Vodafone rebukes £6bn tax bill claim

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Vodafone denies £6bn tax bill claim; HMRC describes figure as ‘urban myth’

Vodafone has dismissed claims that the Government wiped out a £6 billion tax bill regarding its purchase of German engineering company Mannesmann for £157 billion in 2000, and said it had acted appropriately throughout the situation.

Earlier this week a protest by 40-plus demonstrators closed Vodafone’s Oxford Street store for a day after stories circulated that it had been excused a £6 billion tax bill over the acquisition.

Private Eye suggested Vodafone had attempted to avoid paying tax on the purchase by putting it through a Luxembourg subsidiary, Vodafone Investments Luxembourg, and struck a deal with HM Revenue and Customs (HMRC) that would cost taxpayers ‘at least £6 billion’ in lost tax.

The story emerged at the same time as the Government announced £7 billion of welfare cuts, angering some quarters.

However, a Vodafone spokesperson denied that the £6 billion figure was accurate, and questioned the origin of such a figure.

The spokesperson said: “The issue is to do with Controlled Foreign Companies, and whether multinationals are operating brass plate operations or genuine businesses overseas.

“In the course of long-term, ongoing discussions against assessment of the revenue raised it was recognised that this is not a brass plate operation and that we have employees and assets involved.

“The amount of money we had provided in our accounts to satisfy our auditors if there was a risk we had to pay a tax bill was £2.2 billion. Earlier this year we agreed to settle this case with HMRC for £1.25 billion.”

The spokesperson added: “The idea we had a bill waived is not the case. It is incorrect to suggest there was ever an outstanding tax bill of £6 billion. That was never the case.”

An HMRC spokesperson said: “We cannot comment on the detail of the settlement but we can confirm that it was reached by HMRC following a rigorous examination of the facts and an intensive process of negotiation that tested the arguments of both parties.

“As a result it was agreed that Vodafone’s liability was £1.25 billion and at no point was a liability greater than that established.  There is no question of Vodafone having an outstanding tax liability of £6 billion.  That number is an urban myth.”

6 COMMENTS

  1. when i did my number on the plan whit vodafone the say to me call in side australia free call ok now i get me bill about $800.150 that not good u know

  2. Well, if the claims of £6 billion in unpaid taxes are false, why doesn't Vodafone sue Private Eye for instigating this story?

    • Thank you for that vast generalisation, very informative. Perhaps for the intellectually challenged amongst us (not all of whom are anti capitalist, just anti tax dodger), you could illuminate the complexities of cross border tax regulations.

      Are you refuting the suggestion that Vodafone had a tax bill running into the billions in respect of which a "settlement" was then reached, rather than simply paying the original bill as it was presented to them?

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