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Morrisons boss calls for overhaul as Google defends its tax planning

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The UK’s fourth largest supermarket chain has said the chancellor should review the current system for taxing the multinationals and require large private companies to disclose their UK corporation tax liabilities.

Morrisons finance director Richard Pennycook told Jeff Randall Live on Sky News that George Osborne ‘really has to look into’ the potential competitive advantage that the current system provides to companies paying lower levels of tax than UK-based, domestic companies.

At the same time, however, Google’s vice president in Europe Northern and Central, Matt Brittin, was telling Channel 4 News that ‘the tax we pay is the right amount of tax as defined by the systems that are set up by politicians’. Responding to criticism levelled at Google by Margaret Hodge, chairman of the Commons public accounts committee, Brittin said he was not ‘immoral’, and was ‘proud of how we operate’.

More on this story:

Accenture’s tax affairs under scrutiny (27 Nov)

Accountants have conspired in allowing ‘leeching of tax’, says Lord Myners (23 Nov)

Tory MP asks FTSE 100 companies to back country-by-country reporting (23 Nov)

Consumers can change multinationals’ tax strategies very quickly, says Sainsbury’s boss (23 Nov)

There are too many tax havens, says Cameron (22 Nov)

Press watch: ‘We pay our taxes!’ (21 Nov)


‘There do seem to be big differentials in the rates of tax that similar-sized businesses are paying,’ Pennycook told Randall. ‘Some companies in our sector are paying lower rates of tax – we paid £280m cash tax last year, and that’s an important contribution to the economy, but it’s also over a quarter of our profits.

‘If that wasn’t going to the exchequer it would be going back to our customers in terms of better value or it may be going into investment in the business. So I think the point of having a level playing field here is very important. What’s applied to one business should be applied to others.’

Randall said this was the ‘John Lewis point’ that ‘if your rivals don’t pay anywhere near your level of tax they can out-price you, out-trade you and out-invest you, in the end, to destruction’.

Pennycook said: ‘That John Lewis point is right. [The current system] provides a potential competitive advantage to the company paying lower tax. Alternatively, it could be that that money is just going out of the country and therefore not helping us with our deficit situation here.’

Transparency was very important, Pennycook said when asked to comment on the tax affairs of some of Morrisons’ rivals. ‘Morrisons is a public company and it’s very visible, what taxes we pay … It’s important that transparency applies to all big businesses whether they are public or not.’

He added: ‘It can’t be right in this world of transparency for big corporations to think it’s ok not to be very transparent with customers in particular … We’re quite surprised when we see that there are big businesses out there that don’t have to follow the same rules.’

A ‘very good start’ for the chancellor, Pennycook suggested, would be to require ‘that transparent reporting’ by means of regulation. ‘Then questions can be asked about the sectors and companies.’

Asked – in a reference to controversy over the tax affairs of Amazon, Starbucks and Google – at what point the chancellor should start ‘stamping his feet’ about multinationals ‘engaged in transfer pricing and clever manoeuvres to circumvent tax’, Pennycook said the chancellor ‘really has to look into this’.

‘If there is economic activity going on this country, then the tax that attaches to that should stay here. We have a deficit situation to address.’


On Channel 4 News, Krishnan Guru-Murthy asked Google’s Matt Brittin: ‘You pay a little bit of corporation tax in Britain, you pay a little bit more corporation tax in Ireland, but actually a lot of [income] isn’t being taxed at all. It’s just sitting in an account in Bermuda. That’s what seems unfair to people, that a lot of your income is being sheltered from tax completely.'

Brittin said: ‘I understand that. One of the challenges here is for an individual you pay tax on your income but for a business you pay tax on your profits. Anything we do like that ... ultimately we’re going to pay tax on the profits we earn. If we have money that is not yet taxed [as] profits, we can invest that in growth.’ Money in Bermuda was available for Google to invest in growth.

Guru-Murthy said: ‘The way Google is structured is a choice. You could choose to just be based in Britain and pay corporation tax on all the money that British business pays you. That’s why people say “we’re all in it together except people like you”.’

Brittin said he would have loved it if Google had been invented in Cambridge. Google would be paying its taxes where its products had been created – in Britain. Boris Johnson should ‘get his facts right,’ he said. ‘We pay tax and he should be looking at the broader contribution we’re making, including start-ups in London.’