Google agrees to pay HMRC £130m in back taxes

Google will pay 10 years worth of back taxes, totaling £130 million, and higher taxes in future in the United Kingdom after an agreement with the country’s revenue service.

The deal will cover a decade of underpayment of United Kingdom taxes by the firm, which has been criticised in the past for its tax avoidance policies.

“Today we announced that we are going to be paying more tax in the United Kingdom”, head of Google Europe Matt Brittin told the BBC.

The firm collects the vast majority of its revenue from European clients at its Irish unit, irking tax authorities in countries such as France, where local clients generate billions of euros a year in advertising sales.

The European Union and national governments have been taking a tougher stand against profit-shielding arrangements used by multinational companies, including Google, Apple and Amazon. “This settlement reflects that shift”, a Google spokesman said in a statement.

Ruth Owen, director general for Personal Tax at HMRC, said: “We know that people who have had their homes and businesses flooded have bigger things on their mind than sending their tax returns to us”.

Google did not immediately respond to a request for comment.

“What I uncovered is that, while I pay 20% of my coffee shop profits in tax, numerous large coffee shop chains use legal loopholes to avoid tax or negotiate with HMRC to reduce their tax bill to 0%”.

Google is to pay £130m to the United Kingdom in a bid to draw a line under its long-running tax row.

It is an American business, meaning that it pays the majority of its taxes there. The deal could serve as a template for other companies, as well as for other countries.

Britain said: “We were applying the rules as they were and that was then and now we are going to be applying the new rules, which means we will be paying more tax”. Its tax structure led Margaret Hodge, former chairwoman of the United Kingdom parliamentary public accounts committee, to accuse Google of being “immoral”, wrote the FT.