Vodafone paid zero UK corporation tax last year
11 June 2012
Posted by: SAIT Technical
By Katherine Rushton (The Telegraph)
Vodafone is facing a fresh storm of controversy over tax after it emerged that the mobile phone giant did not pay any corporation tax in Britain last year.
The company saw its global corporation tax bill go up by £300m to £2.3bn, but none of that money went to the exchequer in the UK, where Vodafone takes several hundred millions of pounds from more than 19m customers each year.
Instead, the mobile operator's British corporation tax bill fell to zero from £140m in the year to March 31, 2011, despite an increase underlying earnings before interest and tax at its UK operation rose from £1.2bn to £1.3bn.
Although Vodafone has acted within the law, its minimal bill in Britain is likely to reignite anger over the group's dealings with the taxman.
The business, based in Newbury, Berkshire, has already faced a barrage of criticism, after its £1.2 billion settlement of a decade-long dispute with HMRC in 2010.
HMRC officials were accused of arranging "sweetheart” tax with multinationals, sparking an investigation by former High Court judge Sir Andrew Park, due to be published on Thursday this week.
Vodafone was able to avoid paying corporation tax in Britain last year by offsetting the bill against its capital expenditure, which rose from £516m to £575m.
It invests £1.5m a day in mobile networks in Britain, and is still writing tax off against the £5.96bn it paid the government for mobile spectrum in 2000. It also paid around £700m in payroll and other taxes last year.
In avoiding corporation tax in Britain, Vodafone joins a growing list of major multinationals that have a major presence in the UK but pay little or no corporation tax.
In the past, Google's chairman Eric Schmidt has blamed the low payments on the UK's weak tax laws, saying that it has a duty to shareholders to pay no more tax than required and that his company's hands are tied by the Government's low demands.
"It is true we could pay more tax but we would have to do so voluntarily. It's called paying the legally minimum amount of tax required,” he said.