Google and HMRC to give evidence on corporate tax deals

Concerns about the way Google and other multinationals pay tax have been around for at least three years.

Business groups have tended to stay out of the debate, but the British Chambers of Commerce, which represents 100,000 smaller businesses, has spoken out about what it called the "growing anger" of its members.

The BCC rails against the unfairness of a tax system that allows "a small number of global and often multinational companies (to) shift their profits around the world and conduct tax avoidance schemes".

  • Who could they mean?

In an interview with ITV News Dr Adam Marshall doesn't name-check anyone, but the intervention is deliberately timed to coincide with Google's appearance today before the Public Account Committee to answer questions about its tax settlement with HMRC.

Neither Google nor the HMRC has set out how a figure of £130 million for back taxes owed was arrived at - and the lack of transparency has merely fuelled widespread suspicion and mistrust.

The chancellor trumpeted the deal a "major success" and proof that past abuses by multinationals had been stamped out thanks in part to the introduction of his Diverted Profits Tax.

The boast had some merit, but quickly looked hopelessly over-stated.

The £130 million sum, in the context of both a ten year audit and the scale of Google's operation in Britain, looks small.

Google hasn't obviously changed the way it structures its business at all.

UK sales continue to be channelled through Ireland; the company's European operations remain in Ireland; Google continues to stockpile billions in Bermuda - offshore and out of the way of the the taxman in the United States.

HMRC's calculations are a mystery, but the taxman seems happy.

We'll see if the organisation's chief executive - a woman - manages to persuade MPs they should be too.

The commonly held view is Dame Lin Homer has been given the runaround.

Google's position is well-established and will inevitably be re-stated.

The company insists it plays by the rules and argues its British tax bill reflects the "value" Google creates in the UK rather than the profits generated on Google's substantial UK sales.

It's fair point but misses the main one: there's no doubt Google's tax structure is legally sound, the problem is it's morally dubious.

Google's reputation in the UK has been damaged. Credit: Reuters
  • BCC: Corporations only prosper with societies consent

Google admits its reputation in Britain has been damaged but says there's no evidence that people are using its website any less frequently.

The British Chambers of Commerce warns that a tipping-point will come unless multinationals change their ways.

The BCC Director General John Longworth insists: "Corporations only prosper with the consent of the societies in which they operate.

"It is in the self-interest of corporations to remember this."

It's strong stuff and strikingly different to the position taken by a rival business group earlier this week.

CBI Director General Carolyn Fairbairn. Credit: PA
  • The CBI holds a different view

The CBI Director General, Carolyn Fairbairn, wrote to the FT to bemoan "armchair accounting" which she said was "unhelpful and damaging".

In what can only be a leap of faith, she praised HMRC's "rigorous investigation process" and warned of the risk of "harming the UK's reputation as a place to invest" if companies are "tried in the court of public opinion".

  • Who could she mean?

Once again she doesn't name-check anyone, but Google is a member of the CBI.

So too are Sainsbury's and John Lewis. We know they take a very different view.