MPs have demanded a comprehensive inquiry into web giant Google’s tax reporting practices, describing them as  “highly contrived” in a House of Commons report yesterday.

Google generated roughly £18 billion in revenue in the UK from 2006 to 2011, but paid only £10 million in tax, the Public Accounts Committee report found.

The report accuses Google of avoiding UK corporation tax by claiming that its sales to UK clients take place in low-tax Ireland, when in fact the majority of its sales of UK advertising space take place in the UK.

The company’s claims were “deeply unconvincing” and “made absolutely no sense,” the commitee said. 

Evidence for the report was compiled with the help of former Google employees who raised concerns about its tax accounting. 

Google denies any wrongdoing. "It's clear from this report that the Public Accounts Committee wants to see international companies paying more tax where their customers are located, but that's not how the rules operate today,” said a Google spokesman. 

“We welcome the call to make the current system simpler and more transparent."

The PAC called on the government to simplify the UK's tax law but also called for a tougher stance on tax avoidance by global corporations. 

“HM Revenue & Customs (HMRC) is hampered by the complexity of existing laws, which leave so much scope for aggressive exploitation of loopholes,” it said. But it has “not been sufficiently challenging of the manifestly artificial tax arrangements of multinationals". 

The PAC report recommends that HMRC and HM Treasury push for an international commitment to improve tax transparency, "by developing specific proposals to improve the quality and credibility of public information about companies' tax affairs." 

"We expect the UK government to take a leading role in modernising international tax law and welcome the government's emphasis on tackling aggressive tax avoidance under the UK's presidency of the G8," said PAC.