Google offers £130m to make the taxman go away

taxmanThe search outfit Google has managed to pay off the UK taxman £130m will draw a line under its long-running tax row.

The move should set a precident when you do your tax bill this year.  If your tax bill comes to £4,000 why not offer to pay the Inland Revenue £150 instead.  If they say that is not acceptable cite the case of Google.  With a bit of luck you can force them to settle at £200 and a dinner for two at a Harvester of your choice.

Google paid £20.4m in UK taxes in 2013 despite recording sales of £3.8bn.

In fact it has not really paid much tax since 2005 and only agreed to pay £130m in back tax for that period and  will now pay tax based on revenue from UK-based advertisers, which reflects the size and scope of its UK business.

“The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift and is in line with recent OECD guidance.”

The OECD has recently cracked down on companies that move profits between jurisdictions in a biid to reduce tax bills.

Google based its European headquarters in Ireland, which pays a lower rate of tax than if it was in the UK. Under the deal with HMRC, Google will report a larger amount of its sales in the UK. It will also pay more tax on those sales.

Despite accusations from MPs that the firm doesn’t pay enough tax, Google has always maintained that it abides by the tax rules of every country it conducts business in.

“If we were British, we would make most of our profits in the UK and we’d be paying a lot more tax in the UK,” Matt Brittin, the head of Google Europe, told the BBC, which first reported the HMRC tax agreement.

“The facts are we are an American company and that is where we pay the majority of our taxes, that is where we make the majority of our profits.”

The shadow chancellor John McDonnell said the public would be “sceptical” about the “derisory” settlement and called for the National Audit Office to launch an inquiry into the deal.He would be demanding details of the deal from Chancellor George Osborne in parliament on Monday and criticised the HMRC for agreeing to recoup a “relatively small amount”.

“It looks to me from all the independent analysis that this is relatively trivial in comparison with what should have been paid,” he told BBC Radio 4’s Today programme.