HMRC denies multinationals "run rings" around it

HMRC bosses have defended the taxman’s controversial £130m settlement with Google during as MPs in the influential Public Accounts Committee claimed multinational companies were “running rings” around tax officials.

Appearing before the cross-party committee, HMRC chief executive Dame Lin Homer denied HMRC gets “outmanoeuvred” by the likes of Google. “We make them pay more tax and if I am honest I would like to see more recognition of that,” she told MPs.

Jim Harra, HMRC’s director general business tax, said Google had not been penalised because of the difficulty in proving ‘insufficient care”.

“I do understand the [public] anger, and I think HMRC and the government position is that the current penalty legislation does not work for large companies in the way it should,” Harra told the committee.

Harra was unable to respond to MPs’ questions as to how much the six-year Google tax audit had cost, but said it had been ‘very expensive and resource intensive’, largely because of the complexity in transfer pricing cases.

“We can challenge that and they can accept they need to change their position but it is very difficult to establish they have taken insufficient care,” he said.

Google’s European chief also defended the tech giant’s tax arrangements and the tax deal it struck with HMRC as MPs accused two Google executives of being “out of touch with reality”.

Matt Brittin, head of Google’s European operation, and Google vice-president Tom Hutchinson insisted the Silicon Valley was paying the right amount of tax.

“I understand the anger and understand that people when they see reported that we are paying 3% tax would be angry. But we’re not. We’re paying 20% tax.”

Meg Hillier, chair of the PAC, said Google’s £130m tax settlement with HMRC amounted to a ‘PR disaster’ for the firm and accused Brittin of leaving in a different world to ordinary tax payers when he declined to tell the committee how much he was paid.

“Out there, our constituents are very angry, they live in a different world clearly to the world you live in, if you can’t even tell us what you are paid,” said Hillier.