Feeds

Vodafone's small, controversial tax bill validated by UK.gov

See that cell tower? That's actually in Switzerland

Providing a secure and efficient Helpdesk

The National Audit Office, asked to look into Vodafone's negotiated tax bill of £1.25bn, has decided it was a reasonable deal considering the cost of taking legal action against the company.

Back in 2010 Vodafone was accused of owing £6bn in tax, and the company had reserved £2.2bn to meet it's UK tax obligations, but George Osborne struck a deal to accept £1.25bn. That sparked national protests, and in December last year the Audit Office was asked to take a look at five deals including the one struck with Vodafone. It has now concluded that all were perfectly reasonable.

The report (pdf, surprisingly readable, but still very dull) doesn't name the companies, but Vodafone admits to being "Company D" whose deal is criticised as breaking the Treasury Department's own guidelines though it concludes that this is because the guidelines themselves aren't very good.

"Litigation and Settlement Strategy" lays out how the 'Department negotiates deals, and specifically prohibits "split the difference" deals where the liability party is asked to pay a mid point between the maximum liability and the minimum. In Vodafone's case that minimum was zero, as the company claimed it owed nothing at all:

"The agreed settlement ... was lower than the tax liability that would have been paid if the Department won in litigation. Given the uncertainties and costs of litigation, it was reasonable for the Department to settle at the amount it did" says the report. Later Sir Andrew Park, consultant to the NAO, went further:

"Sir Andrew Park considered that there may have been a sense in which the settlement [with Vodafone] could be characterised as ‘splitting the difference’, but his view is that, if this is the case, it is the strategy that is at fault rather than the settlement."

So if the guidelines were broken then it's because they aren't very good guidelines, obviously.

Vodafone, of course, can barely conceal its glee at the report:

For more than a year, Vodafone has been falsely accused of improper conduct ... the National Audit Office has now concluded that the outcome was good for the UK taxpayer. We welcome this vindication.

Not only that, but Vodafone points out that in addition to paying its legally-mandated tax it also handed £6.7bn to shareholders this year to the benefit of the UK economy - if you're not a shareholder then you only have yourself to blame.

All large companies avoid paying tax, if they didn't then we could have much lower tax rates for ourselves, but the tricks being applied are getting increasingly complicated - to the point where it's almost impossible for tax offices, let alone ordinary citizens, to understand who must pay what. A recent investigation by The Bureau of Investigative Journalism, working with Private Eye magazine, found a Vodafone office in Switzerland staffed by one part-time employee who admitted he didn't go into the Vodafone room very often.

None of this is illegal, and neither, it seems, was Vodafone's deal with the Revenue: repugnant as that might all be to those of without barely staffed international offices in tax havens. ®

Beginner's guide to SSL certificates

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.