David Cameron accused of double standards by keeping Google head as adviser despite corporate tax avoidance allegations levelled at the company

Prime Minister has been urged to drop Eric Schmidt

David Cameron has been accused of double standards after retaining the head of Google as an adviser even though the company has allegedly taken advantage of the corporate tax avoidance he has condemned.

The Prime Minister has been urged to drop Eric Schmidt, Google’s executive chairman, from his Business Advisory Panel to send a message that the Government is serious about cracking down on tax avoidance by multinationals like Google, Starbucks and Amazon. In 2011, Google paid £6m corporation tax on £2.5bn of revenues  in the UK.

Mr Cameron has promised to use Britain’s year chairing the G8 leading economies to ensure more transparency over taxes  paid by big companies, who are under growing pressure to disclose how much they pay on a country-by-country basis.

Lord Oakeshott, the Liberal Democrats’ former Treasury spokesman, told Mr Cameron in a letter: “Your campaign as chairman of the G8 against tax dodging by big companies will be holed below the waterline if you keep Eric Schmidt, executive chairman of Google, on your Business Advisory Panel.

“You attack Starbucks, who have at least accepted they must pay more tax in this country. But you are laying yourself wide open to a charge of selective indignation on tax dodging, as in the case of [the comedian] Jimmy Carr. Mr Schmidt sees no shame in Google paying almost no tax in Britain and using complex offshore arrangements to avoid massive amounts of tax.Google are world class tax-dodgers, with Starbucks merely minor league players.”

Downing Street declined to comment about Google’s position. Aides have insisted that Mr Cameron had never singled out individual firms.

A Google spokesman said last night: “We comply with all the tax rules in the UK. We make a substantial contribution to the UK economy through local, payroll and corporate taxes. We also employ over 2,000 people, help hundreds of thousands of businesses to grow online and invest millions supporting new tech businesses in East London.”

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