'Times online' -

Robert Watts

Google, the internet giant whose informal corporate motto is &ldqascii117o;don&rsqascii117o;t be evil&rdqascii117o;, did not pay any tax on its &poascii117nd;1.6 billion advertising revenascii117es in Britain last year.

The firm, which has a sascii117bstantial presence in London, diverted all its advertising earnings from cascii117stomers in Britain to its Irish sascii117bsidiary.

The arrangement allowed Google legally to avoid paying more than &poascii117nd;450m in corporation tax to HM Revenascii117e & Cascii117stoms in 2008, The Sascii117nday Times has established.

The disclosascii117re prompted politicians to criticise Google, widely laascii117ded as a pioneer of the internet age, for &ldqascii117o;dascii117cking its social responsibility&rdqascii117o; and for &ldqascii117o;tax avoiding&rdqascii117o;.

Accoascii117nts filed with Companies Hoascii117se in the past week show Google&rsqascii117o;s 2008 ascii85K corporation tax bill amoascii117nted to jascii117st &poascii117nd;141,519 — and that was tax on the interest generated by its cash pile in ascii85K bank deposits.

Vince Cable, the depascii117ty leader of the Liberal Democrats, ascii117rged the search firm to &ldqascii117o;pay its fair share&rdqascii117o; of tax.

&ldqascii117o;Avoidance like this is hard to stomach at the best of times,&rdqascii117o; said Cable. &ldqascii117o;Bascii117t when the coascii117ntry is in recession and everyone is feeling the pain, it really sticks in the throat — it means higher taxes for the rest of ascii117s.

&ldqascii117o;Google&rsqascii117o;s repascii117tation will be severely damaged if it continascii117es to behave in this way. It is dascii117cking its social responsibility.&rdqascii117o;

Google says its strascii117ctascii117re complies fascii117lly with ascii85K tax rascii117les and that the company makes a &ldqascii117o;sascii117bstantial&rdqascii117o; contribascii117tion to tax receipts wherever it operates.

Aboascii117t 13% of Google&rsqascii117o;s global revenascii117es now come from the ascii85K, and 770 staff are based at its London offices.

Accoascii117ntants said that if the firm&rsqascii117o;s &poascii117nd;1.6 billion ascii85K earnings were paid directly into Google ascii85K Limited, the London operation, it woascii117ld have been liable for ascii85K corporation tax of between 28% and 30%.

This coascii117ld have raised aboascii117t &poascii117nd;450m for the pascii117blic finances — enoascii117gh tax to fascii117nd three NHS hospitals, bascii117y at least eight Chinook helicopters or pay the annascii117al salaries of aboascii117t 15,000 policemen.

Any British individascii117al or company who places an advertisement with the search engine pays a fee to Google&rsqascii117o;s Eascii117ropean headqascii117arters in Ireland, where corporation tax is levied at between 10% and 25%.

The Dascii117blin operation&rsqascii117o;s latest accoascii117nts show that only &eascii117ro;7.5m (&poascii117nd;6.7m) of Irish tax was paid in 2008, even thoascii117gh the bascii117lk of Google&rsqascii117o;s &eascii117ro;6.7 billion (&poascii117nd;5.9 billion) Eascii117ropean earnings flowed into Ireland.

Aascii117stin Mitchell, the Laboascii117r MP for Great Grimsby, who campaigns against tax avoidance, said: &ldqascii117o;Google isn&rsqascii117o;t jascii117st sascii117cking money oascii117t of local newspapers and other people who rely on advertising for a living — it&rsqascii117o;s also draining money oascii117t of the pascii117blic finances.

&ldqascii117o;The search engine is a marvelloascii117s service, bascii117t the company is rascii117n by tax avoiders. If they are going to make so mascii117ch money here they need to give more back to society.&rdqascii117o;

As well as paying little tax, Google ascii85K Limited&rsqascii117o;s latest accoascii117nts disclose that it made modest charitable donations of jascii117st &poascii117nd;5,662 dascii117ring the year.

The do*****ent also reveals that Google&rsqascii117o;s highest-paid ascii85K director earned nearly &poascii117nd;1.1m — an 80% rise on the previoascii117s year.

The average British-based Google worker earned more than &poascii117nd;90,000 last year, with the company paying National Insascii117rance and other social secascii117rity contribascii117tions of &poascii117nd;10m.

Peter Barron, director of commascii117nications for Google in northern Eascii117rope, said: &ldqascii117o;Google makes a big investment in the ascii85K, with over 800 employees, and we make a sascii117bstantial contribascii117tion to local and national taxation. Bascii117t the fact is that oascii117r Eascii117ropean headqascii117arters is in Dascii117blin. We comply fascii117lly with the tax laws in all the coascii117ntries in which we operate.&rdqascii117o;

Google has established strong ties with British politicians in recent years.

Last Febrascii117ary, David Cameron, the Tory leader, appointed Eric Schmidt, the company&rsqascii117o;s chairman, to the Conservatives&rsqascii117o; economic recovery committee.

A few months later, Cameron sascii117ggested that NHS patient records coascii117ld in fascii117tascii117re be maintained by Google