Google, the internet giant whose informal corporate motto is “don’t be evil”, did not pay any tax on its £1.6 billion advertising revenues in Britain last year.
The firm, which has a substantial presence in London, diverted all its advertising earnings from customers in Britain to its Irish subsidiary.
The arrangement allowed Google legally to avoid paying more than £450m in corporation tax to HM Revenue & Customs in 2008, The Sunday Times has established.
The disclosure prompted politicians to criticise Google, widely lauded as a pioneer of the internet age, for “ducking its social responsibility” and for “tax avoiding”.
Accounts filed with Companies House in the past week show Google’s 2008 UK corporation tax bill amounted to just £141,519 — and that was tax on the interest generated by its cash pile in UK bank deposits.
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Google says its structure complies fully with UK tax rules and that the company makes a “substantial” contribution to tax receipts wherever it operates.
About 13% of Google’s global revenues now come from the UK, and 770 staff are based at its London offices.
Accountants said that if the firm’s £1.6 billion UK earnings were paid directly into Google UK Limited, the London operation, it would have been liable for UK corporation tax of between 28% and 30%.
This could have raised about £450m for the public finances — enough tax to fund three NHS hospitals, buy at least eight Chinook helicopters or pay the annual salaries of about 15,000 policemen.
Any British individual or company who places an advertisement with the search engine pays a fee to Google’s European headquarters in Ireland, where corporation tax is levied at between 10% and 25%.
The Dublin operation’s latest accounts show that only €7.5m (£6.7m) of Irish tax was paid in 2008, even though the bulk of Google’s €6.7 billion (£5.9 billion) European earnings flowed into Ireland....
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