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Vodafone Avoids Paying Corporation Tax for Second Consecutive Year

Written by: Keith Tully

Reviewed: Tuesday 11th June, 2013

tax

Recently we reported that the search engine giant Google had been branded ‘devious, calculating and unethical’ for avoiding paying UK tax.

MPs from the House of Commons Public Accounts Committee (PAC) condemned the firm for paying £6 million in UK corporation tax in 2011, even though they earned more than £3 billion in advertising revenues in this country.

However, it seems that another multinational company is now in the spotlight as it has been revealed that Vodafone has not paid any corporation tax for two consecutive years.

Despite making more than £5bn of revenue in Britain, the mobile phone giant did not pay UK corporation tax for the second year running, although it did pay more than £3 million in tax overseas.

According to the firm’s 2011-12 Annual Report and Accounts, investment in UK network and interest payments ‘wiped out’ corporation tax liabilities during the year to the end of March.

It disclosed that £300 million of interest was paid on loans to fund its £6bn purchase for a 3G licence bought over 12 years ago. It also paid the government £802 million for 4G spectrum, which it’s using to launch superfast mobile internet.

Furthermore, they spend £1.8 million every day on “improving the network and systems relied upon by our UK customers” and capital investment in the UK has increased to £575 million. They also maintain that around £700 million is paid to the UK Exchequer each year in fees for payroll taxes, business rates, VAT and other taxes.

A spokesperson said: “Simply put, we make more money elsewhere, so we pay more taxes elsewhere.”

Vodafone paid zero UK corporation tax in the 2011/12 financial year, stating the UK contributed only 2.5% to its overall profits.

Recent findings show that the UK only accounts for 4% of its global operating profits. UK operating profits fell to £294 million from £402 million a year earlier, despite the group operating profits being 3.7% higher at around £12bn.

Vodafone currently employs around 14,000 staff in the UK.

Another spokesperson added: “We believe the UK tax debate should be wider than just merely looking at corporation tax, because different industries make their - in our case significant - contributions in a variety of ways.”

The news will spark further debate into multinational company tax contributions. If your business is struggling with VAT tax arrears, let the team here at Real Business Rescue help. 

Keith Tully

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Keith Tully
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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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