Osborne faces more Google tax questions

George Osborne faces further questions over the Google tax deal, with calls for greater transparency about how the £130m settlement was reached.

Shadow chancellor John McDonnell has written to Mr Osborne demanding details of the settlement.

He has also asked whether the chancellor or his advisers were involved in the arrangement.

Senior Tory MP David Davis said the amount of back tax Google has agreed to pay was a "very small number".

HM Revenue and Customs (HMRC) has defended the deal, with a senior official insisting that it was collecting the "full tax due in law".

Jim Harra, HMRC's head of business tax, told BBC Radio 4's World at One: "We only accept the full amount of tax, interest and penalties that is due, otherwise if we can't reach an agreement on that amount we will go to tribunal. We certainly don't apply any rate of tax other than the statutory rate that Parliament has published."

Mr McDonnell has asked when Mr Osborne was first aware of the deal and whether he or a ministerial colleague personally signed it off.

Chancellor George Osborne

The shadow chancellor also queried whether Number 10 was involved in discussions about the deal before it was announced.

Claims that the settlement covering 10 years from 2005 amounted to a 3% tax rate have been rejected by officials and ministers.

However, Mr McDonnell asked: "What is HMRC's understanding of the effective tax rate faced by Google over the past 10 years as a result of this settlement?"

"I know that many are concerned about the tax treatment of large companies and it is important for public trust that HMRC is fair and transparent in its dealings with such companies."

Mr McDonnell said there appeared to be disagreement between No 10 and No 11 about the significance of the deal, but Downing Street rejected the suggestion.

"The prime minister and the chancellor are of the same mind on this," a Downing Street spokesman said. "This was a good deal."