Google was yesterday accused of being “cleverer than the tax man” by MPs as it was questioned by the Public Accounts Select Committee over its controversial tax bill.
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Labour MP Margaret Hodge led the questioning of Matt Brittin, vice-president of Northern Europe for the internet giant, after it emerged Google had paid just £6m in UK corporation tax on revenues of £395m in 2011.
Matt Brittin denied Google was avoiding tax and claimed Google sold very little advertising from the UK, as this all went through the company’s Dublin office.
However, he did admit that, of the 1,300 employees Google has in the UK, 700 were responsible for the marketing and consultancy which led to sales, and some of these Google employees did sell.
"This is laughable, why on earth do you manipulate your accounts so you don’t have to pay corporation tax in the UK?"
Margaret Hodge MP
Hodge accused Google of being selective about which elements of its business it ran through UK offices to avoid corporation tax.
“The revenues of Google in the UK are those you choose to put through the UK,” she said. “This is laughable, why on earth do you manipulate your accounts so you don’t have to pay corporation tax in the UK?”
However, Brittin continued to defend Google, telling the committee: “We are not avoiding tax. If Google was a British business founded in Cambridge by Larry Page and Sergey Brin we would be sitting in a very different place.”
“What creates the value for Google is the technology and computer science, which comes out of California. We hope people understand that. The tax we pay in the UK is the function of the activity of Google in the UK.”
Amazon and Starbucks were also probed by the committee about their own tax bills. Amazon made over £3.3bn in sales in 2011 but and paid no corporation tax, due to its UK business being based in Luxembourg. Starbucks has paid just £8.6m in its 14 years of trading here.
As the session concluded, Hodge said there were more questions to be answered and would be likely to call on representatives from all three companies to sit before the committee again.