Media buyers say they dealt with UK ad sales teams

06 May 2013


Google LogoA poll of media buyers seems to suggest that the UK digital and media disagrees with Google's assertions that its UK team was not engaged in advertising sales.

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.

If HM Revenue & Customs (HMRC) were to deem that UK based employees did sell to UK clients the company could be hit with larger bills as it would attract tax residency.

An investigation by Reuters found inconsistencies in many statements on Google's own website and the social media profiles of London staff that has further weakened Google's position. An analysis of the  LinkedIn profiles of 150 staff revealed that many claimed to be involved in the sales process.

Meanwhile, according to an article in The Independent that under the bizarre tax rules, Dublin- (Ireland) based Google was able to cut corporation tax, and mitigate tax if it was proved that the job of the UK staff was to market Google as an advertising space – but not to negotiate and close deals with advertisers.

In case Google's claims were to be found contrary to the facts then its tax bill – a paltry £6 million in 2011 on revenues of £2.6 billion  – could increase significantly. According to some lawyers, the real tax figure should have been £218 million.

However, Matt Brittin, Google's European boss, told the UK Parliamentary Accounts Committee (PAC) in November last year that  nobody in the UK was selling or promoting the products although they were ''encouraging people to spend money on Google''.  According to Britten he did not mislead the committee.

Google has been summoned by the PAC to testify again (See: UK parliamentary committee to quiz Google again over UK sales).

Interstingly, while Google employed a few hundred staff at Dublin, it had over 700 in marketing and advertising its products in the UK.

Further Reuters claimed that the profiles of around 150 London-based staff on LinkedIn said they were involved in sales strategy, closing deals or other sales work, even as Google's own corporate website was recruiting London-based staff whose duties included ''negotiating deals'', closing ''strategic and revenue deals'' and achieving ''quarterly sales quotas''.

While denying any wrongdoing on its part, Google said it might have ''confused'' some of its wordings.

Meanwhile, Ernst & Young has also been asked to furnish further evidence to the PAC to clarify whether its accountant checked the kind of work  Google's staff was doing London what was claimed in the company's accounts.

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