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

HMRC and Tax

Tax is a sore point with everyone want to pay as little as possible !

People on PAYE have no choice and pay what the Gov says they have to pay.

Small businesses have no real choice either and try to find every way possible to reduce Tax and costs just to stay in business.

Medium size businesses look for legal tax loop holes and try to exploit that avenue as well as purchase in larger quantities over smaller businesses so they can make larger profits.

But Big businesses seem to have all the advantages of larger purchases to reduce costs and on top of that actually negotiate their Tax bill with HMRC ?

Why is it the larger the Company earn the less they pay in Tax whereas for people the larger they earn the more they pay in Tax ?

Obviously a large business hopefully employs large amounts of people so they have leverage there with the Gov as they could threaten to close up shop and move abroad although not all (Starbucks cannot so they don't have the leverage from that perspective) so how can they negotiate their Tax Bill ?

I am no accountant but something is very dodgy when a company like Starbucks can negotiate their own Tax bill with HMRC ? Does HMRX get a special deal on Starbucks coffee for all of its staff or something ?

When the officials turn up ...

... a quick tour upstream to "traitors gate" wouldn't be amiss.

Posturing

Google and all the other multinationals being hauled in for a bit of theatrical flagellation may not be behaving ethically, but they are behaving lawfully - they're just taking advantage of provisions in the tax laws that enable them to move profits to low/no tax jurisdictions. Other than shaming them into coughing up a bit more cash for PR reasons, the only way of changing this is for these politicians to do some hard thinking for a change and negotiate changes in the tax treatment of multinationals.

"Dragging HMRC over the coals, whilst enjoyable for the rest of us, is largely a symbolic gesture for the politicians to be able to say "look, we are doing something about it!"" and for the rest of us to say "Oh no you're not" .... and so the pantomime continues.

On retirement

MPs, Ministers and senior civil servants will be well rewarded with lucrative appointments in the Google empire. It's called retirement planning.

"Based on UK-based advertisers"

So if an advertiser is spending a billion a year with Google, maybe Google suggests to them "can you create a subsidiary in another country to buy our ads so that billion won't count as UK revenue?" They'll have their lawyers look through the list of all the countries in the world and figure out the one where the tax rate would be lowest (i.e. where they can make the best sweetheart deal for themselves)

The only proper way to do it is to calculate the value of the advertising shown to people inside the UK. That is simple for them to calculate with the amount of data collection they do - they know within whose borders you are when they deliver you an ad, and how much that ad is worth on a per impression or per click basis, because that's how they base their billing to advertisers.

Probably Google lied and claimed that it is too difficult to calculate revenue in that way, so they were let off with this fantasy about revenue from UK based advertisers. If a UK company simply opened an Irish subsidiary to pay Google for their advertising needs, Google would be charged at most 12.5% (and that was only if tricks like the double Irish didn't exist and other loopholes/deals) instead of whatever rate the UK is supposed to charge. And the UK would then get nothing - which they deserve for having such stupid/corrupt officials in government.

This is such a huge loophole you could fit an A380 through it. I'm sure it was very obvious to everyone involved, and if someone paid close attention to the Linkedin profiles of whoever was involved in HMRC, I'll bet within a year they indicate a job change to a lobbying firm that just happens to do work for Google - at a nice half million pound salary, no doubt.

Fighting to remedy the effect, but not the root cause?

When will the government start to accept that in the 21st century tax regimes are also subject to competition?

Enforcement is a regressive solution to a really simple problem. We spend millions every year on enforcement for little gain, when we could compete with Ireland and other EU countries, take the tax receipts business as usual and spend the enforcement money on investing in roles that could help develop communities, educate those people who will probably be hired by one the "tax dodging" companies that has now decided to put a HQ in one of our cities?

If Governments create legal loopholes, why does everyone complain when companies use them? Surely the answer would be to change the laws, or is that too simplistic?

*sigh*

Yet another article which looks to compare Google's Revenue earned compared to the tax they pay - completely ignoring the fact that taxes are paid on profits - not revenue.

Even the BBC managed to get that one right over the weekend, and funnily enough if you look at profits then the figure paid actually looks around 20%, which is far more reasonable.

Also interesting that Labour are gnashing and wailing about it - just how much tax did Google pay under the last Labour Government? (I'll give you a clue it rhymes with Cluck Ball).

All we need now is Margaret Hodge to start up (whilst conveniently ignoring her husband's company's tax structures) and in Tax Reporting Bingo terms, we have a House.

That works out at just 3% tax

Can we all have such a deal, I am sure every worker, self employed person, Manager, Company Director and shareholder would LOVE to pay just 3% tax.

Google has 83 subsidiaries, the main purpose of them is to avoid tax (according to EU Minister).

Google is starting to damage its brand now with all this Tax Avoidance

I think this is also a competition issue, Google has a dominant market position and its competitors have to pay tax at much higher rates.

My Message to Google is

PAY WHAT YOU REALLY OWE

Meanwhile I am advertising on Facebook, Yahoo/Microsoft and doing SEO so you get didly squat!