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News - 14 June 2013

PAC call for Google to be investigated

A House of Commons Public Accounts Committee report labelled claims by the internet giant that its UK sales activities take place in low-tax Ireland as "deeply unconvincing". The company's account of its operations made "absolutely no sense" and had been contradicted by whistleblowers, the committee found.

The PAC have urged HMRC to to launch a probe into Google, the report said it was "extraordinary" that the firm's tax arrangements had not been challenged. The cross-party committee also warned that the UK's big accountancy firms had damaged their reputations by helping big business clients avoid tax, calling on them to recognise that "the public mood on tax avoidance has changed".

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“the PAC report found that between 2006 and 2011 Google made around £11.5bn in revenue from the UK, but paid just £10m in corporation tax during this period, the main rate of corporation tax was between 30% and 26%.”

The PAC report found that Google claimed that its sales of advertising space to UK clients take place in Ireland - an argument which we find deeply unconvincing on the basis of evidence that, despite sales being billed from Ireland, most sales revenue is generated by staff in the UK.

A spokesperson for the PAC said:
"It is quite clear to us that sales to UK clients are the primary purpose, responsibility and result of its UK operation, and that the processing of sales through Google Ireland has no purpose other than to avoid UK corporation tax.”

PAC chairwoman Margaret Hodge said: "Google brazenly argued before this committee that its tax arrangements in the UK are defensible and lawful. It claimed that its advertising sales take place in Ireland, not in the UK. This argument is deeply unconvincing and has been undermined by information from whistleblowers, including ex-employees of Google, who told us that UK-based staff are engaged in selling.”

HMRC head of business tax Jim Harra said: "Since 2010 we have collected over £23bn in extra tax through challenging large businesses' tax arrangements.

"Through tackling transfer pricing issues, we have collected £2bn since 2010 alone. We relentlessly pursue businesses who don't play by the rules, these results reflect this."

If you need any help and advice for your business on Partnership Tax, Corporation Tax or you need to keep abreast of changes in legislation and how it could impinge upon your business, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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