A powerful committee of British lawmakers called on Thursday for a tax probe into Google, after concluding that the US Internet giant sought to avoid paying corporation tax on profit earned in Britain.
The House of Commons Public Accounts Committee revealed its findings in a report which attacked Google for claiming that sales were conducted in Ireland -- which has the lowest corporation tax rate in the eurozone -- and not in Britain.
The cross-party committee said it had received information from ex-Google employees that Britain-based staff were directly engaged in selling.
In reaction, Google insisted that it had co-operated with tax laws, but welcomed any moves to make the system "simpler and more transparent".
The committee's report was published ahead of next week's G8 summit in Northern Ireland, where host Britain will seek to tackle tax avoidance, which is legal, and tax evasion which is not.
"To avoid UK corporation tax, Google relies on the deeply unconvincing argument that its sales to UK clients take place in Ireland, despite clear evidence that the vast majority of sales activity takes place in the UK," the report said.
"The big accountancy firms sell tax advice which promotes artificial tax structures, such as that used by Google and other multinationals, which serve to avoid UK taxes rather than to reflect the substance of the way business is actually conducted."
The report concluded that HM Revenue & Customs (HMRC) --Britain's taxation authority -- needed to probe and challenge what it called "artificial" tax arrangements.
"HMRC is hampered by the complexity of existing laws, which leave so much scope for aggressive exploitation of loopholes, but it has not been sufficiently challenging of the manifestly artificial tax arrangements of multinationals," the report said.
"HM Treasury needs to take a leading role in driving international action to update tax laws and combat tax avoidance."