We recently reported that Google and the British Government inked a £130 million tax settlement figure, which is being critized for being too lenient. Name, Former cabinet minister Vince Cable, media boss Rupert Murdoch and a former chair of the Commons public accounts committee, Margaret Hodge, have all spoken about the matter, claiming that the British Government and especially Prime Minister David Cameron are "too close to Google." Vince Cable explained that Google had a "great deal of influence" at Number 10 Downing Street and that Google's executive chairman, Eric Schmidt, had good links. He went on to explain that this "very close relationship probably made it very difficult for HMRC to be aggressive in its tax settlement with the company." He went on to state that the UK's tax deal with Google "undermines the effort to deal with this internationally," citing how the French and Italian Governments have been trying to squeeze higher tax levels from Google.
Rupert Murdoch, the boss of British newspapers The Times and The Sun and currently facing accusations that he and his executives were too close to senior British politicians during the UK 'phone hacking scandal, send several tweets on Wednesday claiming that the "posh boys in Downing Street" are in awe of Google. He also stated that the UK Government is too close to Google and has settled a deal of "paying token amounts for PR purposes." Murdoch controls the Times and Sun newspapers and continued with, "Google has cleverly planted dozens of their people in White House, Downing St, other governments. Most brilliant new lobbying effort yet." Rupert has been a Google critic for a number of years and has also seen his business tax affairs investigated in Australia.
Margaret Hodge explained that Google had targeted all political parties in order to win influence in Westminster: "They are very, very clever at building their political links. If I am absolutely honest, they had as strong links with Labour. But their executives realise that these things really do matter, even when negotiating tax deals."
In response, Downing Street said that the UK Prime Minister had nothing to do with the deal struck between the HM Revenue & Customs and Google. It could not be said if Cameron and Google had ever discussed Google's tax arrangements and that many of the twenty five meetings were involved with issues such as Internet security. Downing Street also explained that neither David Cameron or George Osborne knew of the tax arrangement deal until shortly before Google announced it, and that George Osborne, the British Chancellor, hailed it a "major success." The UK tax office is refusing to explain how the £130 million charge is calculated, citing taxpayer confidentiality. We do not know the effective tax rate and if this £130m includes any fines or interest. Google said this on the matter: "After a six-year audit by the tax authority we are paying the amount of tax that HMRC agrees we should pay. Governments make tax law, the tax authorities enforce the law and Google complies with the law."