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Google to pay £24m in UK corporation tax

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9th Jan 2014
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Google is expected to pay £24m in backdated tax after a review of its offshore operations by HMRC. Nick Huber reports.

The company has made a provision for the expected tax bill in the accounts of its UK operation, the Sunday Times reported.

The provision follows public outcry about Google and other internet companies including Apple and Amazon which have legally paid little or no corporation tax in the UK.

Google made £11.5bn in revenue from the UK between 2006 and 2011 and paid £10m corporate taxes in the same period.

A recent rule change by HMRC could similarly affect Facebook and Apple, who also have their European headquarters in Ireland, the Irish Times reported.

Google gives shares in the company to its 2,000 UK staff each year. It paid £51m to staff under the scheme in 2011 and £50m in 2012.

Google has treated the payment as a tax deductible expense, and charged it to its Irish operation, but HMRC has tightened rules on share payments to staff. It now tells companies to treat them as revenue instead of an expense.

Last May, the Public Accounts Committee (PAC) questioned Google executives about its practice of routing its sales through Ireland, where corporation tax is much lower than the UK.

Google vice president, sales and operations Matt Brittin denied he had misled the committee when he appeared before them in November 2012.

Margaret Hodge, chair of the committee, which scrutinises public spending, told Google during the hearing: “You are a company that says you do no evil and I think that you do do evil in that you use smoke and mirrors to avoid paying tax.”

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