When George Osborne announced at the Conservative Party conference in 2014 that he would force companies such as Google, Facebook and others to pay more tax in the UK, some of those firms were privately incandescent. As a Daily Telegraph journalist covering the conference at the time, I was witness to a rare example of usually conciliatory American firms eager to critique government policy in robust Anglo-Saxon. Why, they asked, didn’t the UK see the wider benefits of having major digital employers based here, and didn’t ministers understand that they were paying their due taxes where they were founded, in America? In public, technology-friendly commentators suggested the announcement was all politics and no practicality.
Last week, however, Google announced that it would pay £130m in backdated taxes, after a six-year HMRC investigation. Backbenchers from across all parties fulminated that multi-billion pound Google surely owes more than that, with some sounding as though they were looking to the firm like hopeful correspondents writing to recently minted lottery winners.
The payment makes Google the first firm of many to be affected by the ‘diverted profits’ tax, and while France and Italy may claim they’d like infinitely more from Google, it sets a standard independent from politicians that is likely to be used throughout Europe.
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