Google is not scared of HMRC

When parliament makes the law we all expect the law enforcement bodies to implement it in a fair and equitable way with common sense. Tax is a law and HMRC is the enforcement arm of the government. Like all other government institutions, they simply execute the law and they are not allowed to interpret as they like. Here HMRC appears to have done simply what they are not allowed. Now the responsibilities lie with the stakeholders in this process for example; Chancellor, Treasury, HMRC, Parliament Select Committee and independent observers.
In my view HMRC is responsible in collecting tax charged to Google however they have negotiated with Google the tax liability £130 million or 3% of its profit over the period of 10 years which should not be within their powers.

Here are the problems:

  1. Instead of solving the problem, political parties are making accusations on each other for failing to do something.
  2. Tax rate is fixed and should not be open to negotiation for big corporates. It is unfair when everyone is paying 20% or 30% that organisations such as Google, Amazon, Starbucks etc. are getting away with it because of their size and multinational status.
  3. There is lack of consistency and sense of unfairness when treating small businesses who genuinely struggle to meet tax liability and big corporates. HMRC’s decision to accept £130 million may be based on cost of legal action against Google and ultimate net tax receipt. The real gain here is, if HMRC take strong action and make Google pay their fair share of the tax then other big corporates will follow and pay their fair tax as well. HMRC does not need to worry about the legal costs of each and every big corporate because Google’s verdict would set the precedent.
  4. Who is going to bell the cat? HMRC is acting as judge, jury and the executioner. The Chancellor says HMRC is independent. So it’s up to the parliament select committee to see if an independent enquiry is suitable or not.
  5. The real facts could only come out if there is an independent enquiry, after all, it’s the judiciary who has the competence to interpret the tax law not HMRC.

Google may be trying to pay 3% tax out of Social Awareness and brand protection intention and not because of change of heart.

Generally if we do not like any business we just turn away and find another provider, but in this case would you go to Yahoo, Bing etc for your searching and advertising?

 



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