The reason is that HMRC had spent six years testing whether Google’s Irish business had a permanent establishment in the UK. Inspectors had visited offices in London and Dublin and had pored over the whistleblower evidence provided by the PAC. But after what must be one of Britain’s biggest ever tax audits, the inspectors had firmly endorsed Google’s claim that its Irish sales hub was not active in the UK – despite booking £5bn of sales a year here.
I read the first three paragraphs and gave up on that article.
Paragraph 1: Google boss claims tax rate over last five years was about 19%.
Paragraph 3: Quotes individual years’ figures then says ” Only by going back five years can Google say its average rate is 18.7%”.
So Google boss makes factually correct statement shocker.
Watched that PAC yesterday on parliament tv. It was pretty awful. Perhaps even worse than when Hodge was in charge. Much more posturing, grandstanding and soundbite grabbing from the MPs. Nothing was achieved, which is why these ‘articles’ are a load of shite.
Is it normal for a corp to meet with Treasury officials including the Chancellor to talk about its tax arrangements?
Would you be able to do that, Worstall?
Aren’t MPs elected to ask questions on the electorate’s behalf?
And it doesn’t mean any one is wrong about all this. There are sales being made in the UK, it’s just the law says that they can be booked in Eire.
You lot are so far up your own arses that you don’t even think like humans anymore.
Arnald,
Google stated at the PAC that the 20 odd meetings with ministers listed were to discuss issues such as IP, copyright, child protection and other stuff. None was specifically about tax. It could have come up, but was never the purpose of the arranged meetings.
@Arnald It is not normal for anyone in government outside HMRC to discuss the tax affairs of a particular tax payer, although tax payers may make representations about aspects of tax policy.
@Arnald, actually, it probably is, the larger your company or tax issue, the higher up your discussions tend to be.
Arnald demands the government knows everything about large company’s tax arrangements.
Arnald moans about large company meeting government to talk about tax arrangements.
Rob is a dick.
Arnster – Wowee. That hammer blow: what a clincher! That’s Rob sorted then. Bet he feels put in his place. Such rhetoric etc etc
Its’ a good job those tax campaigners politicised the whole issue of tax, making government intimately involved in the whole process.
That’s a much better idea than there being rules that HMRC follow and companies can understand, meeting only to discuss the practicalities around interpretation.
@Arnald – it is *entirely* normal for very large companies to meet regularly with HMRC, Treasury and ministers to discuss tax. At one such meeting a former colleague of mine was asked in so many words by HMT officials “Er, will you be paying your tax bill a few days early by any chance? It’s just the the government’s a bit low on cash”
So the solution to big companies trying to influence Government is to give Government more power?
Didn’t PJ O’Rourke say something about this?
Farmy
Of course they should meet HMRC, but the CotE?
So Alex is wrong then?
Bison
Like for like.
why not – I was fairly junior when I met with people writing the Budget to try (successfully) to repair one of Brown’s legislative cock-ups
Arnald looked a bit foolish.
Arnald had a tantrum.
The way to stop Big Companies having meetings Arnald doesn’t like is to stop taxing them. It’s that simple. Then the meetings can’t be about tax bills and there can’t be any sweetheart deals.
Of course the downside for the politicians is they would have less reason to hobnob with bigwigs and potential donors, and have to raise more revenues directly from the (mostly voting) public.
Farmy
So you met with the CS? Hardly the same thing.
Bob, no tantrum, just disdain.
Gareth
So you’re being stupid too.
Arnald, Rob’s comment is crucial to the issue, so you do yourself no favours dismissing it.
A country can either have:
* A simple tax code, ie no room for argument over liability. No meetings necessary, all businesses can be treated the same. HMRC can be run on a shoestring, businesses that can afford the rates can lay off most of their accounting dept.
* A complex tax code, with the Revenue service working to charge the correct amount. Costly to HMRC and business, as they spend a lot of time sifting trying to work out how tax law applies to each individual companies’ structure and division of labour. High-level meetings between big Corps and HMRC are inevitable, here, because of that division. it’s mainly the senior staff that have the overview of the whole business.
* complex tax code, but a Revenue service that couldn’t give a flying fuck about the actual details of a business that support rational application of the code. Effective tax rates are usually simple, but highly political. Meetings are pointless, and it’s impossible for a company to predict it’s tax bill.
In all cases businesses will shape their businesses to minimise their tax bill, because you can’t make a profit on tax.
Businesses and HMRC like the first option, because it’s cheap to get the correct result. Politicians hate it because they can’t meddle and grandstand.
The second option trades accuracy and hence some revenue for finer control, allowing government to benefit preferred classes of business. For better or worse.
The third option is a banana-republic.
It’s not clear which of these you support. It is clear that the PAC is currently leaning heavily to the third option, by trying to have their cake of fiddling with the tax code, while trying to eat it by keeping effective tax rates high.
It’s not that they aren’t allowed to ask questions, it’s that the questions they are asking are completely fucking irrelevant to establishing whether a company is paying the correct amount of tax.
It is fashionable for the left to say we need big government to deal with big business. The opposite is true. Only big business can survive big government. – C Fiorina
and my boss met with the Chancellor and the First Secretary, as did our MD and head of tax – think of the government as a business which likes to know in advance how much its main sources of income are going to cough up and when. Enough for you, or are you going to tell me that I can’t possibly know as much as you with your superior insight, you pompous twerp?
It’s not clear which of these you support.
You give Arnald far too much credit. Arnald’s commentary is not informed, nor is it reasoned. It is not the product of any sort of intellectual process. He knows nothing about tax and has made no real effort to educate himself about the subject since he landed at this site.
In Arnald’s world-view, the only thing that matters is that his personal prejudices are confirmed. The idea that accomplished professionals could sit down, work through a process in an objective, dispassionate manner, and come to the good faith conclusion based on law and fact is anathema to him unless it gives him what he wants.
If Richard Murphy is a fool because he is consumed by the sins of pride and envy (and he is), Arnald is no less a fool due to the sins of wrath and envy. Wrath and envy are evident in his reactions to everything posted here.
Life has passed Arnald by. He’s a nobody in the middle of nowhere and he can’t abide it. He looks about at those who have more, and those who have accomplished more, and assumes it all had to have been done illegitimately. To admit otherwise would involve acknowledging his own shortcomings, and that’s a big no-no to a man like him.
I wonder if anyone will in future nominate the good 0.2 Prof Murphy for a Nobel in Economics?
I wonder if anyone will in future nominate the good 0.2 Prof Murphy for a Nobel in Economics?
You mean he hasn’t already nominated himself? There’s a shocker.
Flatca
If you look at my posts, I’m asking questions.
You said
“I was fairly junior when I met with people writing the Budget I was fairly junior when I met with people writing the Budget to try (successfully) to repair one of Brown’s legislative cock-ups”
Which is fairly fucking pompous in itself.
That’s not the same as “my boss met with the Chancellor”, a boss of a company that happens to be one of the ‘main sources of income’ for the Treasury.
Which is also pompous. Must be bigger than Google, your company. By some way.
But yeah, you know that.
NielsR
Someone with your obvious intelligence would know that there aren’t just three options as you state. Simplicity would be good, but things being global make that tricky – even with multinational cooperation. Complex and protracted is the status quo, that’s not working very well (well obviously you guys on here think it’s great, for some reason), and your third option has elements that are useful too.
Tax is political, whether you like it or not. It’s important that the electorate feel that they are part of a fair system. It is up to the elected representatives to ask those questions.
It’s not an extreme position to have, to want MPs to ask questions. Corporations believe that they can get away with having no social responsibility, it is up to us small folk to impress that they should have. It’s in our interest.
You guys are probably too well off to really care. Laisser faire is easy to support and promulgate when you have the readies. So much so that HMRC are suddenly the most sensible public servants anywhere.
I don’t believe that corporations should be able to influence policy and decision making for their own benefit.
That’s what these deals look like.
“It is up to the elected representatives to ask those questions.”
They make the laws. Asking themselves whether they have created the right system, and whether they are properly enforcing it should be the first step shouldn’t it?
Less fun, but more useful.
Arnald – there are two ways corporations can influence tax policy; they can either discuss sensibly and try to reach agreement, or they can simply refuse to operate in a country and take their investment elsewhere. Any government that thinks it can impose whatever tax rate it likes on whatever industry it likes (subject to change at ministerial whim) is going to have a rude awakening.
And yes, the oil industry has paid a *lot* of tax in the past. The single asset I was working on was facing an additional bill of well over a billion quid due to a cock-up in wording. If it hadn’t been fixed, the company I was working for was seriously discussing pulling out of the UK altogether.
Arnald,
not really. Option one covers any situation where HMRC staff can master the national and international tax rules, and the company structures and finances of all businesses operating in the UK, so that they can authoritatively state what the tax liability is for any company in any year.
Once that becomes impossible, which is probably quite quickly for complex global businesses, there are only two options – have the meetings with experts in the company to understand and verify their specifics, or make baseless assertions of what tax is due. “your third option has elements that are useful too” – well, if you like fickle people imprisoning you for non-payment of arbitrarily calculated tax bills, then yes.
Sure, each case covers a range of tax codes, permitted company structures, etc, etc. Point still holds – if you think any meetings with CEOs are markers of sweetheart deals and undue influence, you need a fairly simple tax code to avoid door number 3.
“It’s not an extreme position to have, to want MPs to ask questions. ” No, but asking a CEO about his salary is irrelevant and ad hominem when you’re trying to establish a company’s tax liability.
Banging on about headline tax rates is misleading and superficial when you’re trying to establish the actual incidence of your tax code on a particular company structure.
“You guys are probably too well off to really care” – yeah, I’m on my other yacht in the Caribbean right now.
Arnald,
I had to read this again to check that you did actually say:
“And it doesn’t mean any one is wrong about all this. There are sales being made in the UK, it’s just the law says that they can be booked in Eire.”
So why in the name of all that is Googley are we even having this discussion at all? Google is following the tax law. End of.
What is it about this simple truth, one that has been established at considerable cost in time and effort to both Google and HMRC, that evades the PAC? And apparently almost every other left-of-centre commentator?
Google is following the law as it is. If you want Google to pay more tax, you will have to change the law. Then you will have look at whether Google continues placidly to operate in the same way to allow HMRC to gouge more out of the things Google does to add value to Google’s willing customers.
TPG Amen.
What is it about this simple truth, one that has been established at considerable cost in time and effort to both Google and HMRC, that evades the PAC? And apparently almost every other left-of-centre commentator?
It isn’t what PAC and the commentators wanted to hear. They are looking for a rationale for their hatred of capitalism, capitalists and anyone who doesn’t embrace their brand of politics… not facts.
If they want to tax foreign companies for sales they make here, they will have to be consistant. Volvo will have to pay tax here, BMW will have to pay tax here, Kenkyusha Publishing will have to pay tax here, Chung King Mansions property management will have to pay tax here, GazProm will have to pay tax here.
Yes MPs ask question on electorates behalf, but I don’t thinks the world and the UK are at such a settled place that “why did you comply with the law and by the way what’s your salary” are a useful exercise of this function of MPs or any of the time of all those involved.
Off the top of my head, *I* don’t know what my salary is. I know how much goes into my bank account after tax, national insurance and agency fees have been deduced and expenses have been added on. I would have to check my pay slip to actually know what my salary is.
Nor is it an extreme position to want them to ask questions that are relevant, and informed by knowledge of the matter before them. Even better if they ask their questions with an open mind and a true desire to become informed. Unfortunately, they generally don’t have a sniff of the issues, their questions are just accusations with a rising inflection, and their whole purpose is to grandstand for an equally ignorant lot of journos and mouth-breathers. Given their capabilities and intentions, we are better with no questions.
The real problem is that Google’s profits are taken out of the UK
and out of Europe to be taxed in the USA. Since the USA has spent a lot of government money to take over markets worldwide, we should recognise that American exploitation of the globalising mechanisms is not in our interests.
DBC Reed.
To your way of thinking, is Google’s benefit to the people in the UK measurable only in the tax paid in the UK on Google’s profits in the UK?
How much government money has the USA spent (give or take) to take over the worldwide market in which Google operates?
Could you point to anyone, anywhere, who has as miserable an outlook on the world as you? Goodness knows that the OldGreenRetard and Arnie are dreary but you drone on as though you were set in aspic when Corbyn was a boy.
I’m willing to bet Jeremy Corbin gives him a good run for his money…