Photograph: Virginia Mayo/APFrench investigators have raided Google s Paris headquarters, saying the company is now under investigation for aggravated financial fraud and organised money laundering.Google maintains that its large offices in Paris, London and other European capitals are not fully fledged businesses, but operate as mere satellites of its international headquarters in Dublin, providing back-office services such as marketing.The enquiry is focused on verifying whether the company Google Ireland Ltd controls a permanent establishment in France and if, by not declaring a part of the activities conducted on French territory, it has failed in its fiscal obligations, notably regarding taxes on companies and value-added tax.In January, Google agreed to pay £130m in back-taxes to the UK Treasury, but the announcement triggered uproar from tax campaigners and opposition MPs, because it meant that HM Revenue and Customs had effectively allowed the firm to continue routing its UK sales through Ireland.Used by multinationals to shelter profits generated in major markets, where tax rates tend to be higher, transfer pricing works by shunting money into lower tax jurisdictions.Two years ago, Google notified the US stockmarket regulator that it was subject to a tax inquiry.
And GDS's Verify still not readyHMRC is pushing ahead with its own plans to build an online authentication portal following the decommissioning of the current Gateway portal in 2018, according to multiple sources.One source said the department is building its own authentication capability that will deal with businesses – something the Government Digital Service's online authentication system Verify cannot do."It doesn't want to publicly admit it is building its own system, as it's a sensitive issue with the Cabinet Office.A spokesman from HMRC confirmed that the department will use a replacement for Gateway for business users, currently managed by the Department for Work and Pensions.That was in addition to 11,000 people using GOV.UK Verify to file their self assessment tax returns in 2015.In 2016 a total of 9.24 million users paid their tax online, with at least half of those having elected to use an accountant.
HMRC was too hasty to cut staff before expected cost savings from a shift to digital materialised – something that should act as a cautionary tale for its current "digitisation" plans, the National Audit Office has warned.To offset the spending reduction, HMRC planned to increase automation of the PAYE system and move customers from traditional channels to less expensive contact through the expansion of digital services, said the report.The findings echo concerns raised over recent moves to digitise HMRC services.Last year HMRC was granted £1.3bn by George Osborne to spend on digital investment over the next four years, which is expected to yield £1bn in extra tax revenue after 2020.It is hoped those "digitisation" savings will plug the £717m per year in cuts, including a headcount reduction of 21 per cent by 2019-20."This does not change the fact that they got their timing badly wrong in 2014, letting significant numbers of call handling staff go before their new approach was working reliably.
Google s Paris offices were raided by French investigators over fraud allegations.In order to ensure this total confidentiality ... we decided not to ever use the name Google, but to use another name, Tulip, and we managed this operation entirely off-grid, offline.With a computer, but a computer that was text-only, that was disconnected.Last Tuesday, 96 people marched in through the gates of the Hôtel Vatry, the vast mansion built for a French count where the majority of Google s 700 French staff are based.The raid involved six magistrates, 25 IT experts and officers from the central office for the fight against corruption and financial and tax crimes OCLCIFF .He wrote to Osborne last week saying HM Revenue and Customs must urgently liaise with the French authorities to see if they have evidence that could reopen the British tax case against Google.
Microsoft has said it 'complies with all rules and regulations worldwide, including in Ireland and the UK'Technology giant Microsoft has reportedly avoided paying up to £100m $143.59m, €127.34m in UK corporation tax under a "confidential deal" with British tax authorities.The deal supposedly lets the IT giant send revenue through its operations located in Ireland, which has a tax rate of 12.5% compared to the UK's 20%.According to The Sunday Times, the firm has sent "more than £8bn" through Ireland since 2011 and key sections of its offshore structure were approved by HM Revenue and Customs HMRC in a so-called 'advance pricing agreement' signed in 2012.According to The Sunday Times, MIO accounts from June 2015 show sales in the UK generated more than£2.3bn that year.However, in light of the findings, The Sunday Times claims that HMRC has reached 143 separate 'advance pricing agreements' dated between 2009-2014 alone.Microsoft is by no means the only multi-national firm operating in the UK that enjoys the current legal structure.
The Guardian discovered a wave of overseas traders were using Amazon UK to warehouse and sell a wide range of goods.Photograph: AlamyAmazon is quietly rooting out many of its Chinese traders who do not hold UK VAT numbers in an effort to protect itself from a welter of tax evasion inquiries later this year when new HMRC powers come into force, the Guardian has learned.It is understood to have contacted many Chinese sellers, giving them until the end of the month to provide their VAT numbers.While much attention has been paid in recent years to how Amazon, Apple, Google and other tech groups have arranged their affairs internationally so as to avoid corporation tax, the loss to the UK public purse from the hordes of overseas sellers who have found ways to sell online in the UK without charging VAT may be far greater.The chancellor said these measures would help curb the abuse and restore £875m in tax receipts over the next four years.That decision remains controversial because, under the EU s ecommerce directive, online sellers are required to make their VAT numbers easily, directly and permanently accessible to customers.
An IT consultant has been jailed for four years after lying about his income to avoid paying £170,000 in tax.However, a probe by HMRC revealed he had been working as a self-employed IT consultant since 2004.Khan spent his untaxed earnings on a "lavish" lifestyle, and purchased two properties with the funds.There has been sheer greed for a substantial period and you have used the money for your own benefit for a lavish lifestyle and foreign holidays.Khan was arrested in 2013 and pleaded guilty to the offences on 4 September 2015.On 23 June 2016 at Lewes Crown Court he was jailed for four years; two years for the tax fraud and two years for the child support offences.
The department was over-optimistic about reducing staff in the transition to digital servicesHM Revenue and Customs HMRC risks losing the confidence of individuals and businesses in the development of new digital systems because it has not fully estimated the costs for taxpayers or given a clear idea of the potential benefits of the new systems.This is according to the National Audit Office NAO , which said HMRC has also failed to address a previous overestimate of the numbers of staff reductions that would be made possible by new digital systems. HMRC was over-optimistic about how much change it could deliver all at once, and how fast it could reduce demand for telephone contact in particular, the NAO said in a report on the department s accounts for 2015/16.This resulted in a collapse of its service to personal taxpayers in 2014/15 and the first half of 2015/16.HMRC has since recovered the quality of its service to personal taxpayers by recruiting more staff and has adjusted its future resource plans in the light of this experience.
There is "general resistance" among both the public and private sectors to plans that would shift responsibility for ensuring that third party contractors are paying the right employment taxes from the individual to public sector employers, HM Revenue and Customs HMRC has found.Employers surveyed by HMRC were concerned about the impact the proposed change would have on both employers and employees, particularly in relation to new administrative burdens and an anticipated loss in flexibility.Respondents were also "cynical" about the need to shift compliance burdens in the first place, and said that the "current economic climate" meant it was not a good time to introduce "another burden", according to a summary published by the tax authority.HMRC is currently consulting on whether to shift responsibility for compliance with the intermediaries legislation, known as IR35, from the individual contractor to a public body which contracts with them for their services or to the agency or other third party through which employment is arranged
IT contractors could bear the brunt of government plans to clamp down on self-employed workers not paying the correct employment taxes - with HMRC targeting 20,000 public sector contractors.The taxman is currently consulting on whether to shift responsibility for compliance with the intermediaries legislation, known as IR35, from the individual contractor to a public body or recruitment agency.The rules were first brought in to identify "disguised employees" and tax them accordingly, as if they were employee.An HMRC presentation on off-payroll workers, seen by The Register, found that 20,000 public sector contractors are not paying the right tax under IR35 rules.According to the association of Independent Professionals and the Self-Employed IPSE two-thirds of its 22,000 members are IT contractors.HMRC believes just 10 per cent who should apply the rules do.
UK MPs have warned that HMRC HM Revenues and Customs may struggle to overhaul its expensive £10bn IT systems with Capgemini, and that further cuts could ultimately waste more taxpayers' cash.The Public Accounts Committee PAC report published today said the body remains concerned that HMRC may struggle to integrate different services from different providers."As we have seen from elsewhere in government, one of the main factors that determines the success of complex programmes such as this is the quality and stability of their leadership."Currently the Capgemini-run project is the government's largest IT contract and accounted for about 84 per cent of HMRC's total spend on technology between April 2006 and March 2014.Under the replacement programme, HMRC hopes to derive greater value for money by handing out that deal to 400 smaller suppliers.Earlier this year, the National Audit Office said HMRC was too hasty to cut staff before expected cost savings from a shift to digital materialised – something that should act as a cautionary tale for its current "digitisation" plans.
The four-year deal will focus on offering secure cloud-hosted tax management to individual taxpayers.The UK tax authority, HM Revenue and Customs HMRC , has agreed an extension of its application services agreement with IT services provider Accenture.Under the deal, Accenture will develop and introduce a secure cloud-hosted tax management platform for individual users.The agreement, which lasts until June 2020, aims to support increased use of digital technologies throughout HMRC s primary personal tax platform, the National Insurance and PAYE Service NPS .The technology firm will deliver the services from the Newcastle-based Accenture Delivery Center, part of its global delivery network.Accenture already manages and maintains the NPS for HMRC, which will support the tax authority s capability to provide rapid personalised services to the country s taxpayers.
HMRC's chief digital and information officer, Mark Dearnley, is waving goodbye to his £185,000 per annum job in September as he departs for the private sector.Dearnley, joined HMRC in October 2013 under a three-year contract.He described his remit as the transformation of its IT, creation of new digital services and overseeing of the transition from its £800m a year Aspire IT contract.Last year, HMRC was handed £1.3bn to make the UK tax system the most "digitally advanced" in the world.The department has also started to transition from its £10bn Capgemini-run project - the government's largest IT contract, which accounted for 84 per cent of HMRC's total spend on technology between April 2006 and March 2014.Under the replacement programme, HMRC hopes to derive greater value for money by handing out that deal to 400 smaller suppliers and shaving off £200m from the contract per year by 2020/21.
The UK tax office has just finished a consultation on what the next stage of its digital transformation should look like.Although Her Majesty s Revenue and Customs move online has had its ups and downs almost 90 per cent of self assessment forms submitted last year were completed online and not on paper.The next stage is more controversial and aims to create online-only communication with British citizens and businesses by 2020.The project is immensely complex and involved simplifying existing communication not just shifting it all online.First HMRC reduced the number of forms it used from a baffling 1,600 to just 370.It has now reduced total forms to just 247 which are available via PC, tablet and mobile devices as well as working with accessibility tools.
ANALYSIS: The departure of Stephen Foreshew-Cain and Mark Dearnley could mean the end of GDS as we know itThe Government Digital Service s GDS executive director Stephen Foreshew-Cain is being replaced by the Department for Work and Pensions DWP s director general for business transformation, Kevin Cunnington.HMRC s chief digital and information officer Mark Dearnley is leaving his post and just weeks ago, the Home Office scrapped its CDO role.The changes that have come about this week are not independent of one another – they are the fallout of what looks to be a confused and fragmented government digital strategy.Foreshew-Cain had an unenviable task of replacing the much revered Mike Bracken, but when the former took up the executive director role, he emphasised that he had been running GDS for up to a year in what would ultimately be a transitional period.Such concerns heightened when many of his senior colleagues departed with him, but there was optimism that there would be stability under Foreshew-Cain, particularly after the government announced that it would invest £450 million into GDS in the November 2015 spending budget.
Workers' plan is to hike fees or turn back on public sectorAround 90 per cent of UK government IT contractors will rebel against proposals by HMRC to clamp down on self-employed workers not paying the correct employment taxes.The taxman is currently consulting on whether to shift responsibility for compliance with the intermediaries legislation, known as IR35, from the individual contractor to a public body or recruitment agency.By doing so it hopes to raise £400m by targeting 20,000 public sector contractors currently not paying the right tax under IR35 rules.HMRC believes just 10 per cent who should apply the rules do so.The rest will either jump ship to the private sector or hike up their fees to offset the costs.
WHEN Mark Dearnley revealed he would be leaving HMRC as chief digital and information officer CDIO next month, once his existing contract expires, it came as a shock to anyone who had been following the organisation s digital development.After all, Dearnley is leading the tax authority s move away from the £800m-a-year Aspire contract, which is the largest single ICT contract in all of government.It is for this reason that MPs on the Public Accounts Committee PAC emphasised in its recent report on the Aspire contract, the need of effective leadership.As we have seen from elsewhere in government, one of the main factors that determines the success of complex programmes such as this is the quality and stability of their leadership, the report said.MPs had made clear that there were some critical decisions to be made over the next two years which would have a direct impact on the success of the transitional project.The committee had heard that HMRC was in negotiations with Dearnley about his contract which ends in September this year, with MP Richard Bacon stating that the department should ensure that it keeps Dearnley in his position.
HMRC is casting around for ideas on how to splash £1.3bn in order to become the most "digitally advanced" tax administration in the world.Last year the body was awarded £1.3bn of digital investment over the next four years, which it said would yield £1bn in extra tax revenue after 2020 by ending "bureaucratic form-filling".Today the body has issued six consultation documents "each focusing on specific customer groups or specific elements of the Making Tax Digital reforms".The reforms are supposed to "remove the burden" for businesses of the annual tax return.Part of it will include an app for the self-employed that will process pictures of their invoices, and issue quarterly prompts to update digital tax accounts.It is hoped that HMRC's current "digitisation" savings will offset £717m per year in cuts, including a headcount reduction of 21 per cent by financial year 2019-20.
A British parenting blogger has said she has been denied working tax credits because she is unable to prove her working hours.Katie Davis, of Dorset, said she had been turned down despite submitting more than 100 documents, including bank statements, contracts and invoices.Working regular hours is essential for claiming the benefit, HMRC states.The government department has been contacted for comment.As a single parent, Ms Davis has to work for at least 16 hours per week to be eligible for working tax credits, which are worth up to £2,010 per year, according to its website."I am working far more than that, but it's not permanently paid work - it's maintaining my own site," she told the BBC.