Scrutiny of Google tax deal intensifies 
Google’s controversial £130m ten-year deal with HM Revenue and Customs on back taxes could be investigated by the European Commission following complaints from SNP and Labour. EU competition commissioner, Margrethe Vestager, indicated she was ready to look into complaints that the settlement breached EU rules. The Transport Secretary, Patrick McLoughlin, has also joined calls for the company to pay more tax and has said that it might be possible for the National Audit Office (NAO) to examine the deal.  Executives from Google and HMRC bosses are to be questioned about the deal by the Public Accounts Committee  on 11 February in the latest of a series of hearings by the influential spending watchdog into multinationals’ tax affairs.



A cabinet minister has said he would like to see Google pay more tax in future as Brussels considered demands to investigate the agreement reached by the internet company with the UK authorities.

The chancellor, George Osborne, has insisted the deal is a “major success” but his cabinet colleague Patrick McLoughlin said he would “like to see Google making more payments to the country” and suggested Whitehall’s financial watchdog could examine it.

The £130m 10-year deal with HM Revenue and Customs on back taxes could be investigated by the European commission following complaints from the SNP and Labour. The EU competition commissioner, Margrethe Vestager, indicated she was ready to look into complaints that the settlement breached EU rules.

McLoughlin, the transport secretary, defended the deal as a “move in the right direction” but said it was open to the National Audit Office (NAO) to examine it.

“The truth is it’s a move in the right direction. There is more for them to pay and I want them to pay more in future,” he said. Appearing on BBC1’s Question Time, he said: “We have started to receive tax from Google, which is something that hasn’t happened for the 10 years they have so far been established here, so in that position the chancellor was right to say that it was a move in the right direction.

“Of course I would like to see Google make more payments to the country. I would like to see them employ more people in this country. They do employ 3,000 people, top-end jobs, they are doing a lot of investment in this country as well, which is actually good for the long-term economic future of the country.

“But I believe in a low tax base, I believe in attracting companies here, but I believe when those companies are here they should pay their tax which is rightly collected. But companies can and have found ways around paying taxation and we have made a lot of changes to the taxation system that actually will make them pay more over years to come.”

Patrick McLoughlin: ‘I believe when those companies are here they should pay their tax which is rightly collected.’ Photograph: Oli Scarff/Getty Images

McLoughlin said he expected the NAO to come under pressure to investigate the deal.

“The direct negotiations between HMRC and the company are confidential, but the NAO can do an investigation, can do an audit, and I’m sure they will do,” he said. “I’m sure the pressure will come on them to do it.”

He added: “If the NAO decided to do it, it wouldn’t be something George could stop.”

McLoughlin said a review commissioned by the NAO into five large tax deals, which reported in 2012, found that HMRC had acted reasonably in each case.

Both the SNP and Labour have written to Vestager calling for an EU-level investigation into the arrangement between HMRC and Google. The shadow chancellor, John McDonnell, suggested the deal could have broken state aid rules by offering Google favourable treatment.

He said: “We believe £130m to be significantly lower than a fair or reasonable assessment of Google’s UK turnover and profits would suggest, with experts suggesting that Google has been levied an effective tax rate of around 3%. I am therefore requesting an investigation under EU competition law, since we are concerned that, first, the deal is arguably not compliant with state aid rules, creating a favourable treatment for a particular company; second, that if the deal is generalised, it could constitute a serious potential threat to the ability of other EU members to levy taxes in their jurisdiction.”

Executives from Google and HMRC bosses are to be questioned about the deal by the PAC on 11 February in the latest of a series of hearings by the influential spending watchdog into multinationals’ tax affairs.