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George Osborne's tax deal with Google in the spotlight as French authorities raid the company's offices

Published 25/05/2016

George Osborne insisted Google's agreement to pay £130 million in tax was
George Osborne insisted Google's agreement to pay £130 million in tax was "good news"

George Osborne’s tax deal with Google has again been put in the spotlight, after French tax officials raided the company Paris headquarters.

Labour accused the Chancellor of being “too easily satisfied” by a 3 per cent tax rate or £130 million deal with the search giant – branded “disproportionately small” by an influential parliamentary committee at the time.

Around 100 agents entered the search giant’s office in Central Paris at 5am on Tuesday morning amid allegations it has not paid €1.6bn in taxes in the country. The probe by French authorities comes just months after Mr Osborne hailed his UK deal with the company to pay a much smaller amount as a “major success”.

At Prime Minister’s Question time Angela Eagle, shadow business secretary, asked Mr Osborne to clarify aspects of the deal, arguing that he was “too easily satisfied on tax dodging”.

“Given the overnight news of the French authorities’ dawn raid on Google investigating allegations of aggravated financial fraud and money laundering, does the Chancellor now regret calling his cosy little tax deal with the same company ‘good news for the British taxpayer’?” she asked.

“I note that even [Boris Johnson] labeled his cosy little deal ‘derisory’ and the British public think it’s even worse.

“Despite all the rhetoric, on his watch the tax gap has actually gone up; this tax deal with the Swiss raised a fraction of the revenue he boasted that it would, and the OBR blames the lack of resources in revenue and customs.

“Why has he sacked 11,000 tax staff since 2010? When is he going to give them the resources they need to do a proper job?”

At the time of the deal the Public Accounts Committee said the £130m settlement with the company “seems disproportionately small” compared to the size of its British business.

According to analysis by the Independent, Google could owe the UK six times more than it has agreed to pay, or £800 million.

Mr Osborne replied to Ms Eagle that the government had in fact increased HMRC resources. He did not mention specifics of the Google deal.

“We increased resources for the HMRC to tackle tax evasion and avoidance. We’ve introduced a diverted profits tax so companies like Google can’t shift their profits offshore anymore,” he said.

“We’ve made sure that banks pay a higher tax bill than they ever did under the last Labour government.

Ms Osborne and Ms Eagle were standing in for David Cameron and Jeremy Corbyn due to Mr Cameron being unable to attend.

A spokesperson for Google said: "We comply with French law and are co-operating fully with the authorities to answer their questions."

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