Labour calls for investigation into Google tax deal

Labour demands public inquiry into Google tax deal. Credit: Reuters

Labour have called for Google's "derisory" tax deal to be investigated by the public spending watchdog.

The internet giant reached an agreement with HM Revenues and Customs to pay £130m to cover tax owed since 2005 and will also start to pay taxes "based on revenue from UK-based advertisers".

But the shadow chancellor said the public would be "sceptical" about the "derisory" settlement and called for the National Audit Office to launch an inquiry into the deal.

John McDonnell said he would demanding details of the deal from Chancellor George Osborne in parliament on Monday.

"It looks to me from all the independent analysis that this is relatively trivial in comparison with what should have been paid," he told BBC Radio 4's Today programme.

The move comes after years of criticism of Google and other multinational firms over their tax arrangement in the UK and across Europe.

Mr Osborne described the payments as a "victory" for action on tax avoidance:

Meg Hillier, who chairs the Common's Public Accounts Committee (PAC,) will call Google and HMRC representatives before MPs to explain the deal, which she said showed the taxman "admitting it pulled in too little tax from Google for nine out of 10 years".

"HMRC now needs to assure taxpayers that it will keep up the pressure to tackle whatever the next emerging issue is in real time, rather than years later. It is effectively admitting it pulled in too little tax from Google for nine out of 10 years."

An HMRC spokesman said: "The successful conclusion of HMRC inquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the UK. Multinational companies must pay the tax that is due and we do not accept less."