PAC believes that HMRC's failure to act has dashed confidence in the organisation.

"It's clear from this report that the Public Accounts Committee wants to see international companies paying more tax where their customers are located, but that's not how the rules operate today," said a Google spokesperson. "We welcome the call to make the current system simpler and more transparent."

Back in May, Hodge branded Google's behaviour "devious, calculated and, in my view, unethical" and added, "you are a company that says you 'do no evil'. And I think that you do do evil."

Google is not the only multinational involved in a tax avoidance controversy. Amazon and Starbucks have also been called out by the PAC, which is primarily critical of these companies' ability to relocate profits from country to country at will.

The MPs on the PAC have called on the HMRC to challenge such activities with a firmer hand, and to iron out loopholes by simplifying the tax code.