31st January is a day we all hold in contempt, not just for the anniversary of the Soviets exiling man like Trotsky, but as the deadline for self-assessment tax returns. Miss the date? That's an automatic penalty of £100, leave it for a further 3 months then it's £10 a day, with further increasing fines. Nearly 15% of the UK workforce is self-employed, so millions will be feeling the taxman breathing down their neck.
What if the system was better? What if your average worker could schedule numerous meeting with government officials to discuss their tax arrangements and cut a deal to ultimately pay far less then what's owed? What if it took a six 6 year investigation to force that worker into action? The system would break down into disarray, but these have been the rules that tech giant Google and many other multinationals have been allowed to play by.
Google employs a complex tax structure which funnels revenue through corporate low-tax countries such as Ireland and Bermuda. They're completely legal, justifying the company's stance that they act properly; however, the deal struck between Google and HMRC for £130m in back taxes over a 10 year period accounts to a tax rate of an astonishingly low 3%. Chancellor George Osbourne hailed the result as a 'massive success', but soon came under criticism by not only the usual suspects - the commentariat, Twitter, Her Majesty's Opposition - but usual allies like Rupert Murdoch and fellow Tories. Even David Cameron backed off from effusive praise and stressed that HMRC worked out the deal.
Accusations abound that the government is too close to big business (as alleged by Murdoch), which are compounded by news that Italy and France are seeking far more money from Google. HMRC has kept the deal's details confidential, while Jeremy Corbyn used the deal to his advantage in the recent Prime Minister's Questions. Even if the tax avoidance scandal fades away from the news, it looks to be a pressing issue for a while to come.
One of the ways Google has escaped paying a bean for the last decade is siphoning profits through Ireland, a loophole that inspired the Revolution Will Be Televised team to raid their London HQ...
How to break in to the Google office...
This week Google rummaged around the back of their sofa and decided to shower HMRC with £130m worth of loose change. That might sound like a lot, but they’re paying a very small 2.8% corporation tax rate, whilst British taxpaying businesses have to pay 20%. It feels weird to agree with Rupert Murdoch, but the “posh boys in Downing Street” are in awe of Google and have allowed the company to “pay token amounts of tax for PR purposes”. Google found a loophole by syphoning off its profits through Ireland, which prompted our Revolution Will Be Televised team to raid the Google office and celebrate these Irish 'roots'. #googletax #googletaxdeal #matesrates
Posted by Don't Panic on Thursday, 28 January 2016