Google is to be recalled to parliament to explain the company’s tax position following an investigation into its business practices.
The company’s accountancy firm Ernst & Young also faces being recalled to explain how Google paid only £6m in corporation tax in 2012 on revenues of £395m.
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Google has paid the UK government a seemingly small figure for a number of years, with a £935,000 tax bill on revenues of £239m in 2011 and a total of £8m between 2004 and 2010.
Public Accounts Committee (PAC) chairman Margaret Hodge said MPs need to be sure that Google executives were not being “economical with the truth” in giving evidence to the PAC last November.
She said accountants at Ernst & Young also have questions to answer about whether they were being “wholly open” with the PAC.
Google UK chief Matt Brittin told the PAC that the company is fully compliant with the law. In April, Google executive chairman Eric Schmidt reiterated the statement.
Read more on Google and tax issues
- Google is tax law compliant and key to UK growth, says Eric Schmidt
- Google pays just £6m in tax on £395m UK revenue
- Google comes under fire for UK tax avoidance
- UK government to crack down on tax-avoiding suppliers
- Government wants suppliers to reveal UK taxes
- Government introduces new rules to prevent tax-avoidance
Brittin told the PAC that his sales team was based in tax-sheltered Dublin and that the job of UK staff was to market Google as an advertising space rather than to negotiate and close deals with advertisers.
But evidence gathered by Reuters – from Google's website, interviews with clients and former staff, and staff profiles – appears to show that some staff closing deals are based in London, according to the Guardian.
If this is found to be the case, Google's UK tax bill could increase significantly, the paper said.
A Google spokesman said Brittin denied he had misled parliament and stated that London staff were employed as "digital consultants" while only those based in Dublin handled sales contracts.
Ernst & Young said in a statement that it “conducts audits in accordance with International Standards on Auditing", adding that this included the standard that "requires us to obtain an understanding of the entity and the environment in which the entity operates".
Google is one of several multinationals that have come under fire over tax payments.
Earlier this year, the Public Accounts Committee (PAC) accused Google, Starbucks and Amazon of "using the letter of tax laws, both nationally and internationally, to immorally minimise their tax obligations".