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By | Kat Hall 28th January 2016 10:11

Europe: Go on. Ask us to probe the £130m 'sweetheart' deal HMRC made with Google

Eh, UK tax officials? Anything to be 'concerned about'...

The EU's Competition Commissioner has said Europe would probe Google's £130m sweetheart deal with the UK government "if asked" - following growing calls for Brussels to scrutinise the deal.

The Scottish Nationalist Party has today written to Brussels to investigate the arrangement. Stewart Hosie MP said: "The truth is that we know very little about the settlement reached between the tax authorities and the company. These discussions have taken place in private, little detail has been revealed by the Treasury and the methodologies employed by HMRC are shrouded in secrecy."

The Public Accounts Committee has also today set a hearing date to exam corporate tax deals following the arrangement with Google for February 11.

Margrethe Vestager, the EU's Competition Commissioner, told the BBC’s Today Programme that the commission would be willing to look into the tax deal.

“If we find there’s something to be concerned about, if someone writes to us and says maybe this is not how it should be, then we’ll take a look,” she said.

Vestager said it was unfair that different rules apply to larger companies than those adhered to by small innovative businesses. Asked if the arrangement amounted to a "sweetheart" deal - a term used to describe an unusually favourable contractual arrangement - she said it was too early to say.

Seema Malhotra, Labour’s Shadow Chief Secretary to the Treasury, has also written to the National Audit Office calling on it to investigate the terms of the deal.

She said: "This process has taken over six years, and the outcome appears to have resulted in an agreement to pay a very low effective tax rate. This has caused understandable concerns about the impact on our public finances. Tax revenue not collected is revenue foregone – this has important implications for the funding of public services."

However, in a letter to the FT, Google defended its position. "In all the coverage of Google’s tax settlement, little has been said about the international tax rules and how they work. Corporation tax is paid on profits, not revenue, and is collected where the economic activity that generates those profits takes place," said Google's communications veep Peter Barron.

He added: "After a six-year audit we are paying the full amount of tax that HM Revenue & Customs agrees we should pay, including £130m in additional back tax. Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law." ®

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