How corporations avoid paying tax

Google, the internet monster will this year only pay £6m in tax, despite a turnover of £395m from its operation in the UK. Eric Schmidt is the chairman of Google, and he says the company would be prepared to pay more but he can’t due to the British tax laws. Can it be right that off-shore companies don’t pay tax in the UK?

Gary David Smith is an IT entrepreneur, and he says that is in inevitable that when a legal opportunity to not pay tax arises then many companies will grab the chance to keep hold of their money.

Mr Smith, who is a co-founder of Prism Total IT Solutions, went on to say that what he thought was grossly unfair was the way in which these massive, multi national companies were able to distribute their tax affairs across the globe, but SME’s could not.

“Advances in IT and ‘Cloud’ computing means that companies of all sizes can now base themselves overseas,” he said.

“Who’s to say that they are wrong if the system allows them to do this? Companies trading in the UK are still generating capital and providing employment here. What is needed are more incentives to keep UK employers in this country,” said Mr Smith – who added that Prism IT Solutions is based solely in the UK and pays tax here.

“A good move would be to remove employer NI contributions for new recruits to all companies that pay UK Corporation tax,” he said.

Google’s executive chairman Eric Schmidt seems to take a very similar view to Gary David Smith, he said: “We could pay more tax but we would have to do so voluntarily. It’s very good for us [in Britain], but to go back to shareholders and say ‘We looked at 200 countries but felt sorry for those British people so we want to [pay them more]’ . . . there is probably some law against doing that.”

It is worth noting that Google’s contribution to the exchequer has actually risen. Last year, Last year they paid £935,000 tax on £2.39 billion in revenue.

“Fully-function virtual office space and remote staff working in the ‘Cloud’ has at least created a level playing field for companies of all sizes,” said Gary David Smith – whose company supplies complete IT support to more that 1000 SME’s in the UK.

A spokesperson for Google commented that the company’s workshops helped online businesses to grow and that: “We comply with all the tax rules in the UK. We make a big contribution to the UK economy by employing over a thousand people, helping hundreds of thousands of businesses to grow online and investing millions supporting new tech businesses in East London.”