Google’s Nothern European boss, Matt Brittin, faced MPs at the public accounts committee this morning over the way in which Google operates in order to minimise its UK tax bill.
At the time of Google’s UK tax bill revelation, where declared earnings were £2.5bn but the tax charge was only £3.4m, the equivalent of 0.4 per cent, Brittin claimed that that "nobody [in the UK] is selling", which ultimately minimises Google's UK tax liability. He later added that Google only employs "a couple of hundred" staff at its European headquarters in Dublin, who largely are responsible for selling to UK clients.
Reuters meanwhile dismissed this defence, stating that Google's own 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", with one source confirming that "all the people you tend to deal with are in London."
As such, the first question asked at the inquest was if Brittin would like to rephrase his claim that sales are always made in Ireland.
He stated: “I looked back as soon as the Reuters story was published. I looked back at my evidence, all 27 pages of it. And I stand by what I said. I described very clearly how we operate. The story lifted three words from that evidence and suggested we were trying to disguise how we are operating.”
Upon being shown evidence that entire sales transactions took place in the UK, and that staff had revealed they had sales targets and received commission for making and closing deals, even though the billing was done through Ireland, he said: “UK team are promoting our product and encouraging customers to spend money on it.”
Adding: “We do hire people with sales skills but nobody in the UK team can execute a transaction - no money changes hands. The rights to what's sold are owned by Google Ireland. Nobody here can agree a price or a volume discount, they can only encourage that to happen.”
On the point on staff incentives Brittin said: “Many companies incentivise staff in country to grow the business. They grow the business by encouraging people to spend money on Google products.” But added that “customers have to buy from Ireland because that's where the intellectual property sits.”
Chairman Mararet Hodge ended her questioning by saying: "We all accept the billing is in Ireland. If sales activity is taking place in the UK, you are misleading both Parliament and the taxpayers in suggesting that is not happening."
Labour MP Meg Hilier then attempted to verify the proportion of time spent by a key customer with UK staff compared with Irish staff. Brittin gave no clear answer.
After further questioning by MP Austin Mitchell on advertising jobs in the UK with the word “sales” in the title, Brittin conceded that Google has "people in the UK doing a lot of aspects of selling."
Brittin then told the committee that 60-70 per cent of advertising revenues from UK customers comes from that minority of larger clients that have contact with UK based staff. He stated about 300 people in the UK deal with customers and 300 people on phone and internet in Dublin, and that the people in the UK are likely to be more experienced and are likely to have a higher element of commission - but said he needed to check.
He ends by saying: "Tax is a matter of following the laws that are there, internationally, and that's what we do."
The commission then moved on to Google's auditors Ernst and Young who were quick to state that some of the facts that have been presented in this hearing are "not relevant" to the question of how much corporation tax Google is liable to pay in the UK.