Late with tax? That’s a £100 fine
( unless you happen to be Google, of course!)
MINISTERS were accused of going soft on Google last night as it emerged the internet giant escaped fines despite failing to pay its taxes in full for a decade.
In a damning report, the Commons public accounts committee accused HM Revenue and Customs of double standards over its failure to penalise Google for its controversial tax arrangements.
The report also criticised HMRC for accepting an offer from Google of just £130million to cover unpaid taxes dating back to 2005.
It said the figure ‘seems disproportionately small’, given the firm’s vast revenues in the UK. MPs said the taxman ‘seems unable to collect a fair share’ of corporation tax from global companies in the UK.
Ordinary taxpayers face an automatic £100 fine if they are even a day late filing their tax self-assessment. Fines mount rapidly if payment is delayed by more than three months and can amount to 100 per cent of the sum owed. But HMRC admitted to the committee that Google was not fined a penny last month when the firm finally agreed its controversial deal.
The report said Google and other multinationals appeared to have been given ‘an advantage not enjoyed by the average taxpayer’. And it said HMRC ‘appears to have settled for less corporation tax from Google than other countries are willing to accept’.
MPs urged HMRC to reopen its settlement with Google if other countries succeed in forcing the firm to pay more in tax.
George Osborne faced a barrage of criticism last month when he claimed the deal with Google was a major success. Critics claim the payment amounted to less than 3 per cent of the firm’s total UK rev- enues over the period. The report found that HMRC’s sixyear investigation into Google’s tax affairs took far too long to get money out of the firm.
The committee also warned that the secrecy surrounding the so- called sweetheart deal meant ‘ we cannot judge whether it is fair to taxpayers’.
And it voiced dismay at the failure to penalise the firm for dragging its feet. In evidence to the committee, HMRC admitted that the system of fines used for ordinary taxpayers ‘does not work in relation to large businesses’.
Last night HMRC said it would tighten the rules this year to make it easier to fine multinationals for late payment of tax.
Google insists it has paid all taxes that are due, and says it simply follows the international tax rules. But MPs on the committee, who questioned Google executives Tom Hutchinson and Matt Brittin earlier this month, accused the firm of being disingenuous.
The report said: ‘ There is nothing in the rules that says you must set up two companies in Ireland and send large royalty payments, via the Netherlands, to a company that is tax resident in Bermuda.’
Google revealed in evidence to
‘Less than others accept’
the committee that its global tax rate reached a five-year low last year. The firm said it paid an overall tax rate of 21.3 per cent on its profits in 2011. This fell to 16.8 per cent last year.
Shadow Chancellor John McDonnell said the report showed it was far too easy for companies like Google to use loopholes to ‘ pay the least amount of tax possible’.
HMRC said last night that it ‘does not settle for a penny less than is due under the law from multinationals’ and it was ‘committed to being as open and transparent as we can within the constraints of our statutory duty of taxpayer confidentiality’.