Google and E&Y summoned before PAC

GOOGLE AND ERNST & YOUNG are to re-appear before the Public Accounts Committee in order to testify on the internet giant’s tax position.

The search engine’s vice president for northern and central Europe Matt Brittin previously told the committee in November that no sales are made in UK offices, and instead sales to the UK are made from Dublin. Companies are taxed based on where their economic activity takes place.

The UK presence, he said at the time, “helps people make the most of the web… and the people in Ireland are helping to operate the systems and sell advertising to the businesses that want to work with us”. As a result, no profits are generated in the UK, according to Google.

However, Google’s corporate website claims sales teams are based in London, and advertises jobs for London-based sales staff, whose duties include “negotiating deals,” closing “strategic and revenue deals” and achieving “quarterly sales quotas”, Reuters reports.

The profiles of about 150 London-based employees on corporate social networking site LinkedIn said they were involved in drawing up sales strategy, managing sales teams, closing deals and other sales work.

“All the people you tend to deal with are in London,” said Simon Andrews, founder of advertising agency Addictive, whose business plans and buys advertising campaigns on behalf of clients. “You would never know about the Dublin thing apart from if you looked closely at the address on the invoices. All the people are based in London.”

Google director for external relations Peter Barron said Brittin strenuously denied he had misled the committee and maintained no sales were conducted in the UK. He declined to say whether UK staff did negotiate or close deals, but said all sales to UK clients went through Google Ireland. “We comply with all the tax rules in the UK,” he said.

The Big Four also testified before the committee in January as part of a PAC investigation into how they help large companies minimise their tax liabilities, but committee chair and Labour MP Margaret Hodge now believes E&Y should be recalled to discuss its work with Google.

In his previous appearance, head of tax policy John Dixon said E&Y staff visited clients’ offices in order to ascertain they were conducting the activities in their UK offices that they described in statutory accounts and in statements to HM Revenue & Customs.

According to Hodge, the apparent discrepancies between Google’s testimony and the evidence from its website and LinkedIn calls that into question.

“We will need to very quickly call back the Google executives to give them a chance to explain themselves and to ensure that actually what they told us first time around is not being economical with the truth,” she said.

She added: “The evidence they gave was clear and unambiguous … Ernst & Young have questions to answer about whether they were being wholly open with us as a committee.”

E&Y has been contacted for comment.

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