Tuesday 2nd February
Ah, where do we begin? The first question I have to ask is that even if we accept the ‘deal’ reached with our own tax authorities, based on an assessment of how much profit Google has made on U.K. activities – how do we know that Google, a huge multi-national is reporting the same numbers to both other EU authorities and also the Tax Authorities in America? They could be misleading us all….heaven forfend we should even entertain the idea.
But the biggest lie, and it was repeated by both the head of PR for Google and Sajid Javid, the Tory Business Secretary, on Andrew Marr. They both stated that the 130 million in back taxes was not the only tax which Google paid, indeed they paid millions in VAT and PAYE. And in a strange way this is both a lie and not a lie. It is true that Google may well have signed cheques (or actually BACSed over) large sums both for VAT and for PAYE. But it was never their money in the first place. Every time a customer of Google places an advert (or any other revenue) Google will have given them a rate, say £100.00 and then, as is the legal requirement will have had to add 20% on top for VAT. The customer will have paid £120.00 (incidentally reclaiming the £20 on their own VAT return), Google will have received £120.00, £100 of which is theirs and will form part of their profit calculations and the £20 belongs to the Government, and always has done – it was never Google’s money. Eventually this will be paid over to the Government, but it was really paid for by Google customers and was never a part of or ever owned by Google. Therefore to claim that Google has paid millions in VAT is a lie; their customers have paid this.
PAYE is another issue. Staff working for Google will have been paid a Gross amount, of let us say £1000 out of that there will have been deductions for PAYE, let us say £200 and National Insurance of let us say £100. The employee will have received £700 and the Government via Google £300. Google will deduct the whole £1000 from any profit calculation – but it is their employees who will have, at one step removed, paid this money to the Government. It is true however that Google will have had to pay Employers National Insurance on any employees working wholly in the U.K. This is roughly 8.5% of Gross pay. This amount is also put against any profit calculations.
I am sorry if this sounds pedantic but I come across it all the time; Directors who moan time and again about the size of their VAT or PAYE payments – and I have to explain to them that actually this was never your money in the first place, you were simply collecting it on behalf of the Government and are now handing it over; your customers and your staff are paying these taxes – not you.