Search engine firm, which made global profits of £6.2bn in 2012, says it pays bulk of its tax where business originated – the US

Google is back in the firing line over its tax affairs after the giant internet firm revealed it paid only £11.6m to the Treasury last year, despite generating $5.5bn (£3.4bn) of business in the UK.

Margaret Hodge, the chairwoman of the Commons public accounts committee who earlier this year accused Google of breaking its company motto of "don't be evil" said it had once again shown contempt for its customers and UK taxpayers.

Google's complex tax arrangements, under which sales are booked in Ireland but revenues funnelled to a subsidiary in the tax haven of Bermuda, help the group pay minimal tax on the billions it earns outside the US.

Google UK said in its latest accounts that it earned pre-tax profits of £37m on a turnover of £506m. But the company's most recent annual report revealed that the UK accounted for 11% of its global revenues, worth $55bn in 2012.

The disparity is achieved because the company books its sales in Ireland – although this does not generate a significant revenue boost for Dublin: the internet search company's accounts show that last year it paid €19m (£15.9m) tax to the Irish exchequer despite the Irish subsidiary handling the €15.5bn of revenues generated last year in Europe, the Middle East and Africa.

MPs have criticised Google for designating Ireland as its official sales base and branded the company's tax structure "deeply unconvincing".

The influential public accounts committee concluded that Google's Irish employees simply processed the bills, after hearing evidence from a former employee turned whistleblower who lifted the lid on what he described as Google's "immoral" tax schemes. Hodge said yesterday that Google had once again "demonstrated contempt for its customers and for the UK taxpayer who supports its business in all sorts of ways".

She added that the company "continues to use highly contrived arrangements to avoid paying its fair share of corporation tax in this country, and it continues to be allowed to get away with it".

The MP accused the government and HM Revenue & Customs of failing to crack down on tax avoidance despite repeated pledges. "It's not good enough to say this is a global problem and we're dealing with it on the world stage. HMRC has got to get its own act together and start properly challenging the tax arrangements of these big multinational companies."

A spokesman for Google said it was only right that the majority of its tax should be paid in the US, and argued the company made a significant contribution to the UK through investment and jobs. "Like most multinationals, we pay the bulk of our £1.2bn corporate tax bill where our business originated, in our case the US."

But the company's accounts filed in Dublin reveal the phenomenal growth of Google's advertising revenues across Europe, with turnover more than doubling from €6.7bn in the last five years. Last year's figure of €15.5bn was up €3bn from 2011. The accounts also show a sharp jump in profits from about €20m to €152m between 2011 and 2012 after four years of profits remaining in double figures.

While this is significantly up year on year, Google slashed its tax exposure by charging €10.9bn in "administrative expenses", reducing a gross profit of €11bn to its operating profit of €152m.

The "administrative expenses" charge includes a royalty fee that the Google parent group charges its European operation for use of its brand. For the first time the company explained that this is calculated in direct relation to the company's turn­over. The amount of royalties payable is always slightly below the amount that the company makes in gross profit.

In its most explicit explanation of the structure of royalties yet, a note on page 3 of Google Ireland's accounts says that the 2012 administrative expense is partly because of "an increase in the royalties paid as a result of a net increase in the turnover and operated expenses on which the royalty is based".

Google said its increased turnover was "from an increase in the number of paid clicks through Google's advertising programme and, to a lesser extent, an increase in the average cost-per-click paid by its advertisers".