back to article Google 'DOES DO EVIL', thunders British politician

Even as its I/O shindig in San Francisco dominated the headlines, Google was today accused of lying over its claims last year that it makes no sales in the UK - in order to justify its tiny UK corporation tax bill. The web giant keeps its vast UK ad revenues out of reach of Blighty's taxmen by insisting that a team in Ireland …

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  1. Shasta McNasty
    Mushroom

    An open letter

    Dear Ms Hodge (and other MPs involved in this),

    Please stop wasting our money with these Parliamentary panels and meetings with large corporations where you accusing them of acting immorally and legally avoiding paying tax and all they say is we're following the letter of the law.

    Either change the law to make these profits taxable or save us some money and shut the fuck up.

    Google are not going to suddenly start paying extra taxes they don't have to just because you get upset about it.

    1. JonP

      Re: An open letter

      While I agree with what you're saying, it sounds like the possibility exists that they aren't acting legally. If so then it should be investigated.

      1. william 10

        Re: An open letter

        So if Google are selling in the U.K. this is illegal, but if they are marketing it's OK.

        So when does marketing become sales ?

        1. pewpie
          Boffin

          Re: An open letter

          A long time ago - when it was invented.

          Market=large scale selling.

          Don't worry - you've just swallowed a large dose of doublespeak - it will wear off later and you will probly feel a bit grimy, so take a shower.. you are't the first and you won't be the last.

        2. launcap Silver badge
          Joke

          Re: An open letter

          >So when does marketing become sales ?

          Marketing are the people who hold the customers down while Sales screws them..

        3. Anonymous Coward
          Anonymous Coward

          Re: An open letter

          "So when does marketing become sales ?"

          It's an interesting question and one that was covered in the article - it's what is being referred to as "the line" that they're debating. If staff have the power to negotiate and enter into contracts AND habitually use that power, then they're conducting sales, rather than marketing. That's the taxman's line. If it came into court there'd also be consideration of the reasonable intent and on that count having sales commissions on the payslip is pretty damning.

          The problem is the PAC is toothless in this regard. They aren't a court, they aren't operating with any kind of legal force - parliamentary committees operate purely with consent in an informal investigatory role.

          Now that normally wouldn't be a problem, because when a senior MP comes knocking on the CPS's door, they will listen. Unfortunately, in issues of tax evasion, there is an absolute quagmire of jurisdiction, with HMRC's archaic prosecutory powers clashing with those of the CPS and their investigatory powers clashing with those of the plod. Up until very recently there were even insane situations whereby if HMRC had conducted a civil investigation into your affairs you were then immune from any criminal prosecutions.

          HMRC lacks the will and resources to investigate or prosecute these kind of cases effectively and the CPS have their hands tied politically (it isn't "their turf"), so we end up with a situation where HMRC just takes multinational companies at their word that "nothing illegal" is happening and no substantial investigation can take place to verify that.

        4. Lusty

          Re: An open letter

          "So when does marketing become sales ?"

          Never really, marketing are the people who analyse whether your ad campaign worked after you bought it. I think you're thinking of advertising.

          1. Fink-Nottle

            Re: An open letter

            > So when does marketing become sales ?

            A commission implies that a transaction has taken place.

            Therefore, it's sales when the employee earns a commission.

            1. Tom 13

              Re: An open letter

              Except if it isn't a commission on the sale but a bonus for marketing success and it just so happens that the way in which you are confirming the marketing success is the increase in sales.

      2. Tom 13

        Re: it sounds like the possibility exists

        No it doesn't. It sounds like a politician is pissed off and demagoguing the issue. If MP has the evidence he should produce it. If it is a real whistle blower there are laws that protect them so long as the government wants them protected. Or is innocent until proven guilty even less of a reality in Old Blighty than it is in the US?

    2. Tom Wood
      Stop

      Re: An open letter

      IF Google are selling in the UK, then what they are doing *is* illegal.

      Google say they are not selling in the UK.

      PAC say "it sure as hell looks like you're selling".

      Google say "no really we're not".

      The next step is a court case to determine whether or not they are selling. If it turns out that they are selling, then (1) they *are* doing something illegal in not paying (much) UK tax and (2) they also did something illegal by lying to PAC.

      Yes, there may be a need to change the law to make the definition of "selling" clearer, or whatever, but that is a separate discussion.

      1. Shasta McNasty

        Re: An open letter

        "If sales are being concluded in the UK, you're misleading [UK's taxmen at] HMRC."

        ""You're a company that says 'we don't do evil' and I think you do do evil in using smoke and mirrors to avoid paying tax," she said."

        She's not accusing them directly of doing anything illegal as she knows that here evidence isn't strong enough and Google's legal team will destroy her. She only mentions avoidance (which is legal) and suggests that if they were selling in the UK then they would be misleading HMRC.

        1. JimmyPage Silver badge
          Stop

          Re: An open letter

          AIUI proceedings of parliamentary committees are covered by parliamentary privilege, so if Ms. Hodge chooses to call Google liars, she can, although I suspect there are etiquettes around this sort of thing (like MPs can't call each other liars).

          I see this whole exercise as a little bit of grandstanding ... maybe a warning shot across the bows. It sounds like HMRC have pulled their finger out and found *something* to beat Google with, and this is a very public way of telling Google they might not want to press the issue. At least I'd hope so. Otherwise the message the entire world is getting is "UK plc is run by a bunch of powerless tossers". Which may be true, but I'd rather it wasn't.

        2. Anonymous Coward
          Anonymous Coward

          Re: Google's legal team will destroy her.

          Like Apple's clearly failed to do recently? It's almost like British Justice isn't as easy to buy as American....

      2. wowfood

        Re: An open letter

        This comes down to the issue of somantics and what selling actually is.

        On the governments side of the fence, selling is the act of pushing the deal, which is what google employees are being told to do. You get a customer you convince them to buy a product and then to seal the deal you forward them to your "sales department" which effectively reads the details back to the customer, and then gets them to agree to the contract.

        Google are arguing that the sale is the process of closing the deal, which is what the sales department are doing.

        This is one of the problems with somantics, everyone interprets them in the way that best suits them. Personally I'm in agreement with the government on this one. Even though they aren't the ones finalizing the deal, the UK workers are still attached to the sale (otherwise how would they get their bonus?)

        Honestly though I'm still worried that if these 'loopholes' are fixed it'll just drive business away. Why stick around in the UK and pay our incredibly high taxes, when they can close down shop and move everything to ireland where it's cheaper for them.

        I'd still argue that if / when these loopholes are fixed, a tax cut would be in order, just to encourage big business to hang around (as well as encouraging others to come back)

        1. Tom 7 Silver badge

          Re: An open letter

          Wowfood: Somantics? Really boring detail?

        2. Anonymous Coward
          Anonymous Coward

          Re: An open letter

          " Why stick around in the UK and pay our incredibly high taxes, when they can close down shop and move everything to ireland where it's cheaper for them"

          In the case of Amazon, because they'd lose the £4bn in sales. I don't think the population of Ireland is going to take up that slack. Amazon need us much, much more than we need them.

        3. Gordon Pryra

          Re: An open letter

          @wowfood "Why stick around in the UK and pay our incredibly high taxes, when they can close down shop and move everything to ireland where it's cheaper for them."

          Because you do not then allow them to do business in your country or to take advantage of the infrastructure of your county. And other players step up to fill in the gaps left by this company.

          Our high taxes would not be so high if people paid them, laugh at the Greeks as much as you like, we are the same.

          1. Tom 13

            Re: high taxes would not be so high if people paid them

            Seeking low taxes is a rational behavior. If Google were seeking to pay the HIGHEST taxes they could, I'd invest in another company. Same with Amazon. Pretty soon both would be broke. Just because you think it's the appropriate tax rate doesn't mean anybody let alone everybody else does. That's why there's supposed to be an objective legal standard by which compliance is measured. Yelling and screaming about it in public is just demagoguing it. I really would expect Brits to be more familiar with the inevitable outcome of the bread and circuses route than 'Merkins are.

        4. John Smith 19 Gold badge
          Headmaster

          Re: An open letter

          "This comes down to the issue of somantics and what selling actually is"

          I think it comes down to semantics

          Somantics is

          "The Somantics concept is a a suite of applications that use touch, gesture and camera input to encourage, capture and amplify the interests of young people with Autistic Spectrum Conditions and other related communication difficulties."

          If you're going to talk language, get it right.

          1. turnip handler
            Coat

            Re: An open letter

            "If you're going to talk language, get it right."

            Agree - you could even try using Google:

            https://www.google.co.uk/search?q=somantics

            Did you mean: semantics ?

        5. Tom 13

          Re: This comes down to the issue

          First up it's 'semantics.' And I'll agree with the bit about everybody spinning them to their own advantage. I'll disagree about the bit on who is right. The lawyers will tell you that you don't have a sale until the contract is signed. If the signing is taking place in Ireland, that's where the sale is made. The lawmakers can always update the law to change how the lawyers have to interpret it. I also concur about lowering taxes, but then I'm one of those crazy 'Merkin rednecks the UK socialists who visit El Reg consistently downvote on economic issues. So even though you're right, it won't get any traction.

      3. graeme leggett

        Re: An open letter

        isn't the next step, HMRC taking a really good look at the books? It ought to be....

        If the company was in the wrong, they blame some individual engineer accountant, and start negotiating on some settlement for the difference.

        Court cases come much later

      4. Snake Silver badge
        Mushroom

        Re: An open letter

        We all know EXACTLY what Google is doing:

        'Thank you for purchasing our ad program, Mr. Smith! Sign here...just disregard that the invoice says "Google Ireland' even though we're both here'

        Smoke and mirrors, indeed. Many companies pull these shenanigans and yes, in this case it is only to say "We don't sell here!" when in actuality the accurate statement is "We just don't invoice, here'".

        1. Steve Davies 3 Silver badge
          Boffin

          Re: An open letter

          The next question is to see what the VAT rate is.

          ~If they are charging you the Irish rate then fine

          If they are using the UK rate then they are in deep shit with the HMRC.

          Just like Adobe.

          Buy a download and it is fulfilled form Eire. Buy a boxed copy (cue funeral march music) and it is fulfiled from Scotland.

          One attracts the Eire VAT rate and the other the UK's 20%.

        2. jonathanb Silver badge

          Re: An open letter

          Or, thank you for purchasing our ad program, I will walk you through the process of logging onto google.ie to set up your google wallet and agree to the contract.

      5. Tom 13

        Re: next step is a court case

        assuming of course the MP has actual evidence as opposed to a well written bluster that plays well with the masses he is trying to buy off with Google's money.

    3. Anonymous Coward
      Anonymous Coward

      Re: An open letter

      "Copyright minister: Google has better access to No. 10 than me"...

      From the other Reg article today we know its all smoke and mirrors. The exact same politicians continue to be influenced more by Google's lobbyists. But they have to be 'seen' to be doing something for the economic good of the country...

      1. Anonymous Coward
        Anonymous Coward

        Re: An open letter

        " But they have to be 'seen' to be doing something for the economic good of the country..."

        fine, they can return their salaries and all the dodgy expenses over the last decade

    4. Zingbo

      Re: An open letter

      Margaret Hodge and the Public Accounts Committee aren't part of the government so probably can't do much directly to change tax legislation. They can however keep banging on about this, keep drawing attention to it and eventually the public mood may harden enough that the actual government feels compelled to act.

      I can't imagine that George Osbourne would even be saying a single word on the matter if tax avoidance wasn't hitting the headlines so much at the moment.

    5. Anonymous Coward
      Anonymous Coward

      Re: An open letter

      No one ever got rich being moralistic.

    6. Anonymous Coward
      Anonymous Coward

      Re: An open letter

      Truly the amount being spent on this is as worth it as it was on a certain excellent value-for-money MP who spent our taxes employing a crony on PR for herself.

    7. Anonymous Coward
      Anonymous Coward

      Re: An open letter

      "Either change the law to make these profits taxable or save us some money and shut the fuck up."

      Amazon, and probably Google, are acting illegally. They are engaged in fraud by claiming that their UK business is a supplier of services to its Luxembourg company. It isn't; the whole business of buying a book from amazon.co.uk is carried out in the UK. Luxembourg is as irrelevant to the process of buying a book as it is to everything else.

      I agree that all this yakking is pointless. People should be doing time and/or Amazon and co. should be finding that their IPs are blocked at a European level, or at least a national level until they stop engaging in these tax evasion activities. There are plenty of other places to buy books from, and there are other search engines than Google, so it's not really a big deal if they are held to account, IMO.

    8. Gordon Pryra

      Re: An open letter

      What have politicians got to do with it anyway? They are just supposed to legislate.

      The courts and HMRC are the bodies who deal with it, anything said in Parliament is just grandstanding trying to make a name for themselves.

      While we believe that Google may be in the wrong (teithing fuckers is the current term) we also know this is the same for 90% of the corporations.

      What pisses us off is not really the corporations, but the hypocritical lying fuckers called politicians (again the current term in the office) Who use the same schemes to line their own pockets as the big companies.

      The politicians just don't get it.....

  2. JimmyPage Silver badge
    Flame

    This was always going to happen ...

    tax law being so labyrinthine, Google were always running a risk that if they didn't play nicely, HMRC will find *something* to hit them with. Same for Amazon.

    (It's the same principle as never *ever* piss off a traffic cop. You could be driving a brand new car out of the showroom, and he'd find something you can be charged with.)

    Returning to the fray, I can't help but feel rather than trying to twist and crowbar the existing system to fit the emergence of the online universe, our politicians should be DOING THEIR FUCKING JOB and working on devising a new paradigm. And no, I don't have any answers ... but then I'm not paid to.

  3. Anonymous Coward
    Anonymous Coward

    Sigh...it's so easy.

    Dear Google.

    Pay your taxes that we believe you should or we will never give you ANY business.

    Yours H.M. Government.

    And watch them go Oh look we forgot these sales people, silly us.

    1. Anonymous Coward
      Anonymous Coward

      Re: Sigh...it's so easy.

      and what do you "believe" should be right amount???

      yup, oh so frickin' easy - to mouth off. How about some rules instead of picking a number out of thin air.

      Oh, we have rules you say?!? Then either STFU or change the RULES!

    2. DaLo
      Facepalm

      Re: Sigh...it's so easy.

      Really, a UK government openly taking part in extortion, blackmail and encouraging bribery?

      Wow, I'm sure there be no implications with that...

  4. Don Jefe
    Meh

    Evil.

    It was pretty smart to have 'Do No Evil' as part of the company ethos. Nothing they are doing is evil (douchey yes but not evil). It takes a lot to descend into evil and ascribing evil to things like tax evasion/manipulation/dodging/minimization or patent and product protectionism or personal privacy demeans the word evil. Are Google guilty of being a bunch of festering assholes in a lot of things; Yes. Are they being evil; No.

    1. Anonymous Coward
      Anonymous Coward

      Re: Evil.

      On the contrary, it was a bloody silly idea to have "don't be evil" as a corporate slogan. For one it makes them sound like teenagers and for another it makes the staff that work at Google think that they can do pretty much anything. The thought process goes along the lines of "I work for a company who don't do anything evil, therefore what I'm doing must be all above board."

      1. Don Jefe
        Happy

        Re: Evil.

        That's precisely why it was smart. They can be complete dicks if they want but they aren't betraying the ultra high (low?) bar they set with 'evil'.

        I doubt if individual employees take notice though. Do you really buy into your company mission statement? I don't think I've met anyone who really believes all that crap. They should say "Our mission is to make money" & skip the bullshit.

    2. Amorous Cowherder
      Joke

      Re: Evil.

      Google don't pay taxes. Governments don't have as much money. Care homes get closed or have less money. Kids at risk. Ergo Google are Evil!

      1. Tom 13

        Re: Google don't pay taxes.

        Google pays it employees and stockholders more. Care homes and poor houses aren't needed. Kids not only get to eat, they get to pay for college. Ergo Google are not Evil!

  5. Anonymous Coward
    Anonymous Coward

    Time for a sweetheart deal!

    Time for Google and HMRC to have a nice cosy chat in a backroom somewhere to agree a deal that allows Google to pay a miniscule amount of extra tax, minus the usual penalties and interest charges we'd be stung with if we evaded tax. Either that, or Google will be shocked and saddened to find that it's UK office has been acting contrary to corporate policy, with the rogue managers sacked forthwith.

  6. DaLo

    Is it so easy?

    Imagine you, as a UK company makes Super Widgets from your manufacturing based in Wisledon. You have a factory of 50 people making them along with admin employees, sales and marketing.

    They sell well and you branch out, selling them in Europe. Do to the need for demonstrations and language barriers you employ some people in France and Italy to cover those regions. They demo the product and take a purchase request which gets sent back to Wisledon. The invoice is raised and sent out along with the goods.

    Now should your company have to set up limited companies in France and Italy, along with auditing and local legislation (and then also in Germany, Poland, Denmark etc as you expand)?

    Therefore it isn't balck an white, how many staff do you have to have before you need to start paying taxes in that country, how many sales do you need, what constitutes a sale, does the product need to be manufactured there, does a virtual product need to reside there... not easy just to create a law to cover it. Combines with EU open trade agreements and legislation and it gets harder still.

    Now if you are a US company coming to Europe to trade and you need to set up a sales office in one location to simplifiy accountancy, auditing and other requirements are you going to choose the highest Taxed country or the Lowest assuming all else is equal?

    Does the UK government call in UK companies who are trading abroad and criticise them for not paying their fair amount of taxes to other countries where their goods are purchased?

    1. Uffish

      Re: Is it so easy?

      Nicely argued and obviously a valid point but I think that it is not so easy. Sure, Ireland (as in Google's case) has a nice little earner but the Irish staff are not doing the majority of Google's business in Europe. I suspect that there is far more 'product' and 'sales' work carried out in Google offices in UK, France, Germany etc than in Ireland. If this is the case then the governments of these countries have a obvious interest in getting their hands on some of Google's profits.

      Just because Ireland, Luxembourg (and I'm sure UK also) have wangled some nice little tax schemes doesn't mean that there is any natural justice in their schemes and that allows politicians all the justification they need to try and put a stop to it.

      1. DaLo

        Re: Is it so easy?

        Well that is the issue. It is not so easy to create a law - which has to be black and white once case law is created. Any grey areas just create loopholes and tax avoidance.

        So, if you say that a lot more 'product' and 'sales' work goes on in the other countries - then is this the definition in law? Every country that has more customers than the parent company has to be set up for local taxes on all customers in that country?

        Not exactly fair though is it. If, the UK for instance, has 1million customers of company x and they are based in Ireland which has 900,000 customers then they pay corporation tax to the UK? However they have a push and get 1.01 million customers in Ireland and now they can stop paying tax altogether in the UK? What about smaller countries with a lower user base, will they never get tax from any business that isn't based in their boundaries?

        Maybe it goes on company size? Well Google employ 3000 people in Ireland but only 1,300 in the UK. Therefore they would be right to HQ in Ireland, surely?

        Maybe everywhere you have a customer you have to pay tax on that customer? Well this isn't corporation tax, it's duty and VAT.

        So do you split their profits among all the countries based on a factor - but what? Customer size, Customer revenue, staff numbers? This would be a loophole any decent accountant could drive a truck through. You are likely to kill off the super-widget maker's dreams of European sales mentioned above. What if the customer buys goods from the internet in a country that doesn't actively market there?

        In reality in a free market in Europe a company should be allowed to choose when to set up their headquarters. The same way that Wales or Scotland might reduce taxes for the Amazon warehouse in Swansea or Edinburgh. The same way you can choose to buy something from France if it is cheaper and you live in the UK.

        It's not straight forward, if it was then there'd be legislation already.

        1. Naughtyhorse

          Re: Is it so easy?

          The same way you can choose to buy something from France if it is cheaper and you live in the UK.

          try doing that with a truck load of fags - see how far you get.

      2. Tom 13

        @Uffish

        The real problem is that you've bought into the socialist demonization of corporations and expect to bleed them dry instead of rationally examining real-world problems and fixing it that way. I'm no fan of the progressive income tax or the privacy invasions that come with income taxes. I accept however that a flat income tax eliminates the issues you are ranting about. Regardless of whether the Google employees in London are marketing or selling they are undeniably being paid for a job in London. Tax their wages in London and you get the revenue.

        What's that you say? No sane person would ever pay the income tax rate that would be required to support your government programs? Not my problem. Not Google's either. That problem lies in the evil you and the rest of the people who voted with you have created.

        1. Uffish

          Re: @Uffish

          @Tom13 Calm down lad, your eyes are starting to swivel.

    2. Naughtyhorse

      Re: Is it so easy?

      The answer to most of your questions is:

      you get an expert in to advise. And obey the law!

      The answer to your last is;

      don't be so effing thick, the uk gov is not responsible for collecting taxes for other countries

    3. jonathanb Silver badge

      Re: Is it so easy?

      No, but if Super Widgets UK Ltd is trading in France, they have to pay French taxes on the profits they make there. The French division of the company would "buy" the widgets at factory gate prices, pay for shipping to France, pay for the French staff, get money from selling them, and pay tax on the profit. You would have to negotiate a factory gate price if you don't also sell the widgets in bulk to other distributors.

      1. DaLo

        @jonathanb Re: Is it so easy?

        SO you are saying that every company that trades in France has to have a "French division" with all the associated paperwork, auditing, local laws, staffing etc. Even if they are just a small UK company with 50 employees in the UK, or say 10 employees in the UK.

        Then people in France have to purchase from the 'French Division' and not the UK division. If German customers wish to purchase , who must they purchase from?

        1) Their nearest, the French company

        2) The HQ in the UK

        or looking at your post this is the one it seems that you would require

        3) Not be allowed to purchase until a division is set up in Germany with limited company status to handle tax and auditing requirements.

        Be a shame if the German interest in your product was for a short time due to a specific project and now you have no more sales there..

        This is all against EU legislation and free trade agreements. If you wish to scrap free trade across Europe that is a different discussion.

        and @naughtyhorse.

        I never said that the UK should be responsible for collecting taxes. The point is, is a company only morally corrupt, inept, evil, borderline illegal etc when it is a foreign company who is paying their tax in a different country or do those terms also apply to UK companies who are doing the same to other countries? If, therefore, a company is such a bad egg then shouldn't they be condemned as a bad company, or are they no longer a bad company?

        My point being, remarks such as "just create a law for it", "just shut them down", "send in the HMRC", etc are all a little blinkered and unrealistic hence why the problem exists in the first place.

        1. jonathanb Silver badge

          Re: @jonathanb Is it so easy?

          If the frogs phone up the UK sales office and ask them to send some widgets to France, then they are buying from the UK division, and only UK taxes are payable on the sale. The possible exception is that if the UK division sells more than €10,000 of widgets to non TVA(VAT) registered frogs per year, then they have to register for TVA in France . If they do that, then they won't have to charge UK VAT any more. Both countries charge 20% on their respective sales taxes so there is no difference in the amount payable.

          If they contact the French sales office, then the trade takes place in France, and French taxes are payable.

          A UK Ltd company can trade in France in exactly the same way as French SA. You don't need to set up a local company, but either way, the tax rules are the same.

          1. DaLo
            Facepalm

            Re: @jonathanb Is it so easy?

            That is not corporation tax, that is VAT. It doesn't work for corporation tax.

  7. John Lilburne
    WTF?

    Send HMRC in to do their job. Sequester the servers, financial docs, and shut the fuckers down like they'd do to any high street biz.

  8. Anonymous Coward
    FAIL

    Pot and Kettle?

    http://www.telegraph.co.uk/finance/businesslatestnews/9668396/Margaret-Hodges-family-company-pays-just-0.01pc-tax-on-2.1bn-of-business-generated-in-the-UK.html

    Ooopsie.....

    1. Chris Miller

      Re: Pot and Kettle?

      And the cunning use (she was an accountant before she was an MP) of family trusts to avoid inheritance tax. "DON'T LOOK OVER HERE - LOOK OVER THERE!"

    2. Anonymous Coward
      Anonymous Coward

      Re: Pot and Kettle?

      Dear Mr Shitpeas,

      you forgot to include phrase "hypocritical cant" to describe the rhetoric coming from the mouth (?) of tax-dodging Margaret Hodge MP.

      "You're a company that says 'we don't do evil' and I think you do do evil in using smoke and mirrors to avoid paying tax," she said, "whereas I'm a person that says 'I don't do evil' yet I do do quite a lot of evil in using smoke and mirrors to avoid paying tax," she didn't say, reflecting on her own personal experience of doing exactly the same thing, while lying to the public by pretending to be acting in our interests (she is not: what's in our interests is for her to resign, acknowledging her own tax-dodginess and paying back every single penny some random idiot thinks she should pay, regardless of the law, which is what she expects of others).

      If MPs were serious about tax avoidance they would start by doing their own jobs properly and not allowing legislation that leaves scope for loopholes, or doing the decent thing and saying "we created the loopholes, it's our fault, we'll pay the bills for them". They certainly should not be allowed to hide behind parliamentary privilege to call others liars when they themselves are entirely to blame for the loopholes. Parliamentary officials may create the legislation but it's up to MPs to make sure there are no holes, and they've chosen not to do so, so should face consequences. Maybe they were too busy calculating their second home allowances, family members' travel expenses, gold-plated pensions, massive severance packages and other unnecessary stuff most people don't get.

    3. The Axe

      Re: Pot and Kettle? downvote?

      Why would anyone down vote a link to a statement of fact?

      1. Tom 13

        Re: down vote a link to a statement of fact?

        because good little socialist minions never let a fact get in the way of a two minute hate.

        1. Jamie Jones Silver badge
          FAIL

          @Tom13: Re: down vote a link to a statement of fact?

          "because good little socialist minions never let a fact get in the way of a two minute hate."

          Tom, I've generally been agreeing with you and upvoting your posts, but each time you use the word 'socialist' as a perceived insult, you are just acting like you are one of those Americans who believes all the Fox News shite.

          Us Brits haven't been brought up with your "pinko commie" propaganda, and don't see the term 'socialist' as an insult, whichever side of the political spectrum we come from.

      2. Jamie Jones Silver badge
        Happy

        Re: Pot and Kettle? downvote?

        "Why would anyone down vote a link to a statement of fact?"

        You must be new here!

    4. Anonymous Coward
      Anonymous Coward

      Re: Pot and Kettle?

      Of course Barry, were this Apple, she'd be bang to rights; amirite?

    5. Anonymous Coward
      Anonymous Coward

      Re: Pot and Kettle?

      Wasn't that the article that they had to apologise to Margaret Hodge about?

  9. nuked

    A public company has a duty to their shareholders to make as much profit as legally possible. Now, if a company breaks the law then fine, serious consequences should ensue for the people responsible. But personally, I wish some would drop this bullshit morality argument.

    The UK Government has deliberately deregulated and turned a blind-eye to these various tax loop-holes for years in an attempt to attract inward investment, and to make London attractive. London is famous the world over as a millionaires playground and place where money buys you influence.

    Frankly, what other appeal is there of doing business in the UK? We're not a particular populous country in comparison, but still London remains a top-tier commercial center globally. The Government have to reap what they sow, and stop putting on a charade of a public grilling to try and convince people that this isn't exactly the sort of behaviour that is encouraged throughout the political class.

    1. Mole5000

      @nuked

      Not the don't, read the damn law book.

      1. Anonymous Coward
        Anonymous Coward

        @Mole5000

        "Commercial expectations of directors

        - As directors, you are generally expected, in the ultimate test, to drive

        the bottom line and provide appropriate shareholder returns."

        from Directors’ Responsibilities: The reality vs the myths.

        1. Mole5000

          Re: @Mole5000

          That's something from Australia:

          In the UK directors do not have a legal duty to maximise profits or minimsie tax. In the US, Delaware (where a great number of US business exist as a legal entity) trial law shows that directors do not have a duty to either maximise profits or minimise tax.

          In Australia the duties of directors are:

          Duty to act in good faith and not to act contrary to the interest of the company

          Duty not to use power for an improper purpose

          Duty to avoid conflicts of interest

          Duty to retain discretion

          Duty not to misuse position to gain advantage

          Duty not to misuse information to gain advantage

          You'll note that non of them are to maximise profit or minimise tax.

          1. Tom 13

            Re: @Mole5000

            There's law and then there's the real world. If the political creatures pass a legal law repealing the law of gravity, you'd still be a damned fool to ignore it. Same thing goes for investing. And these days investing runs publicly traded companies. Which is why Dell the man is trying to take Dell the company private again. He recons he can rebuild and save the company in the long term, but it is impossible with publicly traded shares. Even if he were chartered out of Australia instead of the US.

            1. Mole5000

              Re: @Mole5000

              There may be "the law and the real world" but if people are going to quote non-existent laws to justify behavior in the real world then that's just a bit rum.

  10. Richard Neill

    Simple fix: VAT+=CorpTax; CorpTax=0

    This is really easy to solve, and would prevent all the complex tax dodging.

    Increase VAT, and zero out corporation tax.

    Provided this is done sensibly, prices will remain the same, and customers won't be hurt.

    1. DaLo
      Facepalm

      Re: Simple fix: VAT+=CorpTax; CorpTax=0

      Corporation tax is based on profits, VAT isn't.

      Therefore companies that are struggling to make a profit in their early years would be hit even harder.

      So prices for consumers would be affected and more companies in their first few years would fail.

      Companies who sell to businesses who then get the VAT reclaimed would then lose the government money (most adwords/doubleclicks go to businesses not to consumers). So it would act as a tax punishment for the company selling the goods but the government wouldn't get any tax at all (reclaimed).

      1. Anonymous Coward
        Anonymous Coward

        Re: Simple fix: VAT+=CorpTax; CorpTax=0

        I don't think VAT works that way. Just because someone reclaims it it doesn't disappear. I don't believe you can just reclaim VAT, you effectively pass it on - VAT in vs VAT out. If you cannot pass it on, you pay it. That was how it worked the last time I ran a business.

        1. DaLo

          Re: Simple fix: VAT+=CorpTax; CorpTax=0

          That's only if you are reselling the goods.

  11. RonWheeler

    In this day and age

    Taxing businesses on earnings is idiotic. You either penalise the smaller companies or drive away the multinationals for whom moving elsewhere is easy. And this destroys investment in our economy and jobs.

    Best to have simple income tax and VAT on people. Politicians like taxing business and stealth taxes as the proles don't understand corporation tax and the likes.

    1. Yet Another Anonymous coward Silver badge

      Re: In this day and age

      And the advantage of this is that rich people don't pay tax.

      Normal worker with salary = pays tax

      Rich worker who is paid in dividends through a shell company = no tax

      1. Tom 13

        Re: In this day and age

        The advantage of being rich is that no matter how tightly tyrants try to tie the tax noose, you can usually avoid paying them. If they jack the sales tax up on your $100,000 yacht you don't have to buy it, or maybe you can buy it at your summer house in another country where there is no sales tax. If they jack up your income tax, you don't have to work.

        Payment in shares is easy enough to deal with. If you haven't bought with money, it counts as income. Now if you are objecting to making money from dividends on shares you've paid for in cash, you can sod off.

  12. gerryg
    WTF?

    "You thought only Google dodges UK taxes? So do all the Brit firms"

    http://www.theregister.co.uk/2013/05/14/uk_firm_subsidiaries_tax_havens/

    It turns out that companies use tax law to minimise their tax bills - who'd have thought that then?

    If the tax code were less complicated with fewer political wheezes designed to make headlines (which every politician does and crosses their fingers that someone will believe them that somehow these wheezes will generate economic growth) then there would be fewer places to hide.

    If PAC and or Margaret Hodge have evidence of evasion then they could cut to the chase and pass it over to the Police and/or Director of Public Prosecutions.

    Of course if Google (others) are just avoiding tax (hands up who has got a tax-exempt ISA) then we are free to dislike them. However, perhaps someone could deal with this (unfortunately, I could not find any left leaning newspaper criticising Margaret Hodge, for some reason or other):

    http://order-order.com/2012/11/21/margaret-hodges-multi-million-pound-stemcor-trusts/

    "Margaret Hodge didn’t take too kindly to being accused of tax hypocrisy by Priti Patel yesterday. The litigious Labour MP and ardent anti-tax avoidance campaigner insists she has done nothing wrong with her shareholding arrangements at 0.01% tax rate paying Stemcor."

    or this

    http://order-order.com/2013/04/26/a-cosy-relationship-hodge-the-dodge-ignores/

    Apparently the Big 4 accountancy firms have an “unhealthily cosy relationship with government”, saying it creates a “ridiculous conflict of interest”. Readers will know of Hodge’s great expertise in this area, given that she worked for one of them, Pricewaterhouse, before she became an MP. Not to mention that Hodge’s friends on the frontbench such as Chuka, Balls and Rachel Reeves have all had PwC analysts on their payroll. Guido can reveal that Labour’s Shadow Treasury ministers Chris Leslie and Cathy Jamieson also currently have PwC employees working in their offices.

    or this

    http://www.dailymail.co.uk/news/article-2230915/Margaret-Hodge-Multi-millionaire-Labour-MPs-family-business-paid-just-0-25-tax-profits.html

    Analysis of Stemcor's latest accounts in today's Daily Telegraph show that the business paid tax of just £163,000 on revenues of more than £2.1billion in 2011.

    1. jonathanb Silver badge

      Re: "You thought only Google dodges UK taxes? So do all the Brit firms"

      If you look (I haven't), you may well find that Morrisons has a subsidiary in Gibraltar, a well known tax haven. The reason I think they might have a subsidiary there is because I know they have a store there.

      There is nothing wrong with setting up shops in other countries, and if those countries don't want to collect tax on the profits made there, that is up to them.

      As far as UK tax is concerned, a UK resident owner of an offshore company has to demonstrate that they have a legitimate business reason for setting up a company in that country, otherwise the profits of that company are taxable in the UK. In the Morrisons scenario, setting up a company in Gibraltar because you have a shop there is a legitimate business reason, so no UK tax would be payable on Gibraltarian profits.

      Richard Branson has a hotel in the British Virgin Islands, the same rules apply there. He has a cable internet/TV company registered in New York, USA and an NHS Walk-in Centre business registered in Jersey. In both cases they were registered there because that's where the previous owners (NTL and Assura) set them up. There is no legitimate business reason for those companies to be registered there, so they do file UK tax returns.

  13. ratfox Silver badge
    Facepalm

    "Hodge said the point was not illegality, but immorality"

    If that is the best thing she can say, then Google is safe from HMRC…

    Seriously, what does she expect with lines like that? She is practically saying outright "don't worry, we are still not able to find anything illegal in what you did"

  14. Anonymous Coward
    Anonymous Coward

    'You do do evil!' vs "Copyright minster: Google- better access to No 10 than me"

    This article had got to be taken into the far more telling other Reg article today "Copyright minister: Google has better access to No. 10 than me". The latter is a nice example of pay-to-play with politicians working for the same corporations that are being hauled-up over clever tax schemes. A game that the equivalent competing SME has no access to. For the UK, the good news is that its even worse in the US. Lobbying in Washington makes an art-form of corruption. The corporate fat-cats enrich the political fat-cats making half of them easy millionaires. Why? Because insider-trading isn't illegal for them exclusively! Honestly, it warms my arteries.

    Glad to be done with UK & USA and now working in emerging markets (EM). It cracks me up how people in the EM look up to first world countries as being paragons of virtue. If they only knew. First-world corruption is just more subtle. I relish the brutal honesty of the EM, in that at least there's less political spin, here's the corruption folks, take it or leave it!

    1. hplasm Silver badge
      Meh

      Re: 'You do do evil!' vs "Copyright minster: Google- better access to No 10 than me"

      Emerging Markets? You do know that's predator speak for Easy Prey?

  15. David Black
    Coat

    Tax on business is fair

    I'm not sure why so many people are so keen on defending Google here. I guess our society has lost its sense of right and wrong and redefined it based on "what you can get away with". Shame really.

    But as to the appropriateness of taxing business... it is simply a way of they contributing to the society and paying for the resources of that society that they consume. Health, education, transport, military, police etc. are all provided by centralized government (whether you think that right or wrong, it is the way it is) and must be paid for. Do Google make business profits from the safe, socially stable UK with it's healthy and educated people? If yes then they have a liablility to contribute to the UK public finances at a fair level. Not really that questionable to me, maybe I'm missing something.

    I take it all those defending Google's actions here are willing to pay a higher proportion of their earnings in tax to enable Google's behaviour as someone has to pay for our country.

    1. auburnman

      Re: Tax on business is fair

      People are defending Google because they didn't do anything illegal. Most people defending Google agree that they should pay tax, but if the powers that be are going to drag them in front of a commission, they need to bust out something more substantial than the 'immoral' bullshit that basically amounts to an embarrassing "You have been a naughty bad man and we don't like it."

      This whole thing is a sideshow to actually fixing the international tax system, which no-one wants to touch because it'll be a nightmare of conflicting treaties and interests to unravel. Which is a shame because we definitely need the government to stop whining about the flood damage while they watch the house continue to flood.

    2. Tom 13

      Re: Tax on business is fair

      I'm not defending Google. I'm outright telling you your definition of "fair" is immoral.

      Corporations are people. Tax those people and you tax the corporation. Playing this "fair" game so that you can demonize corporations and then require the corporations to collect taxes from the people to whom you want to five other people's money is dishonest and immoral. Even if Google were sending checks to British government every month in the amount you think is "fair" they still wouldn't be paying the taxes. Their customers would, but not Google. Because corporations only know costs and revenue and everything else is derived from those two facts. A tax is just another cost. And if you're in business, you have to make a profit on all your costs, including collecting taxes on behalf of the government.

  16. ukgnome
    Headmaster

    Schools of some sums!

    I say bring in the Gove

    As education minister he should have this nailed in no time at all. It's only a pesky GCSE maths problem. For example....

    Dave, John and Simon are sales reps in London. Brian is their manager that works from Dublin. If the sales reps email their sales reports to Brian then how many bananas are sold in France?

  17. The Axe
    Stop

    #HodgeTheDodge

    It's great all this coming from the great tax avoider herself. Margaret Hodge is well known for having lots of shares (multi-million pounds worth) in her family firm which she has placed in a trust. All this so that her children avoid paying inheritance tax. She herself is not avoiding so she can claim the moral high ground. Except that she is the one taking the action on behalf of her children so that they can avoid tax. So she is a tax avoider.

    1. gerryg

      Re: #HodgeTheDodge

      Margaret Hodge got the full Kay Burley treatment this afternoon. After a day of grandstanding at her committee, she was left spluttering about her 0.01% tax bill. Hodge had the nerve to bring up the newspapers who retracted their own stories about Hodge and tax. She has never asked for a retraction from Guido for the stories that appeared on this blog, nor has she answered our questions about her family’s use of trusts…

      see the video...

      http://order-order.com/2013/05/16/watch-kay-burley-skewers-hodge-the-dodge/

    2. MrXavia
      FAIL

      Re: #HodgeTheDodge

      I won't complain about avoiding inheritance tax, it's just blood money that has ALREADY been taxed!

      Avoiding tax by shifting the money out the country, that is a different matter, although, raising VAT and dropping corporation tax would help the issue... even just dropping corporation tax would help keep money in the country....

      our problem is the people in charge can't do basic maths...

      1. Tom 7 Silver badge

        Re: #HodgeTheDodge

        So if I work for my mum or dad I pay tax on that money but if they just give it to me when they die I pay no tax?

        Thats my chores sorted then...

  18. Anonymous Coward
    Anonymous Coward

    sales is a red herring

    this is all a red herring anyway. Who cares that Google has people closing deals in the UK or not, they make more money from online activities from customers in the UK, including buying apps/music/films from the play store and ad words etc etc.

  19. Tom 38 Silver badge

    Of course, we could just leave the EU

    Then all these schemes, the Double Irish, the Dutch Sandwich, the Luxembourgian Book Bonanza¹ and the Swiss Bean Swindle¹ all become impossible. Yay! We'd get all this lovely increased tax revenue that these multinationals are just ripping out of our country at the moment.

    However, we would also lose all the lovely money that we rip out of the rest of the world. I'm no macro-economist, but I bet if you got 100 of them in a room and said "UK leaves the EU, does tax revenue go up or down", you wouldn't get a quorum.

    Personally, I think the EU is a good thing, but there shouldn't be areas like Luxembourg for vast multinationals to take the piss with their tax rates. It may be easier just to leave.

    ¹ This is not a real thing

    1. Yet Another Anonymous coward Silver badge

      Re: Of course, we could just leave the EU

      So the ads would now be sold by Google-Sark or Google-IOM and the 1000s of people workign in London still wouldn't pay any tax.

      However the rest of the Eu would ban Google-UK from selling to them, or introduce a 100% import duty, so Google would close it's UK office and open one in Europe.

      1. ukgnome
        FAIL

        Re: Of course, we could just leave the EU

        "so Google would close it's UK office and open one in Europe."

        The UK is in Europe you dummy!

        1. Yet Another Anonymous coward Silver badge

          Re: Of course, we could just leave the EU

          I thought UKIP's policy was not only to leave the eu but define a new continent

          Unlike the more sensible Conservative/NewLabour policy of redfining it to be America (possibly Texas in Blair's case)

  20. Michael Habel
    Stop

    Just exactly how...

    Is it evil when you pay your Tax Debt down to the last dotted "i" and crossed "t"? I for One need some explanation on this One. Ya sure these Corporates ~could pay more~ BUT WHY THE FECKKING HECK SHOULD THEY?! Cause the Plebeian classes can't afford to hire a CPA to sniff out these "Holes" in the Tax Code that would be of a benefit to you?

    I for One am sick to death about hearing about this "immorality" FECK YOUR MORALITY! Instead of winging on about how evil Google are. Perhaps such energy should rather be detected towards Government to fix their broken Tax System. Then perhaps you might then find this fableland of morality that you are all seeking so much. This might come at the expense of Jobs though.

  21. Steve Knox
    Meh

    Politicospeke

    Hodge said the point was not illegality, but immorality.

    translates roughly as "I know you're not doing anything not done by any other international company, and I know years of legal tax advice are on your side, but you're a big company whose name is very well-known, and there's this election coming up*, and I/my party need to be seen as a 'crusader'..."

    * (There's always an election coming up.)

  22. The Axe
    Flame

    Google, the law, and morality

    Google are not doing anything immoral. That's because the law, tax or otherwise, never has any moral aspect. It wasn't so long ago that gay civil marriage was illegal. Was that moral? No way. Tax law is also immoral about the sharing of property between spinster sisters sharing a house when one dies. So law is never moral. That's because its a view of the morals of a past society as law is always behind current societies views and thoughts. For instance the laws around homosexuality only changed after society became more accepting of them. Only via a private members bill, not a government backed bill.

    1. Graham Cobb

      Re: Google, the law, and morality

      Morals (as opposed to laws) are purely personal. What I consider immoral and what you do are completely separate. It may be grandstanding from the PAC but I think it is very valuable to have the actions of these big corporations exposed. Then we can each make our own decisions on the morality and on whether that changes my willingness to do business with them.

      Some people require the companies they do business with to follow moral standards which are different from those enshrined in law. That is their right: they can do business with whomever they choose.

      I think that this publicity is likely to cause some of these big companies to be less aggresive in their tax avoidance as they will see a public relations benefit (i.e. increased sales) in being perceived by people to be "not doing evil".

  23. The Axe
    Flame

    Google follow the law

    Google is following a law created in 1966 between Luxembourg and the UK over double taxation relief. That means that a business which only has warehousing in the UK but a HQ in Lux, doesn't have to pay full tax on the UK aspect as well as the Lux part. The UK is actually a subsidiary of the Lux based Amazon. Amazon is not a UK company that is escaping the UK.

    The whole setup is something that the EU was created explicitly for. To enable a business to have a single head office somewhere in the EU and to serve the rest of europe from it without having to create a full business in each and every single european country. The EU law forces businesses to only have a single base.

    Either call for the EU to dictate that all european countries should have the same tax rates (and look how well just having countries to share a currency is working out - Not!) or call for the UK to exit the EU. Both options will force Amazon to create a full business paying full tax (so long as they make a profit).

  24. SteveCarr
    Holmes

    I've received Google sales calls originating from the UK...

    ...here in New Zealand! Country code "+44" came up on my phone, and they had a distinctive British accent, not Irish. So yes, there seems to be a case to answer here!

  25. All names Taken

    Contact your elected rep

    In the UK that is probably your MP.

    Parliament and HMRC and Whitehall concocted present tax system, work present tax system and added lots of elitism to present tax system.

    Clearly google cannot belong to the "in" group allowed to minimise tax burden with Whitehall approval (so who does W-I-T-H Whitehall approval - past as well as present)?

  26. Fihart

    Surely Ireland has some say in this.

    If Google claim that UK sales are entirely via Ireland, why do they employ people in UK to deal with customers when there is a large, well educated workforce in Ireland looking for work.

    This is a matter as much for the Eire Government as for the UK. Google may be paying tax in Ireland but that seems to be minimised (perhaps in a similar sleight of hand). If Google are going to hide behind Irish tax law, they might at least employ a significant number of people there.

  27. Marvin O'Gravel Balloon Face

    Paying vast amounts of tax only equates to a moral virtue if you accept the premise that the State is an inherently virtuous institution.

  28. This post has been deleted by its author

  29. Anonymous Coward
    Anonymous Coward

    Fair play to them

    If Google are avoiding the thievery that HMRC calls 'tax' then I say fair play to them. We (the great unwashed) are taxed from the moment we get out of bed in the morning (or late afternoon if you happen to be a student). 60% tax at the pumps isn't a tax, its theft by anyone's standards.

  30. Gordon Pryra
    Meh

    Whatever the arguement is about, Hodge has fucked it by being a hypocritical shit

    No one can take the debate (or kangaroo court) seriously when someone who is only just behind them in the amount of billions is doing exactly what they are doing.

    Speaking to The Daily Telegraph, Mrs Hodge defended Stemcor’s behavior and said that the company had “assured” her it paid “every penny of tax that is owed”.

    So exactly the same as Google then

    How the hell did someone who is such a landowner in the real sense get to be in the Labour party?

    Surly she is the kind of person/from the kind of family they despise?

  31. Roger Stenning

    It'd be interesting...

    ... to see what taxes, if any, they pay in the USA, given that they're a US company.

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