Stop blaming businesses like Google for tax avoidance and look to lawmakers instead

The Public Accounts Committee meeting was a pantomime in which Margaret Hodge cast herself as the hero. In fact, only politicians have the power to reform tax law

Share
Related Topics

The emotive issue of tax avoidance hit the headlines again this week, after Google defended itself in front of politicians over the amount the tech giant pays in taxes to the British government. But Google wasn’t the only one that got a hard time. Tax consultancy Ernst & Young, and even the HMRC were the big bad wolves in committee chairman Margeret Hodge MP’s pantomime of blustering. Hodge, unfortunately, spent her time throwing out soundbites and denying Matt Brittin, Google’s head of operations in Northern Europe, an opportunity to answer the accusations thrown at him. Words like “devious”, “calculating” and “unethical” were repeatedly peppered throughout the grilling. Meanwhile, a handful of the other MPs were more incisive and calm in their questioning, but it was not enough to mitigate Hodge’s effect of pushing Brittin, and Google, into a more positive light.

Brittin, who was giving evidence for the second time in the last six months, had to explain why the search engine behemoth only paid £6m in corporation tax in 2011, despite racking up £2.5bn in annual revenues in Britain the same year. When the ordinary working person is bearing the brunt of rising costs and falling wages, hearing that one of the world’s largest companies in the world only has to scrape together corporate chump change in the form of taxes, is undoubtedly painful. However, what transpired only highlighted the highly complex and fractured tax system that politicians are responsible for creating.

"No money changes hands in the UK. Firstly, the rights to what we sell and are sold are owned by Google in Ireland, under intellectual property rights,” said Britten. "In the UK, we cannot sell what we don't own, we cannot agree a price, we cannot agree on volume discount and we can't close a deal in Britain." The point is, Google can legally court and nurture customer relationships in the UK. However, at the point of closing a deal, only Ireland can issue and seal a contract. Therefore the money can change hands elsewhere. Ergo, the sale did not take place in Britain. But who is to blame for such a seemingly dastardly way of paying less tax?

As HMRC's chief executive and permanent secretary Lin Homer said, “We are duty bound to collect and investigate under regulations, set out by lawmakers, not on what 'you'd like' us to collect on." Whether it is your local fish and chip shop owner or a Mega Corp 101, businesses will always look for, and be advised on how to keep as much of their profits as they legally can. Rules are rules and law is cold. Emotions, ethics and morality do not necessarily equate to good business sense.

We know this all too well, nearly seven years on, from the onset of one of the world’s worst financial crises. Many politicians are taking a step in the right direction by conducting parliamentary meetings and actively spending vast amount of time and resources to investigate a subject that strikes at the heart of every hardworking, ordinary British citizen. However, nothing will change if MPs use the issue as a vote raking tool, and not as an opportunity for sealing up loopholes in the law.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive or Senior Sales Executive - B2B Exhibitions

£18000 - £30000 per annum: Recruitment Genius: A Sales Executive or Senior Sal...

Recruitment Genius: Head of Support Services

£40000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Warehouse Team Leader

£22000 per annum: Recruitment Genius: This industry leading company produces h...

Recruitment Genius: Business Development Manager / Sales - OTE £40,000

£20000 - £40000 per annum: Recruitment Genius: This IT provider for the educat...

Day In a Page

Read Next
A press image from the company  

If men are so obsessed by their genitals, why do they clam up when confronted with the grisly realities of sex?

Chloë Hamilton
Workers clean the area in front of the new Turkish Presidential Palace prior to an official reception for Republic day in Ankara  

Up Ankara, for a tour of great crapital cities

Dom Joly
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory