Google’s UK taxes – another £218 million missing in 2011

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The Google 2011 accounts reveal that the company generated 11% of its sales in the UK (page 31). That’s near enough $4,170 billion in that case. Translated at  HMRC official exchange rates that’s almost exactly £2.6 billion.

Now unfortunately I can’t get the 2011 Google UK accounts from Companies House right now because as far as I can see they’re not filed as yet, but the Telegraph has just reported:

Anger over the amount of tax paid by Google in the UK could escalate after documents showed the web giant contributed just £6m to the exchequer in 2011 on UK profits of £3.95bn.

The search giant reported a loss after tax of £24.1m, according to documents filed at Companies House, after it booked a £51.4m charge for share awards to its employees.
Now I have to admit that I can’t see where they’re got revenue of £3.95 billion from, and profits of that level are exceptionally unlikely. Pro rata UK anticipated profits based on the global result pre tax would be $1.355 billion or £845 million. That’s my benchmark for comparison. The anticipated tax rate on this would be 26.5%. That would give rise to taxes due of £224 million.
And instead it paid £6 million if the report is right.
Which is £218 million gone astray needing to be accounted for.
Of course, Google has come out with all the standard excuses:. As the Telegraph notes:
Eric Schmidt, Google’s executive chairman, claimed last year that the company was obliged to pay the legal minimum in UK tax, implicitly attacking lax British laws.

“We could pay more tax but we would have to do so voluntarily,” he said. “There are lots of benefits to [being in Britain].

“It’s very good for us, but to go back to shareholders and say ‘We looked at 200 countries but felt sorry for those British people so we want to [pay them more]’ … there is probably some law against doing that.”

That’s nonsense: as I have shown repeatedly (and I started the world-wide stories on Google’s tax back in 2009 working with the Sunday Times) Google does not pay tax because Google is structured not to pay UK tax.

That’s a choice, and it’s the wrong choice. It’s the choice of a company that has decided to work round the law and not comply with it, not just in the UK, but around the world.

It is a choice of a company that has decided to ignore it’s own maxim of “do no evil”.

And it’s very clear indication why the UK’s HMRC have got their tax gap estimates wrong, because not a penny of the £218 million under paid will be included in their figure of the tax gap – which is also quite ludicrous. They’re willing to go along with all this. And why? Because we like to applaud big business however tax abusive it may be – and Osborne likes to applaud Google (and Vodafone) in particular. So he willingly turns a blind eye to what they do.

Well, it’s time that game was over.