Former Google UK exec alleges company diddled its taxes

A former employee of Google UK has alleged the company carried out a massive and "immoral" tax avoidance scheme, cheating us British taxpayers out of hundreds of millions of pounds over the last decade.

Along with Amazon, Google has recently come under fire for not paying enough tax. Now former exec Barney Jones says Google's sales staff secured advertising deals almost exclusively in London, rather than in Dublin, where they claimed to be based, The Sunday Times reports (subscription required).

This contradicts Google VP Matt Brittin's claim to the Commons Public Accounts Committee that while "a lot of the aspects of selling" ads happened in the London office, the Dublin one was actually closing the deals. (Ireland has a much lower rate of corporation tax -- 12.5 per cent, compared to the UK's 23 per cent -- so Google bases its European HQ there.)

Brittin claimed only 1 per cent of Google's UK customers were directly sold to by UK staff, but then admitted this accounts for 60 to 70 per cent of its UK revenue.

Jones claims to have a cache of 100,000 emails and documents that detail the "concocted scheme". He'll hand them all over to HM Revenue and Customs.

Google told The Sunday Times it wasn't able to respond to documents that haven't yet been made public, but did say "none of the allegations put to us change the fact that Google pays the corporate tax due on its UK activities and complies fully with UK law."

Google executive chairman Eric Schmidt echoed this sentiment in a piece for the Observer. He said he understands why the amount of tax Google pays has generated some controversy, but that the company wasn't breaking any laws.

"At a time when families are having to tighten their belts and funding for vital public services is under pressure, corporate taxation is rightly a hot topic," he wrote. "And as a company that has always aspired to do the right thing, we understand why Google is at the centre of that debate."

He defended the company's £3.4m tax paid on £3.2bn of sales from UK customers last year as following what politicians laid out, and called for a reform of corporate tax law. He also said that without its large revenues, Google wouldn't be able to reinvest in the UK economy, and that innovation would be stifled.

"While profit has become something of a dirty word, it's important to remember that many corporations reinvest their profits in research and product development, which in turn tends to lead to job creation, further economic growth and, ultimately, more tax."

Do you agree with Schmidt? Or does it sound like an excuse to you? Should tech companies be brought to book over their tax schemes? Let me know in the comments, or on our Facebook page.