Did Google Cook the Books in the UK?

Questions about Google’s (NASDAQ:GOOG) tax liability in the U.K. will become very public, as the company’s reps must testify before Parliament about operations in Great Britain and Ireland. An investigation into Google’s business by Reuters caused a U.K. government committee to go back into the files and examine exactly what Google is doing and how much it should be paying England’s tax collectors.

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Reuters also broke the story that Google must head to Parliament to testify on its U.K. operations for a second time, accompanied by auditors from Ernst & Young. In question are the claims that Google is not selling anything in the UK. By basing its advertising sales operation in Dublin, the search engine mammoth aims to avoid taxes levied upon businesses selling U.K. consumers products marketed and offered by U.K. employees.

That’s not how Google does business in the U.K., according to company statements, which frame the Reuters report as “willfully misleading.” In Google’s eyes, the sales are handled in Ireland (not in the U.K.), while the goings-on in London (in the U.K.) are merely marketing efforts and other administrative tasks. Reuters points out that, if that’s all that’s happening on U.K. soil, someone should tell Google’s employees in the U.K….

For all Google’s staff in England knows, they’re not only marketing but “negotiating” and “closing” deals, according to the LinkedIn (NYSE:LNKD) pages of London employees examined by Reuters staff. Job advertisements seeking sales reps would seem to confirm the assertion that Google is actually doing a bit more than marketing its fantastic reach through ads with its dominant search engine. Should Ernst & Young, along with Google, fail in the effort to convince Parliament of its case, a great deal of money could head into Britain’s tax coffers courtesy of Google.

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Not that Google couldn’t afford it. YouTube was recently valued over $20 billion, making it a wildly successful investment for the company, which purchased the video broadcasting portal for $1.65 billion in 2006. Google shares had risen over 5 percent (more than $40) for the week as of 1 P.M. Friday and up over 19 percent so far in its successful 2013 run.

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