Vodaphone Joins the Tax Avoidance Rouges Gallery

‘Our employees pay tax so why should we pay corporation tax?’ was one argument raised by one global giant when accused of tax avoidance. Now we have another from Vodaphone who have paid NO UK corporation tax for second year running, despite earning £5 billion in UK sales.

The new argument is that they have made enough contribution via other investments in UK infrastructure. Over a decade ago it paid £6 billion to the Treasury for the 3G spectrum and has recently paid over £800 million for new UK 4G spectrum. Ironically they were able to slash their corporation tax liability to zero by claiming allowances for investment in infrastructure, such as it made in the mobile spectrum and in interest payments. They claim they paid £300m of interest during the year on loans to fund its £6bn purchase of 3G spectrum in 2000, which they offset against last year's profits. We may be naïve, but to the simple person that would suggest that the interest payments against the investment were then effectively funded by the taxpayer. If correct that is somewhat like Amazon being paid more in grants than it pays in tax.

Vodaphone still made £294 million operating profit.

Then we have the usual Luxembourg company, Vodafone Procurement Co Sarl, which reported profits of 215 million euros and according to accounts paid no income tax, for the period. The company which lends money to other group units, reported profits of $2.43 billion for the year to March 2012 and reported a tax bill of less than 1%.

Vodaphone are not new to tax controversy and are reported to have stuck a significant ‘deal’ with HM Revenue and Customs in the past. It is somewhat ironic again that Dave Hartnett, the tax officer who struck the deal has now joined Deloitte, who advise Vodaphone on such issues. The names ‘gamekeeper’ and ‘poacher’ spring to mind.

Vodaphone has published a defence of its tax activities and insists it is committed to "integrity in all tax matters" and although it paid no corporation tax in the UK it did pay over £2.5 billion in similar taxes in other countries and claims it paid £882m in other UK taxes and contributions during the year.

We should erect a rogues gallery of corporations who avoid their taxes on such a grand scale. Every month a new ‘rouge’ is unveiled, every month the size of the kitty not being collected and being effectively avoided, grows. Everyone points the finger at each other and appears to cry, ‘not me guv!’ The reality is that when we all have to tighten our belts and we have welfare cuts and caps, it may be legal, but it is becoming increasingly immoral for these corporations not to pay their fair share and that applies to all taxes and not those they select to offset others. It is also immoral for a government and its agents not to act as diligently as it does to others to close down what is fast becoming a moral scandal.