But question mark over whether any of the Â£130million came from the Chancellor’s new tax – he insists it did
George Osborne has defended his claim that a tax deal with Google is a “major success” after the European Commission announced that it is poised to mount an investigation into whether it amounts to state aid.
The Â£130million deal between HMRC and Google has been criticised by senior Conservatives including Boris Johnson, the Mayor of London, as “derisory”.
Downing Street refused to repeat Mr Osborne’s claim that the deal represented a “victory” earlier this week, instead describing it as a “positive” move.
However, the Chancellor yesterday said that the deal and the fact that Google will pay more tax in future is a significant success.
He told Sky News: “When I became Chancellor Google paid no tax. Now Google is paying tax and I have introduced a new thing called a diverted profits tax (DPT) to make sure they pay tax in the future.”I regard that as a major success. Is there more to do? Clearly there is. We’ve got to make sure the international rules catch up and we are leading that effort.”
But last night it was unclear how much â€“ if any â€“ of the Â£130 million was down to Mr Osborneâ€™s new tax.
According to ITVâ€™s political editor Robert Peston, the â€œGoogleâ€™s settlement means it wonâ€™t be paying this tax (DPT)â€.
And The Times reports that Revenue and Customs â€œfailed to recover a pennyâ€ from Google through DFT during settlement negotiations.
This directly contradicts Mr Osborneâ€™s tweet on January 23 from the World Economic Forum in Davos that claimed: â€œGoogle tax bill is a victory for the action weâ€™ve taken. I introduced Diverted Profits Tax.â€
But a Treasury spokesman claimed The Timesâ€™s report was â€œdeliberate misinterpretationâ€ of Mr Osborneâ€™s comments.
The uncertainty came as Patrick McLoughlin, the Conservative Transport Secretary, said Google should pay more tax in Britain in the “future”.
He praised Googleâ€™s Â£130million tax settlement to cover a five year period to 2011, but added that he hoped the company would pay more tax in the future.
Speaking on BBC Question Time, Mr McLoughlin said: “The fact that they have not paid any tax before and now they’ve paid Â£123 million, I would say is a move in the right direction Of course I would like to see Google making more payments to the country, I’d like to see them employ more people in this country.
“I believe in attracting companies here, but I believe when those countries are here they should pay their tax. It’s a move in the right direction. There is more for them to pay and I want them to pay more in the future.”
Meanwhile, Margrethe Vestager, the European Union’s Competition Commissioner, has indicated that she would be willing to consider an investigation into the Google deal.
Ms Vestager told BBC Radio 4’s Today programme on Thursday she was able to “use state aid tools to look for more individual companies and more selective advantages being given out in the form of tax rulings”.
Asked whether she would examine the situation, the commissioner said: “”If we find there is something to be concerned about, if someone writes to us and says this is maybe not as it should be, then we will take a look.”
The Scottish National Party said on Thursday that the party would submit a complaint, which would trigger the start of a possible investigation.
The news came as one of Google’s biggest British shareholders has called on the company to pay “much more” in British taxes.
James Anderson – whose Scottish Mortgage Investment Trust owns Â£120 million of shares in Google’s parent company, Alphabet – said it was in the company’s own interest to pay a “decent” rate of tax.
Â Photo: Philip Toscano/PA
Labour and the Scottish National Party have since written to the European Commission to complain about the deal.
The National Audit Office, the spending watchdog, is also preparing to mount an inquiry while the Public Accounts committee of MPs will quiz senior figures from Google and HMRC over the deal.
The Chancellor said he understood “frustration and anger” over multinationals avoiding big bills but blamed international laws and said he always sought “the best deal for Britain”.
How the Government changed its tune on the Google deal
Chancellor George Osborne tells reporters at a summit of world and business leaders at Davos: â€œThis is a major success of our tax policy. Weâ€™ve got Google to pay taxes and I think that is a huge step forward and addresses that perfectly legitimate public anger that large corporations have not been paying tax. I think itâ€™s a really positive step.â€
Boris Johnson, the Mayor of London and member of the political Cabinet, says in his Daily Telegrpah column that the deal was â€œderisoryâ€ adding: “George Osborne has made progress. The Google payback is a start. We now need to go further.”
A Number 10 spokesman declines to say the Google deal was a â€œmajor successâ€, preferring to describe it as a â€œstep forwardâ€ and a â€œpositive stepâ€.
David Cameron blames Labour for the bill, telling MPs at Prime Minister’s Questions: We’re talking about tax that should have been collected under a Labour government, raised by a Conservative government.”
Moments later Business minister Anna Soubry tells BBC Radio 4’s World At One: “It doesn’t sound like an awful lot of money, of course it doesn’t. It would be silly to say otherwise. But if it is within the rules.â€