Google To Once Again Testify On Tax Practices In The UK

Both Google and its accountants, Ernst & Young, are due to appear again before the parliament’s Public Accounts Committee (PAC) to defend against allegations that the US company isn’t paying its fair share of tax.

This is the second time Google has been called in by UK MPs. In November it testified that it wasn’t making sales to UK customers from within the UK. However, a PAC investigation has found inconsistencies in Google’s practices and wants an explanation.

Round two

In August 2012, it emerged Google’s tax bill stood at just £6 million in the UK, on revenues of around £395 million. Some MPs branded the company’s tax avoidance practices “immoral” and an investigation by PAC was launched. In November, Google’s VP for Northern and Central Europe Matt Brittin testified that his company was conducting all of its sales from outside the country, mainly from its offices in Dublin.

But an investigation by Reuters discovered that Google’s own website says its teams are based in London, and the company regularly posts job vacancies for staff with sales experience in the UK.

There were also over a hundred Google UK employees that listed sales-related positions on LinkedIn. According to some reports, Google employs as many as 700 “marketing consultants” in the UK, compared to only 200 in Ireland.

If Google sold products to UK customers from within the country, it would be liable for a much larger tax bill. But if it knowingly misled the government committee, the consequences could be much worse.

The reputation of Ernst & Young, one of the largest professional service firms in the world, is also on the line since it testified that Google’s books were in order.

Google maintains its VP told nothing but the truth and all sales were really managed by the Irish office. Company’s director for external relations Peter Barron told Reuters that Google was simply looking for people with sales skills, but the positions involved no selling and the description of vacancies might have been “confusing”.

Earlier this month, Google chairman Eric Shmidt also declared that all of his company’s practices complied with UK law.

“We will need to very quickly call back the Google executives to give them a chance to explain themselves and to ensure that actually what they told us first time around is not being economical with the truth,” said head of PAC Margaret Hodge.

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