Ahead of the Public Accounts Committee inquiry on corporate tax deals, due to be heard on 11 February, HMRC issued a factsheet to ‘dispel myths’ in the media coverage about how it engages with multinationals and the Google settlement in particular.
Following the line taken by the government in the opposition early day motion debate on 3 February, the factsheet stresses that compliance among multinationals is a ‘global issue that requires a global solution’. It highlights:
investigations involving about two-thirds of the UK’s 800 largest businesses at any given time;
its focus on compliance, securing more than £100bn of compliance revenues since 2010;
new legislation to strengthen HMRC’s powers, such as the diverted profits tax, the general anti-abuse rule and accelerated payment notices; and
the approach the department takes in large, complex cases, whereby: ‘three HMRC commissioners have to approve any proposal for resolving disputes, including one commissioner from an area of the business which is not directly responsible for the enquiry and the tax assurance commissioner, who oversees the process and publishes an annual report on his work. This process is subject to routine scrutiny by the NAO.’ In short, ‘HMRC does not do “sweetheart deals”.’
In relation to Google, HMRC said it taxed ‘all of Google’s profits chargeable to tax in the UK for the period in question, at the full statutory rate of tax’.
‘Some commentators have applied Google’s group profit margin to its sales to UK customers and estimated that Google’s UK corporation tax is equivalent to an effective tax rate of around 3% on the group’s profits arising in the UK. This calculation does not reflect how tax law works.’
HMRC said it could not comment on media speculation about what other European tax authorities are doing regarding Google, However, the department ‘is satisfied that our enquiry has secured all the tax that is due in the UK’.
HMRC also stated that government ministers ‘are not informed of the progress of enquiries and play no part in agreeing the amount of tax to be paid by any taxpayer’. ‘We only informed ministers of the outcome of the Google enquiry after it was concluded, and we only told them information that was in the public domain or that Google intended to make public.’
The department did not say whether or not it had challenged Google’s assertion that its Irish company did not have a UK permanent establishment. ‘Although we cannot go into details, it is wrong to suggest that HMRC does not take into account all relevant factors when making sure multinationals pay the tax due under the law.’
Ahead of the Public Accounts Committee inquiry on corporate tax deals, due to be heard on 11 February, HMRC issued a factsheet to ‘dispel myths’ in the media coverage about how it engages with multinationals and the Google settlement in particular.
Following the line taken by the government in the opposition early day motion debate on 3 February, the factsheet stresses that compliance among multinationals is a ‘global issue that requires a global solution’. It highlights:
investigations involving about two-thirds of the UK’s 800 largest businesses at any given time;
its focus on compliance, securing more than £100bn of compliance revenues since 2010;
new legislation to strengthen HMRC’s powers, such as the diverted profits tax, the general anti-abuse rule and accelerated payment notices; and
the approach the department takes in large, complex cases, whereby: ‘three HMRC commissioners have to approve any proposal for resolving disputes, including one commissioner from an area of the business which is not directly responsible for the enquiry and the tax assurance commissioner, who oversees the process and publishes an annual report on his work. This process is subject to routine scrutiny by the NAO.’ In short, ‘HMRC does not do “sweetheart deals”.’
In relation to Google, HMRC said it taxed ‘all of Google’s profits chargeable to tax in the UK for the period in question, at the full statutory rate of tax’.
‘Some commentators have applied Google’s group profit margin to its sales to UK customers and estimated that Google’s UK corporation tax is equivalent to an effective tax rate of around 3% on the group’s profits arising in the UK. This calculation does not reflect how tax law works.’
HMRC said it could not comment on media speculation about what other European tax authorities are doing regarding Google, However, the department ‘is satisfied that our enquiry has secured all the tax that is due in the UK’.
HMRC also stated that government ministers ‘are not informed of the progress of enquiries and play no part in agreeing the amount of tax to be paid by any taxpayer’. ‘We only informed ministers of the outcome of the Google enquiry after it was concluded, and we only told them information that was in the public domain or that Google intended to make public.’
The department did not say whether or not it had challenged Google’s assertion that its Irish company did not have a UK permanent establishment. ‘Although we cannot go into details, it is wrong to suggest that HMRC does not take into account all relevant factors when making sure multinationals pay the tax due under the law.’
