Google to pay UK taxman £130 million in back taxes

Internet giant Google has announced that it has agreed to to pay £130m in back taxes to the British taxman.

The agreement covers amounts owed dating back to 2005, the internet company said.

A spokesperson for the California-based company said that it will now pay tax based on revenue from UK-based advertisers, which reflects the size and scope of its UK business. This settlement reflects that shift and is in line with recent OECD guidance, it said.

An HM Revenue and Customs (HMRC) spokesman confirmed it had reached a deal with Google.

"The successful conclusion of HMRC enquiries has secured a substantial result, which means that Google will pay the full tax due in law on profits that belong in the UK," the spokesman said.

"Multinational companies must pay the tax that is due and we do not accept less. HMRC enforces the tax rules impartially, irrespective of the size or structure of the business.

Google had paid just £20.5m in tax in 2013, in spite of its $5.6bn revenues from the UK alone.

The investigation had been sparked by allegations that it had avoided paying tax by allocating profits to Ireland, where it has based its European operations.