Saturday 23 January 2016 9:09 am

Google agrees to pay £130m in back taxes in deal with HMRC

Google has agreed a deal with HMRC in which it will pay £130m in back taxes after an "open audit" of its accounts by the UK tax authorities.

The £130m covers corporation tax owed since 2005, and senior figures at Google have said it would follow rules which will result in it paying more tax in the future.

"Today we announced that we are going to be paying more tax in the UK," Matt Brittin, head of Google Europe, told the BBC. "The rules are changing internationally and the UK government is taking the lead in applying those rules so we'll be changing what we are doing here. We want to ensure that we pay the right amount of tax."

"We are paying £130m in respect of previous years when the rules were to pay in respect of profits you make in a country and then going forward we will also be paying in respect of sales to UK customers," he added.

Chancellor George Osborne has called the agreement "a victory" for the government, but shadow chancellor John McDonnell was less optimistic, branding the sums "trivial".

Google makes billions of pounds in sales in the UK but, along with other multinationals including Starbucks, Amazon and Facebook, has been accused of avoiding tax.

Despite the $5.6bn (£3.93bn) revenue Google made in the UK in 2013, it paid corporation tax of just £20.4m.

Google's European headquarters are in Ireland, where there is a lower corporate tax rate than in the UK.