Google’s 2,300 staff in the UK earned an average wage of £160,000 each last year, despite the group’s insistence that its British operation is a modest outpost of the company’s global empire.

Margaret Hodge, the former chair of the public accounts committee, said high pay among London staff was further evidence that Google’s “complex structure of companies is a sham”. Its UK employees mainly provide marketing and support services to offices in Dublin.

“This unmasks the reality of their business,” Hodge said. “[Google UK] is not a back office support operation. These are clearly people who are paid a lot because they add value – selling advertising, closing deals and developing new products.”

The technology giant has been heavily criticised for routing £4.6bn of UK sales through Ireland, then onwards through a maze of companies in the Netherlands and Bermuda, so as to pay very little tax in Britain and elsewhere.

The UK tax authorities have for years been criticised for accepting Google’s claims that its UK staff do not do business with British advertisers. A £130m settlement reached with HMRC last week effectively made it clear that Google would not be challenged on this point.

Barney Jones, a tax whistleblower who worked for Google’s UK sales team for four years, said Britain was a major profit engine for the US multinational. “They do a lot of high-value sales, marketing and engineering – all out of London. I find it utterly baffling that HMRC accept[s] that these people do almost nothing worthwhile.”

He said staff in London did more specialist work than the 5,000 employees in Dublin, many of whom work in contact centres, where they respond to advertisers with email inquiries.

On its recruitment webpage, Google UK tells jobhunters: “Folks here on the tech side have their hands on some of most exciting technical challenges in the business, entertainment and financial industries.” Software engineers in London work on some of Google’s main products including YouTube, Google Play, Android, AdSense and Search.

Accounts for 2015 show that Google UK paid wages of £562m over an 18-month period, including £148m in share-based bonuses. Calculated on a pro-rata basis over 12 months, the salary bill works out at an average of £160,000 per head. It was spent on 1,075 marketing staff, 799 staff in research and development, and 455 managers and administrators. Two directors – one based in Dublin, another in the US – did not draw a salary from the UK company.

Matt Brittin, who heads Google’s European operations and lives in the UK, is not thought to be a director or employee of the British company. Brittin has been the public face of Google as it has sought to defend its aggressive tax structures amid widespread condemnation.

Three years ago, during a heated public accounts committee hearing, Hodge told Brittin: “You are a company that says you ‘do no evil’. And I think that you do do evil.”

Hodge was referring to Google’s longstanding corporate motto, “Don’t be evil,” which appeared in its $23bn US stock market flotation prospectus in 2004.

Google books sales from UK advertisers through its Irish arm before bouncing the income through the Netherlands and back to Ireland and Bermuda. The complex structure means it pays little tax on non-US earnings. The company is expected to announce that its offshore cash reserves have reached $43bn on Monday.

Accounts for Google UK show that the British unit paid £290m for a plot of land near Kings Cross station in London, where it plans to build a luxury office block to house up to 5,000 workers. Designs including a rooftop were said to have been rejected last year as too “boring”. An additional £14m was paid to extend the development period.

Accounts also make it clear that Google’s controversial £130m settlement with HMRC, which covers a 10-year period, includes interest payments. It is understood that back taxes were about £117m, to which interest of £13m was added.

The settlement was initially heralded as a triumph by George Osborne, the chancellor, but has since been savaged by critics who claim it is a disappointing “sweetheart deal”. In particular, the agreement appeared to leave in tatters Osborne’s promise to prevent technology companies such as Google going to what he called “extraordinary lengths to pay little or no tax” in the UK.

Irish ministers have also pledged to stamp out tax avoidance structures, such as the so-called “Double Irish” – where income is routed through Ireland, the Netherlands and Bermuda – by introducing new rules with which multinationals must comply by 2020.

Changes to Irish tax rules, however, have not stopped global corporations from flocking to Dublin, attracted by its ultra-competitive tax regime. Last year, a record 213 new investments by multinational corporations helped Ireland become one of the world’s fastest-growing economies, according to business promotion quango IDA Ireland.

Among those pouring fresh cash into the Irish economy during 2015 were Airbnb, Zimmer, Dell, Vodafone, Apple, Facebook, Marsh & McLennan and Bristol-Myers Squibb. The total number of major investments was up 8%, with 94 of those coming from companies investing in Ireland for the first time.

About 187,000 people – one in five private sector workers in Ireland – now work for a multinational, an increase of 12,000 in the past 12 months. A further 131,000 Irish jobs are indirectly dependent on foreign investment, according to IDA Ireland.



Ten years ago, Osborne underlined that he wanted Britain to echo Ireland’s aggressive tax policy to attract more investment to the UK. “Ireland stands as a shining example of the art of the possible in long-term economic policymaking,” the then shadow chancellor said. “I will be asking Google executives today why they set up in Dublin, not London. It is the kind of question I wish the [Labour] chancellor of the exchequer was asking.”

Since becoming chancellor, Osborne has made good on his promise to transform the UK’s corporate tax regime into the most competitive in the G20. Several multinationals, including insurer Aon and Starbucks, have moved their European headquarters to Britain as a result.

