Google Faces Renewed UK Tax Scrutiny
06 May 2013
Posted by: Author: Amanda Banks
Source: Amanda Banks (Tax-News.com, London)
Google faces fresh scrutiny of its tax affairs by a Parliamentary committee, after Reuters analyzed job adverts and staff social media profiles which may give the impression that members of Google's sales team are based in the UK rather than in Ireland.
Reuters studied around 150 staff profiles on Linkedin and interviewed clients and former staff. One client suggested that "all the people are based in London," although invoices had a Dublin address.
Reuters' findings prompted Margaret Hodge MP, who heads the Public Accounts Committee, to announce that the committee will be seeking answers "as soon as possible." She also indicated that Google's auditors, Ernst & Young, "have questions to answer."
Google's European head, Matt Brittin, told the committee in November that although customers were "encouraged" to buy advertising by staff in the UK, those who chose to do so were put through to an "expert team" in Dublin.
The company's Director for External Relations, Peter Barron, reiterated that Brittin's account had been "truthful," and he condemned the Reuters article as "wilfully misleading." He also explained that references to "sales skills" in job adverts referred to the kind of candidate they were seeking to attract. He added that Google has already made contact with Hodge and the company will be "happy to appear again to set the record straight."
Hodge recently criticized comments made by Google executive chairman Eric Schmidt about the amount of corporation tax the company pays in the UK, and suggested he should be removed from his role as a member of the UK Government's Business Advisory Group.
Miles Dean, the founding partner of Milestone International Tax Partners, expressed scepticism about the strength of the evidence. He accused the committee of going "well beyond its remit" by announcing a new investigation, and of making insinuations that undermine both HMRC and "the rule of law." However, he added: "If Google Ireland are found to have created a permanent establishment in the UK this will amount to perhaps one of the biggest schoolboy tax errors committed by a multi-national in recent years. Avoiding a PE is the cornerstone of many international tax structures and can be achieved provided the framework within which the business is to operate is properly set and adhered to."