Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Vodafone settles £1.25bn in CFC tax case

by
27th Jul 2010
Save content
Have you found this content useful? Use the button above to save it to your profile.

The telecoms operator has ended a ten year dispute with HMRC by agreeing to pay back £1.25bn over five years.

The case relates to tax payable by Vodafone’s Luxembourg subsidiary and follows tightened CFC rules brought in by the previous Labour government to prevent companies shifting income away from the UK to foreign subsidiaries with a lower tax rate.

Vodafone had set aside £2.2bn in its books to meet the potential cost of the claim.

It has been speculated that the case could lead to further big CFC settlements being made, as the government encourages HMRC to settle long-running legal battles rather than fight them, said the Daily Telegraph.

Mike Warburton, partner at Grant Thornton, told the Telegraph: "This area of tax law has proved extremely complicated which has led to long drawn-out cases with HMRC. It would be far better to clarify the laws than to continue to fight each battle, which the new government seems keen to do."

“It is interesting to note that [Vodafone] must have been given some indication of the as yet unpublished government proposals to reform the CFC regime in order for them to have been in a position to comment on their likely lack of future liabilities. It is to be hoped that HMRC publish their proposals swiftly in order that all taxpayers may be treated equally,” said Jeremy Maynes, senior adviser at law firm McGrigors.

 

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.