back to article MPs demand UK rates revamp after Google's 'extraordinary tax mismatch'

British MPs have demanded that the government act to revamp the tax structure after damning revelations about Google's corporate payments structure in the country. The Public Accounts Committee said in a report that Google had damaged both its own and HMRC's reputation with its "highly contrived" tax arrangements, which had …

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  1. Squander Two

    Damaged HMRC's reputation?

    News to me that that was doable.

    1. Squander Two

      Re: Damaged HMRC's reputation?

      Seriously? A down-vote for that? Must be a tax-collector reading.

      1. James Micallef Silver badge
        Happy

        Re: Damaged HMRC's reputation?

        @squander 2 - spot on for the original post, but complaining of downvotes is poor form. So, someone disagrees with you, big f***ing deal

    2. Dave 15

      Re: Damaged HMRC's reputation?

      The quote came from Hodge - whose own company has managed to avoid paying tax by some pretty underhand techniques... pot calling kettle? Nope, she is an MP, therefore quite above being wrong obviously. And the voters, yup, they are so damned stupid they'll be flocking to put their mark next to her name next election, and the one after that... Or maybe - the conspiracy guys might guess - the ballot papers have no effect on the outcome.

  2. Anonymous Coward
    Anonymous Coward

    Yeah, sure..

    .. as if any of the likes of E&Y are going to admit that they're paid to dig for loopholes.

    However, in this case were are not talking about loopholes - we're talking about lying. Google was selling in the UK, and should not only face the bill for that, but also the penalty for attempting to deceive HMRC. If any of us is out by a penny they're happy to haunt you, time to deploy that enthusiasm where it actually provides a return.

    1. Anonymous Coward
      Anonymous Coward

      Re: Yeah, sure..

      EY have a legal obligation to report on any tax loopholes that they come across to HMRC so that these can be acted upon.

      They said they have done so - not sure what else you want them to do?

  3. Gordon Pryra

    The whole charade is a disgrace

    1) HMRC not saying anything when they got the cheque for 16 million.

    2) Google thinking they can just say, "no, we ain't going to pay, we give a few of you jobs"

    3) Some Politions actually backing that 2nd point up in public

    4) Google's blatant lies around the selling of their services

    Perhaps most damning of all

    5) Margaret Hodges own family run company doing exactly the same as Google with the same arguments. but not being investigated by Parliament like the Google circus.

    1. Anonymous Coward
      Anonymous Coward

      Re: The whole charade is a disgrace

      Re: Point 5

      Actually that was a case of a lot of noise being made about the initial accusation and very little being in the papers about the subsequent apologies for having got the facts wrong. Even Private Eye (scourge of this kind of thing) said that actually Stemcor weren't doing anything dodgy, and made the point that they'd spent a LOT of time looking into the accounts to try and find anything.

      1. Anonymous Coward
        Anonymous Coward

        Re: The whole charade is a disgrace

        @AC Re: Point 5,

        If Stemcor weren't doing anything dodgy then Google weren't either. You can't have it both ways!

      2. The Axe
        Flame

        Point 5

        Stemcor aren't doing anything wrong. Nor are Google. But Hodge the Dodge is doing something wrong by attacking a company carrying out a legal activity whilst she herself does the same legal activity. It's called hypocrisy. Hodge is using a trust to avoid her children having to pay inheritance tax. A trust set up by her father specifically to avoid tax. It is true that currently no inheritance tax is due for unlisted family run companies like Stemcor, but it was not true when the trust was set up. Hodge is just grandstanding as chair of the PAC, lots of shouting but no action because no action is possible as everything is legal. She shouts a lot because she is a champagne socialist who just doesn't like it that everyone else is being taxed to the hilt to pay for all the voters that she would like to bribe with benefits.

        1. Ian Johnston Silver badge
          WTF?

          Re: Point 5

          Didn't the Milliband boys use a trust to deal with the estate of their late, socialist father?

    2. Paul Shirley

      Re: point 2

      point 2: if government after government had spent less time enticing internationals to set up shop in blighty by offering not to tax them, maybe those internationals wouldn't take them up on the offer.

      Politicians have spent decades saying we'll liberally reward anyone that brings collateral benefits, set up taxation to do it, trained HMRC to implement the ensuing free for all. Too fscking late to dodge the blame, politician monkeys did it, politician monkeys need to fix it. Only then do they get to blame others.

      1. Bronswick

        Re: point 2

        Agree, but unfortunately politician monkeys know that they can do whatever they like because voter monkeys do not base their votes on the politician's performance.

        Ultimately we are to blame.

  4. Shasta McNasty
    Meh

    FFS

    Margaret Hodge needs a hobby.

    1. Matthew 25

      Re: FFS

      I thought she had one :D

      1. Shasta McNasty

        Re: FFS

        Margaret Hodge needs a *new* hobby </corrected>

  5. g e
    Holmes

    "pay its fair share of tax" - @ the goalpost-moving politicians:

    Wrong. They do. You clowns set the laws under which they pay that.

    Sort your shit out and they will continue to comply with the laws you set.

    1. sabroni Silver badge

      Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

      Um, no. They lied to the committee by claiming they did their selling in Ireland but whistle blowers from their own company showed that they were selling in the UK.

      1. Flocke Kroes Silver badge

        If you have evidence, take it to HMRC

        Whistle blowers talking to newspapers have as much credibility as an MP's expenses claim. The HMRC have what it takes to take what you got. Give them some real evidence that Google have broken the law, and they will get taxes and a hefty fine out of Google. As we have seen Margaret Hodges is not an expert on tax law or investigating tax evasion. She has publicly harangued a few Google executives, but she has not got a conviction against Google for tax evasion. The only reputation she has damaged is her own.

        1. ratfox

          Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

          I'm not sure it matters where the "selling" is done. European law seems to allow companies to pay tax in a single country, no matter where the "selling" is done. What matters is which country is on the bill. This was very explicitly meant to be a feature of European tax laws, and not a bug: It means that you can sell in many countries without the hassle of paying taxes in each of them.

          Google may have been wrongly claiming that sales were happening in Ireland, but this is probably just for saving appearances; the fact is that they are allowed to pay taxes wherever they want.

          You may go to a travel agency to buy a plane ticket; you may get convinced by the travel agency to buy a certain ticket; you may never talk to anybody from the airlines company. Yet, the ticket you buy is still a British Airways ticket, not a Kuoni one, even though Kuoni did the selling. The travel agency only pays taxes on the commission they get, which has nothing to do with the amount the airlines company earns.

        2. Naughtyhorse

          Re: If you have evidence, take it to HMRC

          given that google have claimed that the people in the uk weren't involved in sales OR development.... what the fuck were they doing?

          1. Don Jefe

            Re: If you have evidence, take it to HMRC

            Pre-sales, customer education, regional sales kit development and market analysis would be my guess. In most settings the individual who closes the deal is the salesperson, regardless of who else may have assisted in the run up to the consummation of the deal. That's a pretty standard arrangement, it looks like Google just took it to extremes and maximized the definition of the word sale.

      2. Anonymous Coward
        WTF?

        Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

        > but whistle blowers from their own company showed that they were selling in the UK.

        Showed a court?

        Sure?

        I'd love to see some actual evidence.

        And if it is true, then why aren't Google being prosecuted?

        1. Anonymous Coward
          Anonymous Coward

          Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

          I can tell you know I've been sold to by Google in both the UK and Ireland. In Ireland as recently as two weeks ago, in the UK twice in the last year at their offices in St. Giles. Google UK staff pitch products to UK corporates daily. Its ridiculous to suggest otherwise.

    2. Anonymous Coward
      Anonymous Coward

      Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

      Surely even the most strident person arguing that "it's all legal, therefore it's OK" can't argue that avoiding as much tax as possible, within the law, is also "paying their fair share". The whole point of this sort of tax avoidance it to not pay their fair share, the defence of it is that it's legal, I've not seen anyone argue it's moral or fair.

      1. Squander Two

        I will.

        Always remember that "shareholders" means, for the most part, our pension funds. More tax for the state now means less pension for us later. A bit of tax surely has a very small effect on my final pension, but then a lot of tax has sod all effect on how wonderful a utopia I get to live in now.

        I'm not convinced tax is any more or less moral than paying shareholders.

        Course, Apple are avoiding both.

      2. Ken Hagan Gold badge

        Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

        "...I've not seen anyone argue it's moral or fair."

        OK, I'll bite. The loopholes exist because at some point Parliament decided that the system would be *fairer* if an exemption was permitted in specific cases. We call those loopholes. Creating them required more effort than just having a flat rate. They would not exist if MPs didn't think they were fair.

        1. The Mole

          Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

          Where there is a clear exemption that Parliament decided then that isn't a loophole. A loophole is where some accountant/lawyers takes and/or combine the exemptions and use them in a way that was never intended by parliament

          1. fajensen
            Flame

            Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

            ... and use them in a way that was never intended by parliament

            The intent of parliament is expressed as laws, if parliament makes laws that parliament does not understand the consequences off then there is a problem somewhere. That problem may be easily resolved by parliament making better, simpler, more transparent laws that parliament *can* understand.

            Some may get the impression that "the intent of parliament" was to let lobbyist, lawyers, cronies and special interests write the laws for parliament to rubber-stamp - and now parliament wakes up with a sore bum and feels violated.

            If that is the case, a settlement will be the outcome, not changes in the process or the legislation.

        2. Alan Brown Silver badge

          Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

          And it's all those bloody loopholes which mean HMRC employs 3 times more staff than it should need ti (well that and the usual civil service featherbedding which goes on)

          There are 2 issues with collecting tax - one is the gross income and the other is the cost of collecting it.

          It's possible to _reduce_ gross income and still come out on top if the expenses go down by even more. That's been amply demonstrated in a number of countries.

        3. Anonymous Coward
          Anonymous Coward

          Re: "pay its fair share of tax" - @ the goalpost-moving politicians:

          @Ken - Not quite - A loophole is something which is unintended, that's what the word means. There may well be a particular situation where an exemption is intended, but this isn't a loophole, because it's intended. By definition someone using a loophole to avoid tax is behaving within the letter of the law, but not its intention.

  6. Alan Denman

    Exactly the same elsewhere !

    So with Apple paying no tax in Briatin and Eire I'd suggest th politicans get real and stop petty charade doomed to fail.

    It is getting quite scary when they move point scoring away from the false inter party banter !

    It is your laws guys, you are the ones to blame.

  7. This post has been deleted by its author

  8. Anonymous Coward
    Anonymous Coward

    Politicians make the tax rules

    So Margaret Hodge is quick to blame the corporations and HMRC, but ignores the fact it's the politicians that make the rules (supposedly). If the crime rate goes up, we don't blame criminals we blame the policy makers. The same should go for corporate tax avoidance.

    Politicians are deluded if they think "doing the right thing" even remotely exists in the corporate psyche. They know that corporations are run by money, not moraility, and if politicians want to moan about the corporate tax arrangements then they should take a long hard look at themselves before blaming anyone else.

    1. Anonymous Coward
      Anonymous Coward

      Re: Politicians make the tax rules

      " If the crime rate goes up, we don't blame criminals "

      Err, yes, we do. Then we prosecute them and if appropriate bang them up. That policy makers may be able to help stop crime doesn't mean that we don't blame criminals for the crime they do.

  9. Alan Denman

    And this new perception simply does not hold up in court

    You ain't marketing to sheep here guys.

    This likely perceptional bullshit is for selling, not the law courts.

  10. Bod

    Obligations to pay tax

    MPs can jump up and down all they like (though they're only doing it due to public/press pressure). You only ever pay the tax legally required and have no obligation to do anything otherwise. What is legally due *is* their fair share, not what people think you should morally pay. HMRC is not a charity and you are a fool to volunteer tax that is not due, not to mention damaging shareholder's interests. I'd quote Lord Clyde yet again, but I'll leave that to a Google search.

    They just need to propose a change to the law, and it should be simple, open and fair, applying to everyone equally.

    Oh wait, that mean's they'll get shafted in their own avoidance schemes ;)

  11. Bod

    Double standards

    What gets me is the rants about Google, Amazon, etc, and yet the gov has been quite happy to provide massive tax breaks to Hollywood to encourage them to shoot the likes of the new Star Wars films and yet that is effectively a sanctioned tax avoidance scheme as after all they're not paying their so called "fair share" are they? ;)

    1. Anonymous Coward
      Anonymous Coward

      Re: Double standards

      That is the whole point - The government advertise some methods of reducing your tax, they tell people/companies about them and invite them to use them. I am a tax avoider, I have Premium Bonds and an ISA. I have these products because the government wants me to have them. I don't arrange for my pay to be put into an offshore umbrella company who pay me minimum wage and then make me a series dividend payments (or however it works) because it's obviously not what the system is intended to do.

    2. P. Lee
      FAIL

      Re: Double standards

      What gets me is that the HMRC is quite open about its own double standards.

      "Employment law and tax law are not related." Employee A is deemed to be working for Company B when it comes to Employee A's tax, but not when it comes to Company B's tax or employment benefit obligations.

  12. AndrewG
    WTF?

    So whos going to do business in England?

    1. Be an international corporation and have a tentacle in Britain

    2. Pay your taxes according to the law

    3. Get told thats not good enough, suffer reputational loss, bad press, etc.

    4. Close up shop, and move all the jobs to somewhere where your not a punching bag for thieving politicians and their over-endowed sense of entitlements

    With crap like the politicians are spewing, why in God's name would anyone bother when they can just plant themselves in business friendly Luxembourg or somewhere?

    1. BoldMan

      Re: So whos going to do business in England?

      point 4 is irrelevant because the UK is a large enough market that they would hurt their own business by pulling out. This excuse has been used before by the City to try to justify leaving their enormous bonuses untapped, but its a straw horse as there are plenty of other reasons why the companies and people CHOOSE to stay in the UK even if they have to pay more tax.

    2. sabroni Silver badge

      Re: why in God's name would anyone bother?

      Because there's plenty of money to be made here? Even after tax? They made 18 billion in five years, they could lose a good chunk of that and it'd still be worth doing. It's all about the bottom line, they won't give up on 10bn just because they think it should be 18bn....

      1. SkippyBing

        Re: why in God's name would anyone bother?

        That's £18 Billion turnover they're making, not profit, what they're making could be any number between 0 and 18 Billion.

        To answer your more general point, if it costs you, for example, £9 Billion to make £1 Billion profit in the UK but you could make £2 Billion with it in another country where would you invest your £9 Billion?

        1. Andy Fletcher

          Re: why in God's name would anyone bother?

          You know that's rubbish right there. The company would spend the $9b in both and make $3b. No-one walks away from $1bn in profits no matter how loud they cry that they would.

          I'm with the "just abolish it" crowd on corporation tax. They can't fix it and they know it so just stop doing it. UK businesses can stop suffering this completely unfair system. Google won't need to offshore, so ther'll be more jobs here - where they should be - serving the UK market.

    3. Anonymous Coward
      Anonymous Coward

      Re: So whos going to do business in England?

      Ah, the old "tax is theft" argument, how very Ayn Rand of you. Closely followed by "all the business guys and smart people will leave" have you just finished Atlas Shrugged, or are you half way through it?

    4. Fink-Nottle

      Re: So whos going to do business in England?

      4. Close up shop, and move all the jobs to somewhere

      An empty threat, if you believe Google's protestations that they don't have a shop here in the first place.

      1. Gannon (J.) Dick
        Pint

        Re: So whos going to do business in England?

        But if you Google it you'll find it's also a stupid threat, a meaningless threat, an irrational ... wait, you're from Ireland, right ? No! ? Ok, empty it is then.

    5. Uffish
      Facepalm

      Re: So whos going to do business in England?

      People who don't want to live in Luxembourg.

    6. streaky
      Holmes

      Re: So whos going to do business in England?

      "2. Pay your taxes according to the law"

      This is fairly murky water given evidence suggests Google probably hasn't been paying tax according to the principle or wording of the law. If you make a profit in the UK you're supposed to pay tax on those profits - it's that simple. If you using dodgy accounting practices and lie to parliament and the HMRC over this stuff at best you're sailing close to the edge.

      Google says it makes no profit in the UK, which everybody thought was pretty silly and then subsequently a huge pile of fairly believable evidence surfaced suggesting Google were being worse than economical with the truth, in the same way as Apple were being economical with the truth over either their Aussie pricing practices or their US taxation practices.

      The argument that Google employs a few people and pays NI and some income tax (though that's probably worth taking a long hard look at anyway) so we should leave them alone is pretty damn silly - because so does every other employer - it's one of the the costs of doing business, and funny story, it's a before-profit cost - and it's not actually that many jobs.

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