Matt Brittin, head of Google in Europe, astonished MPs when he failed to disclose his own salary and incorrectly overstated the profit generated by Google’s British arm by more than £120 million. His appearance came as five Google managers were placed under criminal investigation in Italy as part of a tax investigation into the US internet giant, reports The Times.
Mr Brittin insisted that he understood the anger and frustration of ordinary taxpayers at the settlement, which amounts to about 3 per cent of Google’s estimated UK profits since 2005. He also said that “tax would have come up from time to time” during meetings between Google executives and ministers but he denied political interference.
Meg Hillier, chairwoman of the public accounts committee, accused Mr Brittin of having a “tin ear” to the concerns of ordinary taxpayers. She demanded four times to be told what he was personally paid, but he responded: “I don’t have the figure but I will happily provide it.” She responded: “You don’t know what you get paid? . . . Out there, taxpayers, 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.”
Mr Brittin said Google paid a “fair rate” of 20 per cent in tax on profits from UK activities and had paid more than the sum demanded by HM Revenue & Customs. However, when Richard Bacon asked him to disclose the amount of profit arising from UK activities, Mr Brittin said: “I don’t have a profit number in front of me, but it was a big profit.”
Tom Hutchinson, Google’s global head of tax, also said that he did not “have that number in front of me”. Both executives then agreed, incorrectly, that UK profit was £231 million, significantly more than the £106 million declared in Google UK’s latest accounts. The company has now been forced to clarify its profit figures with MPs.
Mr Brittin said that much of the economic value driving sales in the UK was created by 20,000 engineers writing code in the US, rather than Britain. Google’s 4,000 staff in the UK were outnumbered by the 5,000-plus in Ireland who processed business for the whole of Europe, the Middle East and Africa.
The public accounts committee heard that Google’s £130 million settlement in Britain was made up of £18 million in interest and an unknown amount, thought to be £28 million, relating to a separate dispute over shares handed to employees.
Mr Hutchinson confirmed that Google would not pay George Osborne’s diverted profit tax, which was nicknamed the Google tax when it was brought in to counter artificial structures put in place by multinationals, even though its “double Irish” structure remains in place.
Dame Lin Homer, the outgoing boss of HMRC, also came under fire after boasting that the UK settlement was “the largest settlement Google have made outside the US”. The authorities in Italy and France have demanded more money from Google but have not yet concluded their investigations.
The Times has learnt that five Google managers, understood to be based in Dublin, have been placed under criminal investigation by an Italian magistrate working alongside tax authorities. Italy has accused Google of dodging €227.5 million in tax between 2009 and 2013. As in the UK, Google in Italy is accused of registering sales at its European headquarters in Ireland, where tax rates are more lenient.
The managers were targeted by Francesco Greco, a magistrate in Milan, after an investigation into Google’s tax position in Italy. Police have handed over their findings to Italy’s tax agency, which could now demand the unpaid tax and large fines and interest payments. Google has said it complies with Italian tax law and is co-operating with the authorities.