Google whistleblower reveals massive tax avoidance scheme; ready to hand over 100,000 emails to UK authorities

“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

46 Comments

      1. 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

  1. 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

    1. 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.

        1. 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.

          1. 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.

      1. 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

    1. 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?

      1. 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.

      1. 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.

  2. …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.

  3. 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.

    1. 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.

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