“A former Google executive has blown the whistle on a massive and ‘immoral’ tax avoidance scheme that has ‘cheated’ British taxpayers out of hundreds of millions of pounds over the past decade,” Simon Duke and Jon Ungoed-Thomas report for The Sunday Times. “Barney Jones, 34, who worked for the internet search giant between 2002 and 2006, has lifted the lid on an elaborate structure which diverts British profits through Ireland to the Bermuda tax haven.”
“Although Google’s London sales staff would negotiate and sign contracts with British customers, and cash was paid into a UK bank account, deals were technically booked through its Dublin office to minimise its liabilities here,” Duke and Ungoed-Thomas report. “Jones, a devout Christian and father of four, is ready to hand over a cache of more than 100,000 emails and documents to HM Revenue & Customs (HMRC), detailing the ‘concocted scheme.'”
Read more in the full article here.
In a related article, Ungoed-Thomas and Duke report, “Jones, 34, a team manager, helped enlist some of Britain’s biggest companies to buy Google advertising.”
“During his four years at the firm, he sat in on numerous sales pitches in which companies agreed to join the Google bandwagon,” Ungoed-Thomas and Duke report. “Amazon, Lloyds TSB, Argos, British Airways and Sony were among the firms who agreed to buy advertising from Google UK sales teams.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Tommy” for the heads up.]
Related article:
UK lawmakers challenge Google’s ‘smoke and mirrors’ on tax – May 16, 2013
uuuuuuuhhhh
Busted!
Avoiding payment of taxes is not a crime, evasion of payment of taxes is a crime.
It all depends on the content in the emails. In the UK there is this thing about where the business is done is where the tax is levied. So if Google has made specific references to moving business to Ireland in order to avoid this issue with HMRC, then that would amount to evasion. Google would be in deep doodoo
Now every country they do business in will start an investigation…. Economic conditions being what they are every country will be lining up to see if they can squeeze a bit more tax or fines…I feel bad for them … NOT
Not a big Google fan, but seven years later?
Remember when Google used to have a motto? I guess they mind hypocrisy way more than they do mind hacking the system.
Do know evil! Is that what you were thinking?
Evil is just an old friend and family now for Google. They won’t leave home without it!
In the US,. Tax avoidance is legal and a good business practice. However, tax evasion is a crime. I know nothing about British tax law.
Yes, but there is an industry devoted to concocting schemes that appear to be business transactions but are just tax evasion tricks. They rely on keeping the IRS understaffed enough that they don’t have the resources to catch most of these crooks. When the players are the tax evader and his attorney that cooked up the scheme whistleblowers are far between.
yeah, that poor ol’ IRS needs all the help they can get.
The current crop of morons commenting at MDN can pay more tax than required by law, if they choose. They can be the shining examples of idiocy in action. If they choose instead to use a standard deduction or any other deduction, as allowed by law, then they can include themselves in the same category as any other individual or business that does the same.
99.99% (maybe more) of people in the U.S. do not know the U.S. tax codes (federal, state and local) well enough to take all available deductions and exemptions. Hell, most CPAs don’t know the rules well enough. To say that the U.S. Tax Code is complex is like saying the Internet is just a bunch of information tubes.
Believe it or not, when I corrected a CPA firm about a mistake in one of my filings (they didn’t take an allowable deduction) they offered me a job because I knew more about the code than they did — and I’m a physicist!
There is a select sub group of CPAs that are allowed, by law, to appear on your behalf in Federal Tax Court instead of a lawyer. Those guys (and gals) are the ones who know the system best, but he few I’ve met admit that even they don’t know the code all that well.
So saying that people *choose* to over pay is just asinine. It’s absolutely NOT like them saying, “I know I can save $500 on my taxes by taking this deduction, but the U.S. Government needs the money more than I do. Therefore I won’t take it.” They’re NOT idiots. They just have no idea what the rules are beyond the most rudimentary set.
That’s not what he is saying. The comment isn’t about ignorance of the tax code.
We are Morons for not obeying the law? So you believe that morality is anything you can get away with?
You say that like it’s a bad thing.
Every Dollar, Euro, Yen or Pound that Google keeps away from tax collectors is money not spend on bloody mayhem.
-jcr
If done legally without deception and fraud, fair enough. This does not appear be legal, ethical or moral.
And in response Google’s stock should sky rocket tomorrow. Of course. smh
New motto:
Do no taxes.
Do hundreds of millions of pounds of Evil.
Google: do know evil.
This reminds of Microsoft a decade ago in a way, the hits just keep on coming, please, let them keep coming, expose Google for the frauds they are.
That’s is let the venom and bitterness out. Feel better, don’t you. Feel righteous and perfect, don’t you. Forget that nonsense about presumed innocence, vent your spleen. What is your choice of punishment? Burning at the stake? Drawing and quartering? How about life without parole living with a mindless twit like yourself, or would that be too cruel?
I would just like to see the executives get exposed and then imprisoned. Specifically the CEOs. I will settle for a huge fine and worldwide investigation of Google’s tax evasion tactics.
I’ll be surprised if it gets any attention anywhere. Now if it was Apple it would be all over the news.
So, Google’s fulfilling their fiduciary duty to keep their shareholders’ money out of the greedy mitts of the tax man. Good for them.
Legally, companies do not have a duty to minimize taxes.
They have a duty to preserve, and if possible, to increase shareholder value. Giving away the shareholders’ money to governments when it can be avoided is a breach of that duty.
If Apple gave the US government 95% of its profits would you consider that the actions of enlightened citizenry?
…a massive and ‘immoral’ tax avoidance scheme…
DON’T BE EVIL
http://en.wikipedia.org/wiki/Don%27t_be_evil
GOOGLE FAIL:
It was first suggested either by Google employee Paul Buchheit at a meeting about corporate values in early 2000, or according to another account by Google engineer Amit Patel in 1999. Buchheit, the creator of Gmail, said he “wanted something that, once you put it in there, would be hard to take out”, adding that the slogan was “also a bit of a jab at a lot of the other companies, especially our competitors, who at the time, in our opinion, were kind of exploiting the users to some extent.” While the official corporate philosophy of Google does not contain the words “Don’t be evil”, they were included in the prospectus (aka “S-1”) of Google’s 2004 IPO (a letter from Google’s founders, later called the “‘Don’t Be Evil’ manifesto”): “Don’t be evil. We believe strongly that in the long term, we will be better served — as shareholders and in all other ways — by a company that does good things for the world even if we forgo some short term gains.” The sixth point of the 10-point corporate philosophy of Google says “You can make money without doing evil.” The motto is sometimes incorrectly stated as Do no evil.
Interesting if it’s true. Just sounds a little bit sketchy. And I thought many companies, including Apple, had dealings through Ireland to avoid paying higher taxes overseas? Dunno? I’m not exactly a corporate tax attorney. But if it is true I’ll bet Google isn’t the only company that does it.
They’re not.
Apple, for example, runs some sales through Ireland which means I pay more VAT than I would here in the UK, but Apple pays less in corporate taxes. Which means that my country actually loses twice. iTunes itself is Luxembourg-registered which means someone, somewhere is running a neat little run-around the authorities.
But ‘new age’ companies like Apple and Google aren’t the only people who are leveraging these schemes; Starbucks, BP, Shell, Vodafone and many, many others are all playing games with what they call transfer pricing and ‘phantom transactions’ that are simply ‘funny money’ book-keeping exercises.
Shell, for instance, now holds all of its ‘trademarks’ and brand identity in a Swiss-based entity that charges every end-market for every use of the Shell trade dress on packaging and on the filling station forecourt. Starbucks does the same in Luxembourg whilst routing the purchase of all its whole-bean coffee through the Netherlands.
It’s legal, but it really stinks because these multi-nationals are effectively accessing parts of the tax code that are unavailable to small independents, so not only are they winning on economies of scale, but they’re also effectively being subsidised by their smaller competitors.
ERic Schmidt is currently in the UK and rapidly pulling out of scheduled appointments. Yesterday he pulled out of an interview on BBC TV without giving a reason and there is some doubt whether he will turn up for a meeting scheduled today with the UK Prime Minister, David Cameron.
It’s almost as if he’s running scared.
http://www.independent.co.uk/news/uk/politics/google-boss-eric-schmidt-may-snub-david-cameron-over-companys-house-of-commons-grilling-8622138.html
Black helicopters.
Here in the UK under the previous government the atmosphere regarding tax avoidance was very relaxed. Things have changed now. There’s a huge media and government campaign against tax avoidance. The irony is that the UK government is committed to reducing corporation tax to boost its attractiveness to investors as a result of becoming uncompetitive under the previous government due to high taxes. The UK government is also fighting tooth and nail the proposed European financial transaction tax because it will hit London’s financial centre disproportionately.
The UK government has also written to it’s dependancies encouraging them to sign information sharing agreements to ensure shareholder data is passed cross border.
They can’t have it both ways. Either they recognise that low taxes encourage economic activity (the current government view) and respect the right of its sovereign territories to run their tax affairs as they see fit or they stop this constant attack on tax avoidance.
They encourage low tax as a policy to attract investment but attack businesses who make use of UK and International tax avoidance strategies, all of which are within the law, and are the result of past and current government policies to make the UK tax competitive compared to our European neighbours.
This dichotomy relating to tax policy is driving UK businesses to despair.
The UK already has a financial transaction tax of .5%, much higher than the proposed .1% the EU will be instituting.
Correct, but the proposed EU Financial Transaction tax will widen the scope of financial transaction taxes to many areas not currently taxed. Since approx. 60% of the E.U.’s financial transactions occur in London such a tax will hit the UK disproportionately and undermine it as the E.U.’s hub for financial transactions. The proposal is widely seen as a French/German proposal to benefit Germany in particular and may undermine the E.U.’s competitiveness as a whole at a time when Europe is already uncompetitive compared to many countries, in Asia, for example.
Further to this, once on the statute book, taxes are rarely rescinded or reduced which means that such a financial transaction tax may ultimately cause great harm to Europe’s competitiveness at a time when many countries in Europe are virtually bankrupt due, in part, to being hugely unproductive, Greece and Italy being two examples.
finally someone besides Apple gets blamed for all the Malheurs du monde!
This “former” employee will find it difficult gaining employment now. Feeling self righteous won’t help paying the bills. This person’s bitterness and hate will be their regret later.
I’m sure he’ll be crying as he walks away with his 10%.
If.
Maybe UK has a whistle blower lay like US. Whistle blower can get 10% cut in US of what IRS recovers.
Little history lesson for the fanbois. Apple’s CEO recently faced questioning by the Democratic controlled Senate to “explain” Apple’s policies and practices of tax avoidance. Now, if a disgruntled former Apple executive, say Scott Forstall, testified to various misdeeds and conspiracies by Apple will you also be so vigorous in your condemnation? I would love to read your comments then.
Apple is borrowing money instead of “repatriating” foreign income which was already taxed in other countries because the US feels entitled to over 30% on income that was not earned in the country which is insane. That’s entirely different than say collecting income from entities in the UK and paying tax for it in Ireland or the Netherlands.
It’s getting better.