Google should pay more UK tax, says transport secretary
29 January 2016
A Cabinet minister has said he would like to see Google pay more tax in future as Brussels considered demands to investigate the agreement reached by the internet giant with the UK authorities.
Chancellor George Osborne has insisted the deal is a “major success” but his Cabinet colleague Patrick McLoughlin said he would “like to see Google making more payments to the country” and suggested Whitehall’s financial watchdog could examine it.
The controversial £130 million 10-year deal with HM Revenue and Customs on back taxes could be investigated by the European Commission following complaints from the SNP and Labour.
EU competition commissioner Margrethe Vestager indicated she was ready to look into complaints that the settlement breached EU rules.
Transport Secretary Mr McLoughlin defended the deal as a “move in the right direction” but said it was open to the National Audit Office (NAO) to examine it.
“The truth is it’s a move in the right direction. There is more for them to pay and I want them to pay more in future,” he said.
Appearing on BBC1’s Question Time, he said: “We have started to receive tax from Google, which is something that hasn’t happened for the 10 years they have so far been established here, so in that position the Chancellor was right to say that it was a move in the right direction.
“Of course I would like to see Google make more payments to the country. I would like to see them employ more people in this country.
“They do employ 3,000 people, top end jobs, they are doing a lot of investment in this country as well, which is actually good for the long-term economic future of the country.
“But I believe in a low tax base, I believe in attracting companies here, but I believe when those companies are here they should pay their tax which is rightly collected.
“But companies can and have found ways around paying taxation and we have made a lot of changes to the taxation system that actually will make them pay more over years to come.”
The Cabinet minister said he expected the NAO to come under pressure to examine the deal.
“The direct negotiations between HMRC and the company are confidential, but the NAO can do an investigation, can do an audit, and I’m sure they will do,” he said.
“I’m sure the pressure will come on them to do it.”
He added: “If the NAO decided to do it, it wouldn’t be something George could stop.”
Mr McLoughlin said a review commissioned by the NAO into five large tax deals, which reported in 2012, found that HMRC had acted reasonably in each case.
Both the SNP and Labour have written to Ms Vestager calling for an EU-level investigation into the arrangement between HMRC and Google.
Shadow chancellor John McDonnell suggested the deal could have broken state aid rules by offering Google “favourable treatment”.
He said: “We believe £130 million to be significantly lower than a fair or reasonable assessment of Google’s UK turnover and profits would suggest, with experts suggesting that Google has been levied an effective tax rate of around 3%.
“I am therefore requesting an investigation under EU competition law, since we are concerned that, first, the deal is arguably not compliant with state aid rules, creating a favourable treatment for a particular company; second, that if the deal is generalised, it could constitute a serious potential threat to the ability of other EU members to levy taxes in their jurisdiction.”
Executives from Google and HMRC bosses are to be grilled on the deal by the PAC on February 11 in the latest of a series of hearings by the influential spending watchdog into multinationals’ tax affairs.
Photo from Andrew Matthews / PA Wire