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Corporation Tax System 'A National Disgrace', Says John McDonnell Following Google Revelations

The tech giant paid £36.4m in the UK.

01/04/2017 10:58

The UK’s corporate tax regime was labelled a “national disgrace” after Google revealed it paid £36.4 million in tax on profits of almost £150 million.

The firm came under fire from the government last year for not paying its fair share to the exchequer and opposition politicians seized on the latest tax payment as a sign that the US tech giant was still not doing enough.

Google insisted it paid “all the taxes due in the UK” but as an international firm it paid the majority of its taxes in its home country, the Press Association reported.

PA Wire/PA Images
Google paid £36.4 million in UK corporation tax for the year to June 30, 2016, the company has confirmed.

Shadow chancellor John McDonnell said: “This revelation only further proves that Philip Hammond and Theresa May are more interested in cutting Google’s taxes, than making sure they are paying their fair share.

“It seems that the so called ‘successful’ tax deal with Google that George Osborne boasted about last year has meant that they are still not paying their fair share under his successor Philip Hammond.

“We urgently need clarity on HM Revenue and Customs’ relationship with Google and what reassurances have been provided to the company.

“It is a national disgrace that by paying just £36 million in tax Google could have an effective tax rate lower than many working families in our country. And it exposes the complacency at the heart of this Tory Government, which is allowing this to still continue despite last year’s scandal.”

Liberal Democrat treasury spokeswoman Baroness Kramer said: “It is appalling that Google are still getting away with paying such a paltry amount of their total revenue back in taxes.

“Our worst fear is that the Tories would use Brexit to turn the UK into a tax haven sitting off the northern shores of Europe, there is no sign that this isn’t where we are headed.

“This Government is already struggling with the Brexit squeeze, if they want to stop cutting vital services they need to start picking up what is owed to the British people.”

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John McDonnell slammed the system as a 'national disgrace'

Meg Hillier, chairwoman of the influential Commons Public Accounts Committee (PAC), said: “Yet again we see a large corporation paying a rate of tax that belies its significant presence and business transactions in the UK.

“This is why the PAC is working internationally to press for greater tax transparency so that we can all see clearly how much tax corporations pay and where.

“This latest tax contribution from Google just underlines why this is so important.”

The firm revealed it paid £36.4 million in UK corporation tax on pre-tax profits of £148.8 million in the year to June 30 2016.

A Google spokesman said: “As an international business, we pay the majority of our taxes in our home country, as well as all the taxes due in the UK.

“We have recently announced significant new investment in the UK, including new offices in Kings Cross for 7,000 staff.”

The tech company paid £46.2 million in corporation tax for the previous 18 months to June 30 2015.

That covered an extra six months of business before Google moved to a 12-month accounting period the following year.

Google said both administrative costs and turnover for the period decreased as a result of the accounting changes.

Revenue dropped £141 million in the year to June 30 2016 to £1 billion, from just under £1.2 billion for the previous 18 months.

The company has faced mounting pressure over its tax affairs amid a backlash against corporate tax avoidance by multi-national companies.

Google agreed to a controversial £130 million deal with HM Revenue & Customs in January last year to settle a 10-year tax inquiry into its UK business.

HM Revenue and Customs (HMRC) declined to comment on Google’s tax payment, saying it did not discuss identifiable taxpayers.

A spokesman said: “Everyone has to pay the tax due under the law and we do not settle for less.

“Our most recent figures show that HMRC brought in a record £26 billion in extra tax for our public services, with £7.3 billion of that total coming from the 2,100 largest and most complex businesses in the UK.”

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