Leading UK tax officials have faced questioning from MPS with regards to deals with major corporations such as Google which let them evade payment of tax totalling millions of pounds.
An ex-Google employee had sent emails to HMRC which is said to have detailed staff, staying in the UK, who worked in the sale of advertising while revenues were logged by its Irish business, to which Google stated that it “complies with all the rules”.
Although Google has purchased numerous properties in the UK they still maintain that they are US and Ireland based, allowing them to pay tax just for these countries despite the location of any transactions.
HM Revenue & Customs’ director-general of business tax, Jim Harra, as well as two other employees are due to face questioning by the Public Accounts Committee with regards to the email, including what will be the response to the proof.
Along with Google, the PAC will most likely ask the taxation details of other large US based online companies, including Facebook and Amazon.
Chair of the House of Commons public accounts committee and Labour MP, Margaret Hodge said to the officials “It looks to me that you should be litigating. Why have you not chosen to litigate and test your powers?”
However Harra has explained that “What we have to look for is this: is there evidence that the offshore operation does nothing more than rubber-stamp?”
In total, on last year’s revenues of £3 billion Google paid £11.2 million in corporation tax which brought into question as to just how these foreign companies manage to cut UK tax costs. While the official estimate for the tax gap is £35 billion, Margaret Hodge held reservations on whether this was the true gap:
“It does not include a lot of what ordinary punters in the street think you should be collecting, particularly in regard to the large corporations… The tax gap is really the tip of the iceberg in the gap between the money that you collect and the money if everyone paid their fair share.”