Google denies ‘minimising’ tax bills in the UK

Google has denied trying to disguise the way its business operated to minimise its tax bill in the UK. Appearing before a British parliamentary select committee of MPs, google vice-president Matt Brittin insisted that he stood by evidence he had given last year that the entire advertising of the firm in Europe was sold through its offices in Ireland.

However, a poll of media buyers seemed, earlier this month, seemed to suggest that the UK digital and media disagreed with Google's assertions that its UK team was not engaged in advertising sales (See: Media buyers say they dealt with UK ad sales teams).

According to Google, its UK staff was not advertising but provided sales and marketing support to its Dublin office.

The internet company's strategy for reducing its tax exposure in the UK rests partly on the distinction and between 2006 and 2011 the company had paid only £10 million on UK revenues of £11.5 billion.

The committee chair, Margaret Hodge, however pointed out in a series of sharp exchanges that Brittin's claims were contradicted by documentation seen by MPs as also evidence from a "stream" of whistleblowers.

She told Brittin that it was quite clear from the documentation that the entire trading process and sales process took place in the UK.

She said that she simply suggested that he think about what he actually said on 12 November which was that anyone who bought advertising from Google bought it in Ireland from Google's expert teams.

Brittin pointed out that the evidence related to the period before he joined the company six and half years ago and that suggestions that Google was trying to disguise the way it operated were "just not true".

He said he stood by what he had said and that he had clearly described how the company operated.

Hodge opened the hearing by warning Brittin that it was a "very serious offence" to mislead a parliamentary select committee. MPs said new evidence suggested almost 70 per cent of Google's sales revenues came from deals that had involved UK staff.

The staff largely gets paid commission and is expected to achieve monthly 'sales' targets - suggesting they were in fact selling in the UK.

According to the MPs, they had been contacted by a 'stream of whistleblowers' and had seen invoices sent out from British addresses.

Hodge, said she had seen a presentation given to UK staff giving sales targets for 2012.

She said it was quite clear from all that documentation that the trading process as also the sales process took place in the UK.

In the two-hour interrogation, Brittin did finally accept that a  'a lot of the aspects of selling' took place in the UK, though he insisted that all sales were processed and billed in Ireland.

Last month, defending his company's low tax payments in the UK, Google executive chairman Eric Schmidt said the company followed the letter of the law and made a positive contribution to the UK economy (See: Schmidt defends Google's low tax payments).

The internet search company along with, Amazon.com and Starbucks Corp was last year accused by a UK parliamentary committee of "immorally" minimising their tax bills (See: UK lawmakers to quiz Starbucks, Google, Amazon over tax avoidance).

In a radio interview with the BBC, Schmidt rejected the criticism.

Schmidt said Google helped drive growth in the UK economy. "We empower literally billions of pounds of start-ups through our advertising network and so forth," he told the BBC.

"And we're a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country."

Defending the internet giant's tax record, Schmidt said the firm was playing a key role in the UK's high-tech growth.

Brittin, giving evidence before the Public Accounts Committee last year,  insisted the firm complied with the law in the UK and had not breached its own "Do No Evil" mantra.