This article was published on May 1, 2013

Google set to face new questions over its business and tax setup in the UK

Google set to face new questions over its business and tax setup in the UK
Jon Russell
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Jon Russell

Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on T Jon Russell was Asia Editor for The Next Web from 2011 to 2014. Originally from the UK, he lives in Bangkok, Thailand. You can find him on Twitter, Angel List, LinkedIn.

Google is set to be asked to explain its business and tax arrangements in the UK once more, according to comments from the head of a UK parliamentary committee investigating the Internet giant.

Last November, Google, Starbucks and Amazon were quizzed over their tax payments and now Reuters reports that Margaret Hodge, head of the Public Accounts Committee (PAC), will contact Google’s UK representatives with an additional request to explain how it closes sales and works between its London and Dublin offices.

Update with a statement from Google below.

By classifying that sales and business deals are sealed out of Dublin, Google is believed to be saving millions in potential tax payments; indeed, it reportedly paid just $6 million in UK taxes in 2011.

The resurrection of the case comes after a Reuters report raised questions about Google’s UK operations. Google exec Matt Brittin told the news agency that the company didn’t close business deals with UK-based customers from the UK, a fact that appears to conflict with comments from Google customers and evidence from staff in the country.

Executives say the search engine giant complies with all UK tax regulations and rules, but one detail that Reuters suggests could be a smoking gun is Google job descriptions.

LinkedIn profiles for more than 150 employees appear to suggest that they are involved with the sales process, while the company has rejected the suggestion the wording of London-based vacancies on its website — such as this one for a sales manager — shows UK staff are involved in closing sales. If true, Google would be liable to pay tax on the revenue generated from its London-based staff.

Director for External Relations Peter Barron said the wording of job descriptions was such because “we are seeking to attract people with those skills and that background”.

“We accept that the wording of some job adverts may have been confusing and we are working to make it clearer,” Barron admitted.

There is no timeline provided for when Google will be summoned, but Hodge told Reuters that the firm will be given “a chance to explain themselves and to ensure that actually what they told us first time around is not being economical with the truth.”

Google’s accountancy firm — Ernst and Young — is also under the spotlight after a company representative testified that it had vetted Google’s sales operations and determined that it did not secure deals from its London office. Hodge confirmed that the company will also face further questioning.

We contacted Google to see if the company has any additional comments to add.

Google has provided the following statement which it says clears up some important points:

The Reuters article is wilfully misleading. As we told them in our statement, Matt Brittin clearly explained the roles of UK staff in hours of evidence to the Public Accounts Committee [FULL TRANSCRIPT HERE].

He said:

‘if [customers] want to buy advertising from us they are encouraged to do so by our people in the UK – they will buy it from our expert team in Dublin’

‘…the people on the ground [in the UK] are helping people make the most of the web and the people in Ireland are helping to operate the systems and sell advertising to the businesses that want to work with us.’

In our written evidence, which we also shared with Reuters, we said: “Google UK Ltd provides sales, marketing and R&D support to Google Inc.” [WRITTEN EVIDENCE]

We have written to the PAC chair Margaret Hodge to explain that Matt Brittin’s evidence was truthful and accurate and that this article paints a very misleading picture.

As we have said many times, we comply with all the tax rules in the UK and in every other country in which we operate.”

Headline image via toprankblog / Flickr 

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