Two of mobiles biggest players are yet again making headlines for the small amount of tax they are paying despite having large operations in the UK.

Google has denied that it is misleading HMRC over its business and tax arrangements after its head of UK sales, Matt Brittin, appeared this morning in front of MPs on the Public Accounts Committee. 

The search giant was recalled by the committee and asked to explain why it is paying so little tax in the UK despite huge revenues here. Between 2006 and 2011, Google made $18bn in revenues in the UK but paid just $16m in corporation tax – though companies are only obliged to pay tax on profit. 

Although the PACs chairperson, Margaret Hodge MP, said that she has seen confidential evidence to the contrary, Google says that all of its UK sales – worth £4.2bn last year – are made in Ireland because they are done online. Brittin said: “99 per cent of the companies that spend with us spend with google in Ireland and are not speaking to anyone in the UK.” The committee also asked what the 1,300 UK staff are doing if they arent making sales.

Meanwhile, Amazons accounts have revealed that it received more in government subsidies than it paid in UK corporation tax last year. Its corporation tax bill was just £2.44m on sales of £4.2bn –  less than the £2.5m given to it by the Scottish Government in return for building a distribution centre in Dunfermline. It has 4,200 UK staff but says most of its work is carried out in Luxembourg, where is has just 380 people on the ground. 

As neither company is doing anything illegal, there are increasing calls for law makers to improve financial legislation so they can better determine where money is being made and where the tax is due. Many of the companies being called out on tax avoidance are technology firms working where the traditional geographical lines are becoming blurred and law makers have not kept up with changes in the way business is being done.