Googleâ€™s executives have been accused of being out of touch with reality after the companyâ€™s most senior UK-based executive was unable to tell MPs how much he earned.
Matt Brittin appeared before the public accounts committee on Thursday to be questioned alongside senior tax officials about Â£130m in back taxes that Google agreed to pay in a deal announced last month.
In an early session of parliamentâ€™s spending watchdog, he repeated a claim that his company is paying 20% tax on its UK profits, not the 3% cited in media reports.
However, he and a colleague were unable to say on what figure the 20% was paid, also whether UK ministers had discussed tax with the company as the deal was being negotiated, or whether the French and Italian governments had extracted more in taxes from the tech giant.
Brittin, the president of Google Europe, the Middle East and Africa, declined to respond to a request to say how much he was paid, saying: â€œIâ€™ll happily disclose that if itâ€™s a relevant matter for the committee.â€
The committee chair, Meg Hillier, demanded to know the figure as she sought to emphasise the gulf between senior executives and ordinary citizens filling in their tax returns.
But Brittin said he did not have his salary calculations to hand. â€œYou donâ€™t know what you get paid, Mr Brittin?â€ she said to laughter in the room.
â€œOut there, our constituents are very angry; they live in a different world clearly to the world you live in,â€ she said.
Referring to the companyâ€™s Friday evening announcement in January that it had reached a tax settlement with HMRC, she said: â€œIt seems a bit of a PR disaster if you didnâ€™t have the nous to realise in the same week taxpayers were filing their tax returns.â€
Brittin responded: â€œI understand the anger and understand that people when they see reported that we are paying 3% tax would be angry. But weâ€™re not. Weâ€™re paying 20% tax.â€
MPs later asked him on what figure Google paid tax at 20%.
â€œI donâ€™t have that figure in front of me,â€ Brittin said.
During the session, Googleâ€™s executives disclosed that the firm paid Â£112m in tax and interest of Â£18m for a 10-year period following negotiations with HMRC officials. However, HMRC imposed no fine for the late payments.
Asked if the Â£130m settlement was fair, Tom Hutchinson, a vice-president of Google Inc, told MPs that it was. However, he could not explain why the company had not paid its tax for nearly a decade. â€œThat is a good question,â€ he said.
The chancellor, George Osborne, had claimed Googleâ€™s settlement was thanks to his diverted profits tax (DPT), which was introduced last year to target multinationals artificially routing profits overseas.
But Hutchinson said: â€œMy understanding is that it [the tax deal] had nothing to do with the DPT.â€
He could not confirm whether sales and profits in France and Italy were lower, despite Google reportedly paying more tax in those jurisdictions.
â€œWe are not confirming those rumours,â€ he said.
MPs also addressed Googleâ€™s decision to set up its base in Ireland for tax purposes. The company insists its Â£4.6bn of sales to UK advertisers are conducted by some of its 5,000-strong workforce in Dublin.
The figures reflected the fact that corporation tax was paid not on sales, but on the economic value of activities in the UK, said Brittin. Much of the economic value driving sales in the UK was created by 20,000 engineers writing code in the US.
The Labour committee member Caroline Flint asked whether tax issues arose during more than 20 meetings held between Google and government ministers during HMRCâ€™s six-year inquiry. Brittin said he had no direct knowledge, but added: â€œIâ€™d be surprised if tax hadnâ€™t come up from time to time.â€
Under the tax deal, which will keep it clear of the diverted profits tax, Google has agreed to pay tax on an element of future revenues from UK advertisers as well as on profits. The company will be able to keep taxes low by continuing to book advertising deals with UK clients through its international headquarters in Ireland.
Dame Lin Homer, the head of HMRC, told MPs she was not a tax expert but that most of her six fellow tax commissioners were. She said that it might be possible to reopen HMRCâ€™s six-year inquiry into Google if new material was presented to them.
Homer, who is stepping down in April, denied that large companies such as Google were given preferential treatment in comparison to small firms. â€œIt is exactly the same system we apply to everyone,â€ she said. â€œWe then apply exactly the same approach to expecting back payments and fines.â€
Jim Harra, HMRCâ€™s director general of business tax, said the six-year audit was labour intensive and involved lawyers, data analysts and economists. At any one time there would be â€œmore than 10 and less than 30â€ people working on the Google tax deal, he said.