Report published 24 February 2016. Government response published 28 April 2016.
Transparent, predictable and fair taxation is at the core of our public finances. The Government has a responsibility to assess and collect tax due from all taxpayers, without fear or favour, and taxpayers should pay all that tax which is due. In 2012, the Public Accounts Committee looked at HMRC's accounts, and of principal concern to the inquiry was the corporation tax paid by multinational companies.
The hearings held showed that international companies were able to exploit national and international tax structures to minimise corporation tax on the economic activity they conducted in the UK. In the Public Accounts Committee report published in November 2012, Members considered that these companies were not paying their fair share and that this practice was widespread. They concluded that HMRC was not taking sufficiently aggressive action to assess and collect the appropriate amount of corporation tax from these multinationals. Members reported that because companies did not pay their fair share of tax, other taxpayers were having to pay more. Both HMRC and corporate taxpayers were therefore failing to meet the legitimate public expectations from the tax system.
Previous evidence "unconvincing" and "evasive"
In the 2012 inquiry, the Public Accounts Committee took evidence from multinational companies and HMRC to understand how successful companies with huge operations in the UK pay little or no corporation tax. The evidence received was unconvincing, and in some cases evasive.
On Friday 22 January 2016, it was reported that Google had agreed to pay £130m in back taxes after an open audit of its accounts by the UK tax authorities. The payment covers money owed since 2005 and follows a six year inquiry by HMRC. Google is one of several multinational companies to be have been accused of avoiding tax, in spite of making billions of pounds of sales in Britain. Matt Brittin, head of Google Europe, told the BBC: "Today we announced that we are going to be paying more tax in the UK. 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."