MINISTER PROMISED COSY TAX DEALS TO U.S. GIANTS
As Osborne Google fury deepens...
A TREASURY minister has flown round the world to woo global corporations with promises of cosy arrangements with the taxman, it emerged last night. David Gauke, the third most senior figure in George Osborne’s department, told US firms that it was not up to politicians to decide what is a ‘fair amount’ of tax.
Just days after he appeared in the Commons to defend the controversial Google tax deal, it has emerged he spent thousands of pounds of public money travelling across the globe to ‘promote the UK tax system’.
The minister outlined how the international giants would be given VIP treatment by HM Revenue & Customs. He pledged that if their firm was large enough, the taxman would provide ‘relationship managers’ to help them avoid ‘expensive litigation’ over
tax disputes. And he told them the amount of tax that international companies pay should not be dictated by ‘what a group of politicians think is the “fair amount”.’
Mr Gauke declared: ‘ The UK government believes in a low corporation rate. We believe in a simple system that taxes profits in the UK. And we believe in good working relationships between companies and tax officials.’
In April 2013, he flew to an exclusive event in Los Angeles to say his government would welcome businesses ‘with open arms’ if they decide to come over.
A report issued by the Treasury days later as a brochure for overseas businesses advertised the UK’s ‘flexible and competitive rules for taxing the profits of multinationals’.
The comments come in the wake of controversy over the tax affairs of web firms Google and Facebook. Critics will ask why it was that large multinationals were offered such cosy deals with HMRC at a time when small businesses found it almost impossible to get through to it on the phone.
Google stands accused of paying an effective tax rate of just 3 per cent after it reached an agreement with HMRC to pay back just £130million to cover a decade of back taxes.
Yesterday George Osborne continued to claim he had presided over a ‘major success’. he told Sky News: ‘When I became Chancellor Google paid no tax. Now Google is paying tax and I have introduced a new thing called a diverted profits tax to make sure they pay tax in the future.’
Mr Gauke – who once said paying tradesmen cash in hand is ‘morally wrong’ – flew to far flung corners of the world on three different trips between 2013 and 2015.
each trip cost more than Facebook paid in British corporation tax in just one year. The overseas jaunts emerged as the American social networking website underlined its corporate might by posting annual revenues of £12.4billion for 2015.
But the latest filings show the company paid just £4,327 in UK corporation tax the previous year.
The figures will fuel anger over the tax arrangements of big multinational technology firms such as Facebook, Apple and Google, as well as Amazon, which met Mr Gauke to discuss tax as recently as September 2015.
In April 2013, the Treasury minister flew to Los Angeles and San Francisco, ‘to engage with American companies about the UK tax system’. The trip, which cost £5,736, took him to the heart of operations of both Google and Facebook. On April 10 he was the guest of honour at a breakfast meeting of the British American Business Council in Beverly hills, Los Angeles. It is not known which firms attended. Mr Gauke told delegates: ‘We are not a jurisdiction that offers “preferential special deals”. We are very competitive but it is on the basis of all taxpayers being equal under the law.
‘It is also important, however, that our tax administrators understand major taxpayers. So, for example, the largest 2,000 corporations in the UK have their own dedicated relationship managers at her Majesty’s Revenue and Customs.
‘These relationship managers support those organisations and help to ensure that their arrangements are compliant with UK law. It’s in everyone’s interests to have a strong working relationship that will ensure revenues are paid fully and that any disputes or queries can be played out quickly without expensive litigation.’
Mr Gauke also flew to San Francisco – as well as Washington DC and Seattle – last September ‘to promote foreign investment in the UK’, at a cost of £7,000. The minister carried out a range of other trips to ‘promote the UK tax system’, including one to Singapore and Japan, costing £5,481.
A Treasury source said: ‘This is a ridiculous and deliberate distortion of a speech David Gauke gave in 2013. he was very clearly telling US businesses that if they wanted to come to Britain, they had to play by the rules.
‘As he made clear then, we have put in place tax laws that are competitive but treat all taxpayers equally – and he specifically warned that multinationals could expect no special deals.’
Comment – Page 14
‘Flexible and competitive’