MPs have today condemned HM Revenue & Customs' (HMRC) recent deal with Google to pay £130m in unpaid corporation tax, and called on it to lead by example in reforming international tax laws.
A report by the Public Accounts Committee (PAC) slammed the settlement for seeming "disproportionately small" compared to the size of the technology company's business in the UK.
"Public anger has been palpable ever since this settlement was announced and we still don’t know the full details," said Meg Hillier, chair of the PAC. "Whether you call it secrecy or confidentiality, this lack of transparency does nothing to build confidence that big corporations are paying their fair share of tax."
The PAC also urged HMRC to keep a close eye on agreements reached by other tax authorities with Google and to re-consider their current decision should new information come to light.
The PAC remarked that a lack of transparency made it difficult to tell whether the settlement was fair to other taxpayers, and that HMRC had taken far too long in reaching the agreement, which had resulted from a six-year investigation.
Hillier continued: "We are calling on HMRC to take a lead in reforming international tax rules. The bigger prize after a costly six-year investigation would have been to develop a new approach to the activities of internet-based companies.
"We are not convinced HMRC has achieved this and it must work with overseas tax authorities if we are to see lasting and effective change in the international tax system."
An HMRC spokesperson said that the tax authority did not settle for a "penny less than is due under the law" from multinational companies, and added:
"We completely understand that there is a real appetite for as much information and insight as possible into how we pursue the tax payable by multinationals. We are committed to being as open and transparent as we can within the constraints of our statutory duty of taxpayer confidentiality."
City A.M. also reached out to Google for comment but is yet to receive a response.
Earlier this month, PAC grilled representatives from both Google and HMRC about the deal in a heated evidence session.
Commenting on today's report, shadow chancellor John McDonnell said:
"This report further shows that it’s far too easy for big multinationals like Google to set up a merry-go-round of tax loop holes to deliberately pay the least amount of tax as possible.
"It is vital that George Osborne gets a grip as these companies have been getting away with paying very little for way too long."
Meanwhile, Liberal Democrat economic spokesperson Susan Kramer called on Osborne to fix the tax system, remarking:
"We need a system which allows HMRC to bring the full weight of UK law in ensuring that companies pay their fair share, no matter how much an hour their lawyers charge."
John Cullinane, tax policy director at the Chartered Institute of Taxation, added:
"There is nothing in the Google affair to suggest HMRC is unable to collect a fair share of corporation tax from global companies with activities in the UK. Google’s tax planning arrangements highlighted in the report seem directed at flaws in the US system rather than comprising anything that would impact their tax paid in the UK."