Oh dear

The latest example of this is the tax deal between Google and Her Majesty’s Revenue and Customs (HMRC) which enabled the company to extinguish a decade of its tax liabilities with a single payment of £130m, an effective tax rate of 3 per cent on its profits.

Shouldn’t we hold an accounting professor to higher standards of evidence than that?

Prem Sikka is Professor of accounting at the University of Essex

The £130 million was in addition to tax already paid, is at the statutory rate for the jurisdiction under discussion, not 3%.

Sikka is counting stuff not UK profits as UK profits in defiance of the law. Just because, you know, he’s making shit up.

25 thoughts on “Oh dear”

  1. Tim Newman you’re a real democrat aren’t you! Corporations are there to serve us, not the other way around! I presume you’re off school today, because it’s half term week.

  2. Corporations are under no obligation to serve us. They are there to make money for their owners, while remaining within the law. It just so happens that the best way to make money is to satisfy the desires of their customers.

    There’s no ethical reason why Google shouldn’t let the University of Essex’s accounting department drop down a couple of pages of search results. It’s not likely to dent its bottom line, after all.

  3. Tim Newman you’re a real democrat aren’t you! Corporations are there to serve us, not the other way around!

    Bullshit. Corporations are there to serve the interests of their shareholders, and part of that may well include not allowing entities that criticise the corporation to do so using the corporation’s own service. This is especially true if the criticism is grossly misleading and bordering on libelous. You would not expect McDonald’s to sell burgers to those protesting outside McDonald’s restaurants when they got hungry. Why should those who criticise Google in this manner expect to be included in Google’s listings?

  4. Actually I would expect McDs to sell to protesters, in the hope of getting a few photos of said protesters chowing down on a Big Mac…

  5. There’s also Maugham’s typically soapy post today where he manages to moan about HMRC not being respected while not mentioning the campaign that Sikka , Murph and he have been conducting to undermine HMRC. Typical head-up-arse socialists.

  6. “If one takes £130 million and divides by this profit number which I have made up a) without any access to the data and b) based on a set of assumptions broader than Norfolk then one gets an effective tax rate of 3%. This is clearly an outrage and must be rectified”

  7. Don’t all laugh, but universities are meant to be in the truths business: finding new ones and passing on old ones. “he’s making shit up” ought to be a valid cause for dismissal. Being wrong shouldn’t be, but making stuff up should be.

  8. “Even if Google was legally compliant, the UK government could have changed the tax laws to capture more of Google’s UK sales and profits, which are currently being booked in Ireland.”

    No it couldn’t! Couldn’t possibly do this unilaterally. Another academic who doesn’t know what he’s talking about.

  9. Governments are made to serve those who govern.
    The best you can hope for is that the majority of those who govern have some common sense and see merit in making sure the public in general benefits as well.

  10. Sikka is a paid up member of the Murphy school of venal dickheadness.

    I cant help wondering whether he was appointed to his profship as a consequence of PC ethnic minority quota filling.

  11. I liked this bit at the end

    ‘ If the deal is one-off and is not available to others, it can be construed as state-aid and be examined by European Union. ‘

    Presumably a six year audit, revised assessment & interest charged is a deal open to others. ‘Pay more tax Google’ ‘OK’ that’s state aid?

  12. Didn’t the European Union just rule that HMRC had overtaxed companies, maybe referring the Google deal to EU review wouldn’t be in HMRC favour at the moment

  13. “You would not expect McDonald’s to sell burgers to those protesting outside McDonald’s restaurants when they got hungry.”

    If I was a shareholder, yes I would. And I would expect anybody who turned away their custom to be fired.

  14. BF

    Actually having reviewed his output, he is technically qualified for his job – he has a decent number of 4* publications over his entire career and a number of 3s recently. (where 4* is the highest and 1 the lowest). He’s an idiot, but a published idiot.

  15. @BNIC “Didn’t the European Union just rule that HMRC had overtaxed companies, maybe referring the Google deal to EU review wouldn’t be in HMRC favour at the moment”

    Well not quite. The ECJ ruled that certain UK multinationals suffered a larger UK tax burden on the income of their overseas (EU based) subsidiaries than they would have suffered if they were UK resident, and the ECJ says this is anti-competitive (their view not mine). That doesn’t really fit the facts in Google.

  16. “By avoiding taxes, the value of shares and options is increased and enriches directors.”

    Er, by rewarding directors very well Google is actually increasing the tax take.

    Let me just get this right again; you call yourself an academic right? It’s OK, so does Richard Murphy.

  17. Can’t the UK Parliament afford the $45 to buy Google’s detailed shareholder’s financial report? I’m on the point of buying it myself and just sending it them as a donation, but that is based on the pre-assumption that they can read.

  18. Bloke in Costa Rica

    Sad to relate, a degree in accountancy from either Essex or City will not cause, and has never caused prospective employers to engage in a bidding war to secure your unspeakable talents. Murphy and Sikka can hardly detract from that.

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