Google tax deal 'disproportionately small' says Public Accounts Committee

Google's £130 million tax settlement "seems disproportionately small", an influential Commons committee investigating the deal has said.

Public anger at the agreement with HM Revenue & Customs to cover taxes due over the past 10 years has been "palpable", MPs said.

The internet giant insisted that it pays a "fair" amount of tax and Chancellor George Osborne hailed the deal a "victory".

But the Public Accounts Committee said it "seems disproportionately small when compared with the size of Google's business in the UK, reinforcing our concerns that the rules governing where corporation tax is paid by multinational companies do not produce a fair outcome".

Meg Hillier, who chairs the PAC, said: "Public anger has been palpable ever since this settlement was announced and we still don't know the full details.

"Whether you call it secrecy or confidentiality, this lack of transparency does nothing to build confidence that big corporations are paying their fair share of tax.

"Google has been keen to parade its enthusiasm for simplicity in the tax system but the fact remains the company has chosen to set up a complicated tax strategy specifically designed to minimise its tax bill."

MPs said they were concerned that the taxman "appears to have settled for less" corporation tax from Google than other countries are willing to accept.

The committee pointed to French and Italian investigations into the company, which are expected to lead to larger payments.

It called for HMRC to reopen the deal if new evidence becomes available as a result of the probes by European authorities.

MPs said the lack of transparency over the details of the settlement and how it was reached meant they could not judge whether it is fair to taxpayers.

They criticised HMRC for taking six years to carry out "a very expensive and resource-intensive" investigation into the company's tax affairs before finalising the settlement.

The taxman "seems unable to collect a fair share" of corporation tax from global companies in the UK because international rules are not working, the PAC said.

Google did not pay a penalty as part of its settlement and complex rules make it easier for large businesses to avoid being fined than the average taxpayer, it added.

MPs called for reforms punishing businesses for failing to pay tax to be introduced swiftly.

Ms Hillier said: "HMRC itself has identified that the current penalty regime treats corporations differently from individual taxpayers.

"That is why we are calling on HMRC to take a lead in reforming international tax rules. The bigger prize after a costly six-year investigation would have been to develop a new approach to the activities of internet-based companies.

"We are not convinced HMRC has achieved this and it must work with overseas tax authorities if we are to see lasting and effective change in the international tax system."