Vodafone in new tax bill controversy

Mobile phone giant Vodafone is under pressure again after it emerged it did not pay any corporation tax in the UK last year.

The company was able to reduce its CT liabilities by off-setting the bill against its capital expenditure, which rose from £516m to £575m, through investment in improving its network and interest costs.

According to a Sunday Times investigation into the company accounts, its global corporation tax bill went up by £300m to £2.3bn, but its British corporation tax bill fell from £140m in the year to 31 March 2011 to zero, despite an increase in underlying earnings before interest and tax at its UK operation from £1.2bn to £1.3bn.

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Comments
ShirleyM's picture

Poor things!    3 thanks

ShirleyM | | Permalink

"..... and it paid the exchequer £700m in payroll and other taxes last year""

I make the assumption that this statement refers to:

a) payroll taxes deducted from employees

b) VAT collected less VAT reclaimed

So ... all in all .. the only part that they actually paid (rather than their employees or customers) is the employers NI.

I wonder how long it will be before they find a way to avoid that too?

 

What did they pay for?    2 thanks

Ian Bee | | Permalink

Despite the investment in infrastucture for which they claimed capital allowances, I still find that I cannot get a signal on my phone half the time!

signal    1 thanks

kamzy | | Permalink

I hope they did a lot of upgrading, was with them before I jumped ship to o2. Could only ever get gprs in my house with them but with o2 I can get 3G!!

It does annoy me how these multi nationals are blatantly using tax avoidance schemes and shifting profit to low tax jurisdictions.

Vodafone proves that employers' NICs must never be abolished ...

dstickl | | Permalink

ShirleyM wrote:
        ...

So ... all in all .. the only part that they actually paid (rather than their employees or customers) is the employers NI.

I wonder how long it will be before they find a way to avoid that too?

CONCLUSION: So, Vodafone proves that employers' National Insurance Contributions must never be abolished ... and that the only way to partially tidy up the "fiscal horror" of IR35 is for Government to remove the worrying uncertainty of the scourge of deemed payments for workers aged over SPA (State Pension Age) working through a PSC (Personal Services Company) because they have to work due to their inadequate pensions/annuities/returns from savings due to Government failure.

REASON: I believe it unlikely that Vodafone may employ a significant number of people aged over SPA in UK.

[Q: Does any body out there have any specific figures, please?]

The article is very poor. I    5 thanks

djw090 | | Permalink

The article is very poor. I expect that sort of thing in the general press. However, I would have thought that Accounting Web could mange a better technical explanation of what Vodafone has done.

On the face of the capital allowances on fixed asset additions of £575m does not fully relieve an operating profit on UK operations of £1.3billion.

Please try harder.

listerramjet's picture

not only poor    1 thanks

listerramjet | | Permalink

"vodaphone is under pressure".  From whom exactly?  Are you suggesting it is not complying with UK tax law?  This is supposed to be an accounting website - not a mouthpeace for undergraduate types with too much time on their hands.

They'll probably be employing    1 thanks

rennisonf | | Permalink

They'll probably be employing aggressive salary sacrifice schemes to reduce their NI costs.

Lies, damn lies and statistics

Ian McTernan CTA | | Permalink

As my maths teacher was fond of saying.

People are wilfully misreading figures to create their own interpretation of the reality.

The £1.3bn quoted is underlying earnings 'before interest and tax'.  Perhaps they should quote the real profit figures rather than an artificial figure which only exists in accountants land.

People seem to forget the phone companies paid billions for their licenses- or just conveniently slips their mind when they want to bash a big company.

Also, if the company employs people it pays the taxes, both PAYE and employers NIC.  It is a complete fallacy to say the employees pay the PAYE.  From a company point of view, the cost of employing a person is, say, a £40k salary plus the 13.8% jobs tax known as employers NIC for a total of £45,520, from which the taxman grabs a large slice.  If the company didn't employ them, there would be no tax take.

Scrap employers NIC and companies could employ more people for the same total cost.

@ HH: How should HMG make up the tax revenue shortfall?

dstickl | | Permalink

hopkins-hohg wrote:

Scrap employers NIC and companies could employ more people for the same total cost.

IMHO you are wrong here, HH!    As Vodafone have proved to me that the only tax they really pay to operate in UK is "employers NIC", I would be glad to know your answer to this QUESTION: How should HMG make up the Vodafone tax revenue shortfall - in your opinion - if employers NIC were to be scrapped, please?

ShirleyM's picture

Catch 22 - the other argument

ShirleyM | | Permalink

hopkins-hohg wrote:

 If the company didn't employ them, there would be no tax take.

Scrap employers NIC and companies could employ more people for the same total cost.

If Vodaphone didn't employ people it wouldn't have any profits to tax.

PAYE is paid by the employees. It is merely spin to say otherwise. I am sure that employees across the country will agree that they pay their own tax otherwise they wouldn't get so upset about higher rate tax.