Google tax deal labelled 'derisory' in UK

An agreement for US firm Google to pay £130m in UK back taxes has been labelled as "derisory" and a "sweetheart deal" by critics, BBC News reports.

The payment covers money owed since 2005 and follows a six-year inquiry by Her Majesty's Revenue and Customs.

The government hailed "a victory", but shadow chancellor John McDonnell said the figure was "relatively trivial".

Labour MP Meg Hillier, chair of the public accounts committee, said it was "a small amount of money" for Google.

The tax agreement comes after years of criticism of Google and other multinational firms over their tax arrangement in the UK and across Europe.

Mr Osborne described the agreement as a "victory" for action on tax avoidance, saying: "We now expect to see other firms pay their share."

However, speaking to BBC Radio 4's Today programme, Labour's Mr McDonnell called for greater transparency, saying it looked like a "sweetheart deal".

"HMRC seems to have settled for a relatively small amount in comparison with the overall profits that are made by the company in this country. And some of the independent analysts have argued that it should be at least ten times this amount," he said.

Mr McDonnell said he would raise the issue in Parliament next week and called for the deal to be investigated by the public spending watchdog.

"It looks to me from all the independent analysis that this is relatively trivial in comparison with what should have been paid. In fact one analysis has put the rate down to about 3%, which I think is derisory," he added.

Conservative MP Mark Garnier, a member of the Treasury select committee, said the agreement represented a "relatively small" amount of money compared with Google's UK profits.

Richard Murphy, from the independent Tax Justice Network, estimated Google should be paying £200m every year in Corporation Tax.

He said the figure was based on the firm's declared profit margins and sales in Britain in 2014 of £4.5bn.

Ms Hillier labelled the agreement a "cosy deal", saying she would call Google and HMRC before MPs on the Common's Public Accounts Committee to explain the deal.

The deal showed HMRC had admitted collecting "too little tax from Google for nine out of 10 years", she added.

Margaret Hodge, the Labour MP and former chair of the same committee, said HMRC had "a duty" to explain details of the agreement.

The government needed to "assure us that everyone is treated fairly before the law and confidence in tax system is restored", she added.