The phrase “daylight robbery” was first coined in 17th century Britain to describe an unpopular, and what many considered to be unfair, tax wheeze by King William III, based on the number of windows in a property.

Some 320 years on, and the phrase is once again being bandied around in relation to tax, but this time it’s in the context of multinational companies that are aggressively minimising, or avoiding altogether, corporation taxes to HMRC.

From the double Irish to the Dutch sandwich, there are plenty of schemes designed with the specific goal of enabling companies to control their tax expenses. For many, paying tax is now viewed as optional, and more a question of their own moral compass than a duty.

But the conclusion of HMRC’s enquiry into Google last month could yet prove to be a tipping point.

Despite the chancellor, George Osborne, hailing Google’s £130m payment in back taxes for 10 years as a “major success”, few are convinced. Labour’s shadow chancellor, John McDonnell, described it as a “sweetheart deal”, but behind closed doors rival media firms are referring to the situation in far more colourful terms.

Market leaders shamed

Google’s effective tax rate of around 3% is particularly grating for media rivals paying corporation tax rate of 20%. They note that Google is comfortably the UK’s largest media operation in terms of ad revenues, taking £1.33bn ($1.92bn) from the advertising market in the last quarter alone, and nearly £5bn across 2015. This is roughly comparable to the size of the entire TV sector, which has just broken the £1bn quarterly barrier.

So, as Google approaches the annual £5bn mark, the media industry finds itself in a position where more than a quarter of the UK’s £18.58bn total ad spend is going into one company, and that company is paying less tax than home-grown competitors.

By way of comparison, ITV paid £132m in tax on adjusted pre-tax profits of £712m in 2014. The fact the broadcaster’s annual tax bill is more than Google’s offering for the entire decade has not been lost on executives.

In the same year, Sky paid £215m in corporation tax on profits of £1.03bn.

The striking disparity comes at a time when much of Google’s commercial momentum outside of search is being generated by its ever-growing video platform YouTube, which competes aggressively with the traditional broadcasters.

Eileen Naughton, Google’s managing director of UK and Ireland, has spent much of the past year trying to persuade advertisers to redirect a large portion (24%) of their TV budgets into YouTube when targeting 16- to 34-year-olds.

Google is not the only media operation to be accused of aggressive tax planning, of course, and the world’s biggest social network, Facebook, paid just £4,327 in corporation tax in 2014.

It’s a statistic that jars with those in the media business. Facebook’s London-based team has made significant strides in the last 18 months to monetise the platform, and its sibling Instagram, via mobile video ads.

According to sources, Facebook is fast closing in on taking £1bn from the UK ad market this year and yet paid less tax than the average UK employee. Someone on the average British wage of £26,500 would pay out £3,180 in income tax, and £2,213 for their national insurance payments.

You can push the rules ... you can lower your tax rates. But should you do it from a question of judgment? Sir Martin Sorrell

The importance of these tech companies to the very fabric of the web means few media owners are willing to make their bar room gripes public. But the tide could be turning.

This week, Sir Martin Sorrell, whose WPP Group paid £300m in tax in 2014 on pre-tax profit of £1.45bn, told the Mirror: “You can push the rules, you can abide by the laws, you can lower your tax rates. But should you do it from a question of judgment? The chickens have come to roost because people have been very aggressive on their tax planning. Some people have judged it right, some people have judged it wrong”.

Closer to the coalface, a protest of sorts – perhaps – was revealed last week when The Lighthouse Company’s straw poll of around 400 media leaders, found Google sitting on the “could have done better” list.

No company operates in a vacuum, and the local leadership teams at Google and Facebook are starting to feel the strain. The widespread disapproval among public and peers alike has reached unprecedented levels.



Media eyes will have been watching closely as the public accounts committee took evidence on the issue in parliament today.

Arif Durrani is a freelance media journalist and the former editor of Media Week. Follow him on Twitter @DurraniMix

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