Google and HMRC face Parliamentary grilling over £130m tax deal

Puts fire under taxman's 'sweetheart' settlement with Alphabet Inc

British politicians will tackle Google parent Alphabet Inc and the taxman over an official £130m back tax settlement.

Both the US ad-flinger and HM Revenue and Customs are to be hauled before Parliament’s Public Accounts Committee (PAC), Labour MP Meg Hillier has tweeted.

Hillier is the chair of the PAC. It was the PAC that in November 2012 grilled executives from Google, Amazon and Starbucks on the subject of tax avoidance. It also grilled HMRC’s top civil servant Dave Hartnett in 2012 for letting Vodafone off lightly from an £8bn tax bill, accepting £1.25bn instead. The National Audit Office later called the payout a good outcome.

This time around the focus is on Google. Hillier was referring to a deal announced at the weekend that will see Google pay £130m to settle a tax dispute with the British government over how it accounts for revenues booked in the UK.

Under the agreement, the search giant will also now pay tax “based on revenue from UK-based advertisers, which reflects the size and scope of our UK business” the firm said.

Alphabet Inc’s European business is based in the Republic of Ireland, which operates a favourable tax regime that has attracted many big US tech firms.

Google paid just £6m to the UK treasury in 2011 on UK turnover of £395m. The settlement with the Treasury means the firm will pay £13m per year for 10 years from 2005 – 2015.

Chancellor George Osborne called the Google deal a “major success” and a victory for his Diverted Profits Tax, enacted in March 2015, which places a 25 per cent levy on companies that channelled profits overseas.

Shadow chancellor John McDonnell called it a “sweetheart deal” on the BBC, adding that it was “relatively trivial in comparison to what should have been made." ®

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