Whose fault is Google’s tax bill?

May 21, 2013 12:00 pm

Google is the latest in a long line of companies that are being pariahed for their tax affairs. It’s not just big corporations that are being targeted either. Even the sometimes funny Jimmy Carr isn’t immune from this modern day witch hunt.

Whilst most of the newspapers and many MPs seem to be getting themselves worked up about the “low” tax bill Google is paying to the Inland Revenue. It seems no-one has bothered to ask the one and only important question – is Google doing anything illegal?

If it is illegal then by all means string them up and make an example of them. But if it isn’t, then I fail to see what the problem is. Google’s responsibility isn’t to the Revenue, it’s to their shareholders. Reducing their tax bill in an innovative, yet legal way, seems to me to be a very responsible thing to do. Furthermore, Lord Clyde famously agreed in a ruling against the Inland Revenue saying

“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue”

If the Inland Revenue doesn’t like what Google are doing, then do something about it. They are in the perfect position when they see clever avoidance schemes to change the rules. But if they are too lazy or incompetent to fix these loopholes, well it’s certainly not Google or anyone else’s “moral” responsibility to do the right thing.

google logoFurthermore, I actually think you could argue in the opposite direction. Why aren’t the CEOs of the companies not using these schemes being charged for being negligent to their shareholders. If a company was paying double for some raw material for no obvious reason at all, they would rightly be taken to task – why isn’t the same logic applied to tax bills? I find it disgusting that as a shareholder or consumer of these companies’ products, I’m having to pay for their incompetence.

The bottom line is that whilst these schemes remain legal, there really isn’t a good reason why they shouldn’t be used. Google, Amazon and even Mr Carr certainly shouldn’t be victimised for doing so. Especially when Google et al have explained to the Inland Revenue exactly what they are doing and how they’re doing it. I’m not sure how much easier they can make if for the Revenue to close these loopholes, perhaps next time they should draw them a picture or something.

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