The Labour MP and tax campaigner Margaret Hodge has described as “disgusting” a plan to give an executive of online retailer Amazon, one of the companies at the centre of an intensifying row over taxes, a directorship at the Department for Work and Pensions.
Hodge was responding to the news, first revealed by Sky News, that Amazon’s head of Chinese operations, Doug Gurr, is to become a non-executive director of the DWP. The DWP said it would issue a statement, which was not available at the time of publication. Amazon declined to comment.
Hodge said: “If people are not putting their proper share into the pot, how can government ever justify giving them prestigious positions?”
Amazon’s UK business paid just £11.9m in tax in 2014, even though its Luxembourg unit took £5.3bn from internet sales in the UK.
Gurr’s arrival at the department will increase fears that largely US-based technology giants such as Amazon are having an increasing influence on government at a time when there is growing public pressure for them to pay more tax in the UK.
Hodge also said it was ironic for the DWP, which is trying to place people in employment, to hire an executive from Amazon. “They are killing off British business and jobs, partly because they’re not paying sufficient tax and so are able to undercut their rivals,” she said.
The multinational tax row has intensified since it emerged that Google had agreed to pay £130m to cover taxes dating back a decade. Although George Osborne heralded the deal as a success, it was soon derided by critics, who calculated that the payment equated to a tax rate of just 3%.
The business secretary, Sajid Javid, said he shared the feelings of many people who felt there was a sense of injustice about the Google deal and described the tax settlement as “not a glorious moment” for the government.
Google has enjoyed a close relationship with the government, with key figures going to work for the US company as well as some executives going from the firm to Whitehall.
John McDonnell, the shadow chancellor, said: “I am disappointed but not surprised, and taxpayers will be further dismayed, to hear about yet another close relationship between the Tory government and a company with potential questions to answer over its tax liabilities.
“On the back of a fortnight of inaction from the government on tax avoidance, this will do nothing to dispel the feeling that when it comes to tax avoidance the Tories don’t have a credible solution, and don’t care about finding any answers.
“That is why I am today calling for the government to be open and honest over any Tory tax deals with big multinationals so that we can start to find a proper solution to the crisis we face over tax avoidance. Especially after the missed opportunity in the EU negotiations to get a deal on transparency by companies across Europe.”
Jolyon Maugham, a tax expert and former adviser to the former Labour leader Ed Miliband, said: “If we hadn’t had such a revolving door between government and Google, perhaps we would not be asking questions about a sweetheart deal.
“Government is absolutely right to want to bring business expertise into the heart of government, but it needs to do so in a way that avoids obvious conflicts of interest. To take a senior executive from a company that’s seen by many as a poster child for an aggressive approach to workplace standards and put him at the heart of the Department for Work and Pensions is pretty punchy."
In December, a Guardian investigation revealed how overseas traders on Amazon’s UK website were selling goods without charging VAT. The abuse is estimated to have cost the Treasury tens of millions of pounds in lost tax receipts over the Christmas period alone.
The investigation prompted HMRC to hold urgent meetings with Amazon, and Treasury spokesman Lord Ashton told the House of Lords that the government was considering whether Amazon could be held liable for tax losses – an option the Treasury has since ruled out.
Conservative peer Lord Lucas claimed Amazon and eBay had been “collaborating with hundreds of overseas retailers to defraud the taxman of millions of pounds every day”. The allegation was denied by both groups.
Last month, outgoing HMRC chief executive Dame Lin Homer told MPs this kind of widespread evasion by overseas sellers had become “a very big issue”. She said: “[Online] marketplace providers have responsibilities”, but she failed to say how these might be enforced under current laws.
Amazon has continued to insist it is not responsible for policing the VAT compliance of traders using its site. Last year, eBay and Amazon stepped up marketing drives in China aimed at traders looking to ship to the UK and other European markets.