Vodafone looks be heading for a dispute with Customs & Excise over allegations concerning unpaid VAT.

According to Reuters, Vodafone made use of a tax loophole regarding the manufacture of mobile phone cards which resulted in it paying less tax.

Although not thought to be illegal, the Government is now cracking down on such tax avoidance schemes and wants the giant mobilephoneco to cough up around £15m.

A spokesman for Vodafone told The Register that the company had sought a meeting with Customs some six months ago to discuss the matter. That meeting only took place this week.

Vodafone is now considering its options and hasn't decided whether to pay up or contest the matter.

A spokeswoman for Customs declined to comment. ®