Google agrees deal to pay back £130m in UK taxes

Google has agreed to pay £130 million in back taxes after striking a deal with UK tax authorities.

In a statement, the company said it had agreed a "new approach" with Her Majesty's Revenue and Customers to cover taxes since 2005.

It comes after years of accusations that the firm's complex tax arrangements meant it was failing to pay its fair share of tax in Britain.

In 2013, the company paid around £20 million in taxes in the UK - one of its biggest global markets. In the same year it achieved UK sales of £3.93 billion.

Google said it would now "pay tax based on revenue from UK-based advertisers, which reflects the size and scope of our UK business.

"The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result."

An HMRC spokesman said: "The successful conclusion of HMRC inquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the UK. Multinational companies must pay the tax that is due and we do not accept less."

Anger over the tax arrangements of companies such as Google, Facebook and Amazon prompted Chancellor George Osborne to announce plans for a diverted profits tax - dubbed the "Google Tax" - in his 2015 Budget.

In September shadow chancellor John McDonnell told the Labour conference that if elected in 2020 the party would launch an "aggressive" drive to ensure multinational corporations pay "their fair share of taxes" as part of a bid to balance the nation's books fairly.

Meg Hillier, the chairwoman of the Common's Public Accounts Committee (PAC) will call Google and HMRC figures before MPs to explain the deal, which she said showed HMRC "admitting it pulled in too little tax from Google for nine out of 10 years".