Google Is Dodging Taxes In The UK, Says Ex-Employee

Max 'Beast from the East' Smolaks covers open source, public sector, startups and technology of the future at TechWeekEurope. If you find him looking lost on the streets of London, feed him coffee and sugar.

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Yet another whistleblower claims Google has not been paying its fair share of tax

A former Google employee has revealed the extent of tax-dodging practices used by the Internet giant in the UK.

Barney Jones, who previously testified before the Public Accounts Committee (PAC), told the Sunday Times that for nearly a decade, Google products were sold from the London office by local staff, but the sales were registered in Dublin to avoid paying UK tax.

He assembled an extensive collection of documents proving this and said he was ready to submit them to HM Revenue & Customs.

Google’s chairman Eric Shmidt is an official business adviser to the government and is due to meet prime minister David Cameron later today.

Don’t be evil

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.

Gunnar PippelIn 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 European headquarters in Dublin.

Brittin returned to face the PAC and clarify some of his comments last week, when Margaret Hodge, chair of the committee, called Google’s behaviour “devious, calculated and, in my view, unethical”. Despite this, Brittin once again said the company was not selling from the UK.

The corporate tax in Ireland stands at 12.5 percent, as opposed to the 23 percent rate in the UK.

Several independent investigations, including one by Reuters, have questioned Brittin’s statements after it emerged that Google’s own website said its sales teams are based in London, and the company regularly posted job vacancies for staff with sales experience in the UK.

Jones worked for Google for four years, and says he had witnessed London sales staff closing deals, including those with large clients like eBay and Lloyds TSB. He also said the money was paid into accounts located in the UK.

He told the Sunday Times he had assembled a collection of more than 100,000 relevant documents including contracts and invoices, which he was ready to hand over to HM Revenue & Customs. Echoing the sentiment previously expressed by some MPs, Jones called practices employed by Google “immoral”, and said the taxpayers were the real victims.

If Google’s deals were finalised by London-based staff, the company made profits on the contracts which would be taxable in Britain, rather than Ireland.

Eric_Schmidt_at_the_37th_G8_Summit_in_Deauville_037_(crop) (Small)On Saturday, Eric Shmidt wrote in The Observer to explain Google paid most of its tax in the US, where the majority of its product development was taking place. His comment stated that Google was a law-abiding company, and if the government wanted to tax Google more thoroughly, it should change the law.

“Our hope is to move the debate forward, with everyone engaged constructively in developing a clearer, simpler system – one in which companies that abide by the law know that the politicians who devised the rules are willing to defend and commend them,” wrote Shmidt.

Labour leader Ed Miliband has said he will write new rules to tackle corporate tax dodgers if he wins the next election, citing Google as an example of an “irresponsible” company.

The investigation by the PAC continues.

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