HMRC did not fine Google over its failure to pay the right tax despite the payment being almost a decade late, a committee of MPs has found.
But why would they?
The report found that HMRC, the body in charge of levying tax on individuals and companies in the UK, did not charge Google a penalty despite it underpaying tax over a 10 year period.
Individuals who do not pay the correct tax or submit late receipts are charged a fine for doing so.
That’s not so.
If the amount of tax you have paid is correct by the rules as they are, but then there’s a discussion about whether the rules really quite mean that and your bill is raised, then no, you as an individual will not pay a fine.
And here, again, is what the Google situation actually was. Simplified, but true, and yes this is absolutely what happened. I have checked.
Google IE pays some amount to Google UK to cover all that engineering work etc that the latter does. The amount it pays is governed by the transfer pricing rules. That’s the way international tax law works. Meaning that Google IE should be paying Google UK a rate which is at least somewhat in line with what it would be paying an independent company, one not a part of the same group, for the same work.
HMRC had a look at Google’s books and basically said: oi oi, that rate’s a bit low, isn’t it? Google shuffled its feet and muttered, well, if you say so. Thus the rate was raised. That meant more profit in Google UK which was then taxed at the normal rate (that 20% Matt Brittin talked about).
This is exactly the same as the Starbucks royalties case. Where they were paying 6% (?) to Holland for the brand name and HMRC muttered that perhaps 4% was more appropriate. Hmm,. mebbe you’re right.
This isn’t Google having lied, it’s not them having fiddled their books and it is absolutely nothing at all to do with them selling from Ireland into the UK. And given that the earlier rate is supportable, even if after discussion wrong, there’s no fines. It’s a difference of opinion that has been resolved.
The very fact that a fine was not imposed shows that HMRC does not think this is something culpable. It’s a difference of opinion over what the transfer rate should be.
Not that the PAC gives a shit about that, grandstanding bastard little tossers that they are.