MPs challenge Google over tax reporting

The internet giant Google has been challenged by MPs over the way it reports its income for tax.

The chair of the Public Accounts Committee, Margaret Hodge, said whistleblowers had told her that Google had sold advertising within the UK and invoiced customers in the UK.

Google had earlier said that UK customers paid Google in Ireland.

"No one in the UK can execute transactions," said Google's head of sales in Northern Europe, Matt Brittin.

"No money changes hands," he said, despite the fact that he employed sales staff in Britain.

But Mr Hodge said: "It was quite clear from all that documentation that the entire trading process and sales process took place in the UK."

She read from the official guide to parliamentary procedure, Erskine May: "A person prevaricating or giving false evidence can be considered to be in contempt of the House."

Google's sales in the UK are worth £3.2bn, but most are routed through Dublin. In 2011 it paid £6m in UK corporation tax.

But Mr Brittin maintained that any advertiser in Europe would deal directly with Google in Dublin, which employs some 3,000 staff.

"When we came to Europe, we set up Dublin as our European headquarters," said Mr Brittin

"We wanted to be able to contract with customers across the whole of Europe, not just the UK."