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Google 'will be pulled back in front of MPs' on its UK tax affairs

London Googlers 'aren't sales people', claims ad giant

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Enormous advertising firm Google has said that any suggestion that its veep Matt Brittin was less than accurate when testifying to Parliament on the firm's UK corporation tax affairs is "wilfully misleading".

The Chocolate Factory told The Register that it has written to parliamentary Public Accounts Committee chair Margaret Hodge after a Reuters article claimed there were "inconsistencies" in how Google portrays its activities in Britain. Reuters reports that Google and its accountants will be called back in front of the Committee as a result of the supposed inconsistencies in its position.

The argument stems from whether Google's staff in the UK (many of whom are in London, handily located for Blighty's ad-land) are actually sales personnel, and whether the UK firm sells advertising services in Britain. Google's position is that deals are struck with its European HQ in Dublin, where corporation tax is lower than in Blighty.

In testimony to the PAC in November, Brittin, Google veep for Northern and Central Europe, said that nobody in the UK was directly selling anything. But Reuters said that the firm's website, its job ads and endorsements on corporate networking site LinkedIn showed that the corporation's (numerous) London based personnel were in many cases "negotiating deals", closing "strategic and revenue deals" and hitting "quarterly sales quotas".

The news wire also said that PAC chair Margaret Hodge had confirmed plans to recall Google and its auditor Ernst & Young to testify further on the matter to the committee. As Google's UK auditor, Ernst & Young head of tax policy John Dixon was asked by the PAC last year if his staff walked around the offices of its clients to check staff were doing what they were supposed to be, and he said that they did. Hodge told Reuters that the auditor had "questions to answer about whether they were being wholly open with us as a committee".

Hodge confirmed to the Register yesterday that she intends to speak to Google again on tax matters.

"There's more to come on this," the veteran Labour MP said.

A Google spokesperson told The Register in an email this morning that the Reuters report was "wilfully misleading".

"As we told them in our statement, Matt Brittin clearly explained the roles of UK staff in hours of evidence to the Public Accounts Committee," the Chocolate Factory UK tentacle stated indignantly.

"He said ‘if [customers] want to buy advertising from us they are encouraged to do so by our people in the UK - they will buy it from our expert team in Dublin ... the people on the ground [in the UK] are helping people make the most of the web and the people in Ireland are helping to operate the systems and sell advertising to the businesses that want to work with us'.

"In our written evidence, which we also shared with Reuters, we said that Google UK Ltd provides sales, marketing and R&D support to Google Inc," they added.

Conor Delaney, a tax lawyer at Milestone International Tax Partners, told the Register that he would be "flabbergasted" if Google had done anything illegal.

"I think they would have been well advised and they'd be operating within very clear guidelines under which to the extent there are UK sales staff, they're doing no more negotiate subject to approval of the board in Ireland," he said.

"And I think really that what what Margaret Hodge and the PAC are doing is trying to get these people in and pandering to tabloid and public opinion that corporates are not paying enough tax. They're perpetuating and fuelling that concept that there's a fair share of tax and that corporates should somehow go beyond the letter of the law and pay more than they should."

Delaney also said that even if Blighty-based staff were involved in sales, that wouldn't necessarily make any difference.

"I suppose it's a question of fact as to whether they've overstepped the boundary and done more than just go around and drum up interest, if they've actually been negotiating deals in the UK, agreeing with a handshake and then sending the contract over to Ireland for a rubber stamp," he said.

"But assuming that's what they are doing, there's still an argument that there's nothing wrong with that.

"Because you would say, 'Those sales guys in the UK, they've had conversations, they've agreed something', but it's still subject to the agreement of the board of the company in Ireland. And the board of Google Ireland can always say, 'No, we don't like that deal', and that's just a function of company law and the way corporate decision-making works in any business."

The Google spokesperson said that the company had already been in touch with the committee.

"We have written to the PAC chair Margaret Hodge to explain that Matt Brittin’s evidence was truthful and accurate and that this article paints a very misleading picture," they said.

"As we have said many times, we comply with all the tax rules in the UK and in every other country in which we operate."

A committee spokesperson said the PAC can't make any formal decisions on its activities until after parliament reopens next week. ®

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