Don’t tell the taxman, but Google revenues will soon beat the BBC’s

UK sales for 2013 surge to $5.6bn, bringing its corporation tax arrangements back into the spotlight

A man stands in front of a Google logo. (REUTERS/Bobby Yip)

Google’s UK revenues last year came within a whisker of the entire BBC licence fee as online advertising surged, putting yet more pressure on the US company over its relatively low levels of UK corporation tax.

Sales in the UK leapt 15.5 per cent in 2013 to $5.6bn (£3.4bn), just shy of the £3.65bn raised during the year from the licence fee, highlighting how the online search engine is rapidly rising in the financial power league of British media. Britain is Google’s second-biggest market outside the US and it recorded its best-ever quarter here in the final three months of 2013 as revenue hit $1.5bn.

News of Google’s soaring revenues, the bulk of which come from advertising, will heap further pressure on the company over its tax arrangements. Despite its huge revenues, Google paid just £11.2m in corporation tax here in 2012. The company pays all its taxes legally but books most of its UK takings through its Irish business, so avoiding UK corporation taxes.

John Mann, a Labour MP and member of the influential Treasury Select Committee, told The Independent yesterday: “Google has a massive turnover, but along with other corporations continues to scheme to avoid paying its fair share of tax. Google’s mantra is ‘don’t be evil’ – but companies need to consider the customers they rely on. At a time of wage stagnation and welfare cuts, does ‘evil’ mean illegal for Google, or should it consider a more relative concept of fairness and accountability?”

Margaret Hodge, who chairs the Public Accounts Committee, last year condemned Google’s UK tax arrangements as “devious, calculated and unethical” when the company’s UK chief, Matt Brittin, appeared before MPs.

The most recent accounts for Google UK reveal that its shares-based staff compensation scheme is also under scrutiny from HM Revenue and Customs. The company has set aside £24m to cover potential historical corporation tax on the scheme, dating back to 2005, arising from the taxman’s investigation.

Details of how much corporation tax Google paid in 2013 will not be available until Google UK files its annual accounts later this year.

Google said: “Like most multinationals, we pay the bulk of our £1.2bn corporate tax bill where our business originated, in our case the US. We’re also a significant contributor to the UK economy, having created over 2,000 jobs.”

However, losses at the internet giant’s Motorola arm, which it has just agreed to sell to Lenovo, weighed on earnings, pushing it to a loss of $384m in the quarter.