Google to pay £130 mn in UK back taxes

Google has agreed to pay £130 million in back taxes to the UK, prompting criticism from opposition lawmakers and campaigners who said the "derisory" figure smacked of a "sweetheart deal".

In recent years, Google, now part of Alphabet Inc, had come under pressure over its practice of channelling most profits from European clients through Ireland to Bermuda, where the profits were not subject to tax.

In 2013, the company faced a UK parliamentary inquiry after a Reuters investigation showed the firm employed hundreds of salespeople in the UK maintaining it did not conduct sales in the country, a key plank in its tax arrangements.

According to the search giant's Google 22 January statement, the £130 million would settle a probe by the UK tax authority, which had challenged the company's low tax returns for the years since 2005.

It added, it had also agreed to a basis on which taxes in the future would be calculated.

"The way multinational companies are taxed has been debated for many years and the international tax system is changing as a result. This settlement reflects that shift," a Google spokesman said in a statement.

Meanwhile, chancellor George Osborne had been quick to claim the tax deal that HMRC reached with Google was ''a major success'' – fruit of the Tory government's determination to get tough on multinationals ducking their taxes by shifting profits round the globe.

According to commentators, the announcement revealed a little desperation on the part of HMRC and the Treasury to come up with some kind of figure that it could claim to have been ''squeezed'' out of a terrified giant.

They add that Google seemed to have emerged remarkably lightly as compared with ''ordinary'' taxpayers.

Further the fact that there was no clarity as to how this figure was reached,  vindicated the demand of the shadow chancellor, John McDonnell, for the National Audit Office to look at how it came about.