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Google and its auditor recalled to parliament over tax investigation

Google executives and the company’s auditor Ernst & Young have been recalled to a British parliament committee to testify on its tax status in Britain.

An investigation by Reuters has discovered inconsistencies into Google’s portrayal of its operations in the UK, especially its advertising sales practices.

Last November Google’s European boss Matt Brittin was hauled in front of the British parliament’s Public Accounts Committee (PAC) to discuss the way Google operates in the UK.

Brittin informed the PAC that Google’s sales team is based in tax-sheltered Dublin, but UK staff only deal with marketing the search engine giant as an advertising space, rather than dealing with the sale of any advertising.

“Nobody [in the UK] is selling or promoting the products, but they are definitely encouraging people to spend money on Google,” said Brittin in his evidence to the PAC. “No one is buying from them.”

If Google’s UK staff members are found to be negotiating and closing advertising deals, the search engine giant could find its UK tax bill increases significantly.

“We will need to very quickly call back the Google executives to give them a change to explain themselves and to ensure that actually what they told us first time around is not being economical with the trust,” Margaret Hodge, Chair of the Public Accounts Committee.

However, Reuters has held interviews with Google’s customers and former staff members, and after examining job advertisements, CVs and endorsements on LinkedIn has discovered that UK Google jobs involve much more than marketing.

LinkedIn profiles for London-based Google employees listed job specifications that include managing sales teams, closing deals, formulating sales strategies and other sales related responsibilities.

“Our advertisements for UK staff sometimes refer to sales skills and many of the roles include sales in the title as we are seeking to attract people with those skills and that background,” said a Google spokesman. “We accept that the wording of some adverts may have been confusing and we are working to make it clearer. As we have said many times, we comply with all the tax rules in the UK and in every other country in which we operate.”

Google’s auditor Ernst & Young will also be asked to return to the PAC to testify about their checks on Google staff and the company’s accounts.

“The evidence they gave was clear and unambiguous… Ernst & Young have questions to answer about whether they were being wholly open with us as a committee,” said Hodge.

“Ernst & Young conducts audits in accordance with International Standards on Auditing,” said the auditor’s spokeswoman Sarah Jurado. She also added that this standard “requires us to obtain an understanding of the entity and the environment in which the entity operates.”

Here’s what we think you can expect from Google I/O 2013 on May 15 – 17.

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