18 Dec 2013

Vodafone cuts its tax bill by a fifth

Vodafone paid no corporation tax and reduced its UK tax bill by a fifth last year. The company defends its arrangements in a 3,600 word statement that Channel 4 News hears is “smoke and mirrors”.

Vodafone paid no corporation tax and reduced its UK tax bill by a fifth last year (G)

The telecoms company paid £275m in British taxes for the year up to March 2013 – down from £338m the year before.

For the third year in a row, Vodafone paid no corporation tax in the UK.

But this time, the telecoms company announced its affairs in a long statement with a handy “in focus” box entitled: “Why does Vodafone pay little or no UK corporation tax?”

The moment I read it, I thought I could just hear Margaret Hodge sighing – Richard Murphy

Vodafone said that critics failed to understand the complexities of the tax system, and said: “tax law is often unclear and subject to a broad range of interpretations”. The statement pointed to the £1bn of investment in the UK and to the £600m a year of UK borrowings, which can be claimed for tax relief.

The statement also made the defence that corporation tax is made on profit, not revenue, and said that the UK was “one of the least-profitable mobile markets anywhere in the world”.

Vodafone has come under scrutiny before for its payment (or lack) of UK tax. It was targeted by UK Uncut in 2010 and was locked in a legal dispute with HMRC over its lack of tax. Vodafone paid a £1.25bn settlement, but did not acknowledge wrongdoing.

‘Pure spin’

The company’s lengthy statement on its financial affairs is an attempt at transparency, and it is one of the first companies to publish such a detailed list of its tax affairs on a country-by-country basis.

However accountant and tax campaigner Richard Murphy said the 3,654 word statement was purely “smoke and mirrors”, and was “patronising” to the British public in leaving out crucial information – including profits.

“Without knowing what the profit is, Vodafone is giving us an incomplete view, or at least, a very selective view,” he told Channel 4 News.

“Alistair Campbell would be proud – this is pure spin.”

He added: “They have written very long excuse for their behaviour. The moment I read it, I thought I could just hear Margaret Hodge (chairman of the public accounts committee) sighing.”

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