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Vodafone Vindicated In UK Tax Settlement Review

by Robert Lee,, London

15 June 2012

UK telecommunications giant Vodafone has welcomed the vindication of its tax record following the publication of a review into five tax settlements reached between HM Revenue and Customs (HMRC) and large corporate tax payers.

The National Audit Office concluded that Vodafone's GBP1.25bn (USD1.9bn) settlement with the UK tax authorities in 2010 was “good” from the perspective of the UK taxpayer and "represented fair value for the wider taxpaying community".

The NAO report, published on June 13, was based on an examination of five cases by former High Court tax judge Sir Andrew Park following concerns in parliament that HMRC had given favourable treatment to certain large corporations during tax audits, in a series of so-called 'sweetheart deals'.

In the case of Vodafone however, Park concluded that HMRC was “right” to settle the nine year-long dispute “because, if the case had not been settled, it would have gone to litigation. If this had happened, there was a substantial risk that the Department would have received nothing."

Vodafone Group Chief Financial Officer Andy Halford said: "For more than a year, Vodafone has been falsely accused of improper conduct. As we have consistently stated, those attacks were unwarranted and unjust. We acted with the utmost propriety throughout the HMRC settlement process, and the National Audit Office has now concluded that the outcome was good for the UK taxpayer. We welcome this vindication. Vodafone has always been a responsible company with a strong commitment to managing our affairs properly and diligently within the law and with full disclosure to all relevant tax authorities."

“Vodafone is a long-standing and significant contributor to the UK as a whole, not least in our role as the biggest dividend payer in the UK," Halford added.

The NAO did, however, flag up concerns regarding the governance arrangements operating in certain cases. In particular, it found that specialist staff were sometimes excluded from the final settlement negotiations and that HMRC did not always ensure that these staff involved understood the reasons for settlement.The report also found that in certain settlements, it was not clear whether HMRC's Litigation and Settlement Strategy had been followed.

TAGS: compliance | tax | business | tax compliance | tax avoidance | law | corporation tax | audit | United Kingdom | telecoms

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