According to Private Eye, Vodafone have lined up another scam. Basically, their Luxembourg branch, which claims turnover over 2X Luxembourg's GDP yet has never sold a phone there, has "recognised" that in the future it will suffer losses of dozens of billions.

All the profits made in (for example) the UK can therefore apparently be used to offset these losses. And there is enough to ensure that Vodafone won't pay any UK tax for at least 25 years.

All this is seemingly perfectly legal, and judging by the way HMRC infamously did a deal with Vodafone previously over its tax bill, costing the UK taxpayer billions, we can apparently expect the old boys club to wish them good luck and slap them on the back in this latest wheeze. No doubt to be used as a template by the rest of the usual suspects.

Not surprising the Luxembourg branch is losing money

No phone sales, from the 300 employees



I can't find anything about the latest deal. However, Corporation Tax being paid on profit and not revenue (AFAIK) how much should Vodafone pay? More than £275m? (which wasn't Corporation Tax) and the non-tax payments to the UK gov of £825m?

£46m paid to the Lux gov, £454m, to the Turkish gov and £1.1bn to the Dutch gov BTW.

Boycott Vodafone.

for what, obeying the law?

the law is wrong, not the behaviour of Vodafone

The law is not wrong, it is the appetite of HMRC to enforce it. they should just say "Look, these are all associated operations, the reality in the round is its a scam to avoid paying full UK tax on the profits you make in the UK", and assess them to the appropriate percentage of corporation tax.

It would be open to Vodafone to then fight the assessment through the courts if need be.

I look on this from the other end. Which is that I damn well know Vodafone makes billions in the UK, whichever way they want to arrange the books, and so need to pay tax on the billions they make in the UK. Whatever else they may arrange elsewhere through complex international schemes would be of no interest to me, as i would argue it is not real, but a pure device to reduce the tax they should pay.

I am not saying they are doing anything illegal, (all these complex scams are based on arguable and very arcane and technical interpretations of extremely complex rules) but the burden should be on them to prove that it is not tax avoidance. Given we all know perfectly well that it is pure tax avoidance, that might be a heavy burden to lift. The best way to deal with them would be to assess them for the full tax, which they would then have to pay, and leave them to argue it in court if they want.

If at the end of that Vodafone managed to win, then I would quickly whiz a retrospective statute through Parliament closing the loophole neatly in accordance with whatever loophole the court had allowed.

I was just saying, if you don't like it then don't use them. I don't.

Then lobby your MP.

It is now illegal for individuals to indulge in schemes designed simply to avoid tax that technically may be legal in an accounting sense. That is why Gary Barlow is now facing a huge tax bill.

If you come up with a scheme designed just to avoid tax you remain liable for the tax.

Such behaviour is now deemed to be wrong regardless of the accounting technicalities used to make out nothing illegal took place. So if Vodafone are doing the same kind of thing I'd say there were just as much in the wrong as Barlow was.

If it's wrong for individuals to set up tax avoidance schemes I can't see why it isn't wrong for corporations to do the same. In fact I am pretty sure it is just as illegal for corporations to do this but it requires HMRC to go after them as enthusiastically as they went after the Ice Breaker scheme Barlow was involved with.

If Vodafone is coming up with a scheme to make profit seemingly vanish which is basically what Ice Breaker did I can't see why they aren't having to cough up the full whack.

Another angle on this is how come the Luxembourg operation that makes such vast losses isn't simply shut down? It must be basically insolvent so why wouldn't Vodafone want to prune this loss making enterprise and be rid of what must be 300 extremely incompetent individuals? The liquidators should be called in and the directors done for Wrongful Trading.

The answer is of course they don't shut it because it is used for tax avoidance if Private Eye is correct. So again Vodfone should be liable for their full UK tax bill.

A lot of ifs there, Dave.
Luxembourg is the finance centre for Vodafone, so gets the debts and the interests on those debts. I was only kidding about their inability to sell phones (which isn't even how mobile telephony providers make profit anyway)

There are perfectly valid reasons why they could have large losses in Luxembourg. It may be, just as an example, that they purchase their operating licences for the 3G and 4G spectrums across Europe via their Luxembourg company which would give them massive cost with little income.

There may well be some perfectly legal offsetting going on, but there is not enough information to give a considered opinion.

You have to remember that HMRC has signed agreements with the tax authorities of many other countries regarding double tax and other issues and are therefore powerless to prevent some things happening if the other country allows it under their tax laws.

But the point is if they do so to avoid tax in the UK then that ought to illegal as the mechanism being employed is only being employed to reduce tax.

For example if the example you use of Vodafones set up costs for 3G and 4G [iin the UK[/i still meant after such costs were taken into account [ithe UK operation[/i still turned a profit then tax should be due on that profit.

If what they do is use losses elsewhere as in "recognising" losses in the Luxemburg operation as a means of wiping out that UK profit this seems a thinly disguised attempt to avoid tax and nothing to do with offsetting investment costs incurred by the UK business.

The UK has not benefitted from whatever led Vodafone to incur these losses and it wasn't investment in the UK so offsetting UK profit against these losses does as I said look like something being done for tax avoidance purposes not because they just invested a shed load of cash in the UK.



There is a difference between legitimate offsetting such as taking advantage of a tax break on R&D spend for example and offsetting done just to reduce tax.

It's also nothing to do with double taxation but employing mechanisms to not pay any tax at all. The courts view any such scheme as illegal so what HMRC needs to do is decide if ing profit and loss around multinational corporations is being done to avoid tax and for no other reason. Private Eye alleges this is what is going on and if so HMRC needs to act.

This is one of the major topics that should be decided the general election in this country. If one of the parties had a proper plan for removing these loop holes and generating many billions of additional tax revenue, they'd get my vote. Instead we're faced with debates on whether UKIP are suitable to represent the country and how labour are taking back the working class.

I don't think they need a plan, as I understand it the HMRC could assess tax bills on Vodafone or anyone, and leave them to pay and then appeal. The question to me is why they don't. Given that they hold the ultimate card of being able to enact into law, retrospectively, any loophole a court might find anyway.

A cynic might suggest that they are all mates together and will do alright out of it, in one way or another.

Pretty much spot on, the whole tax system needs an overhaul from top to bottom, sadly no one will, far too many jobs for the boys in both directions.

[url=http://www.medact.org/campaign/alliance-boots-campaign/Alliance Boots[/url

Sad to see that from the days of a socially responsible employer like The Boots Pure Drug Company, we now get to the British taxpayer subsidising the finance required to leverage a buyout

I try to boycott them. Since they became private equity owned I have no time for them. We use a local, independent pharmacist. As to the rest of the junk they sell, you can get it elsewhere.

Daveo. What Vodafone is doing is nothing like tax avoidance so don't compare them to Gary Barlow. Vodafone do not have to enter a scheme number on their CT600 as there is no scheme, Gary Barlow will have had to disclose the scheme. Vodafone are doing nothing wrong. I bet there are self employed people on here complaining about Vodafone, yet who will do cash in hand jobs. Good on Vodafone I say. They are a plc and whilst they have to consider all stakeholders, the main aim of a plc is to increase shareholder wealth which is what it is doing, I don't see the problem

Regards

King James

So you are comfortable with the fact that companies can get away with paying zero corporation tax while upwards of 1,000,000 UK citizens (some of whom are possibly employed by the same companies) are relying on foodbanks and taxpayer subsidies to sustain them?

maybe they should be better at budgeting and not expect a free ride?

Lol

too many people spend beyond their means, and then blame someone else when the bills come in.

Please explain just how trhe fook you budget for not getting a pay rise in ten years, while the cost of most things has gone up exponentially?

Or how do you budget for divorce or illness etc?

Vodafone are avoiding tax by organising their business to do just that. The fact Barlow and Vodafone adopt different ways of doing it is completely irrelevant.

The general consensus is that avoiding tax is wrong. The legal view is if what is done is simply a mechanism to avoid tax it is also illegal. So I so no reason why Vodafone's actions could not be viewed as nothing other than a tax avoidance measure and so be open to challenge in the courts.

The fact you don't see the problem is rather disturbing. The mantra of increasing shareholder wealth is the biggest excuse not to consider all stakeholders particularly a companies employees but especially the tax man.

You get a better job/more skills/more hours?

What does that have to do with companies paying/not paying tax?

Yes becausae it really is that simple isn't it?



You brought up the budgeting scenario. We have a welfare state that could be better funded if corporations and individuals paid the tax due without spending mega bucks on an army of lawyers to simply look for loopholes.

This, except that it's even easier since as I said HMRC could just ignore the scam,raise an appropriate assessment which Vodafone would have to pay, and if they wanted to persuade a court that this wasn't a scam, it would be their right.