Vodafone hits back at claims that it paid no corporation tax

Mobile phone giant Vodafone faces a fresh tax row after a Sunday newspaper claimed yesterday the firm had paid no UK corporation tax last year.

The firm earns several hundred million pounds from its 19 million UK customers, but shared none of it with HM Revenue & Customs (HMRC), according to the report.

Vodafone said its corporation tax liabilities in the UK were offset by investment in improving its network.

The group has previously been criticised for its dealings with the taxman after its £1.2 billion settlement of a decade-long dispute with HMRC in 2010.

Underlying profits at Vodafone’s British operation rose from £1.2bn to £1.3bn in the year to 31 March, while adjusted profits rose 16 per cent to £402 million. Yet its corporation tax bill fell from £140m to zero.

Vodafone said its UK capital investment increased to £575m from £516m in the year. It said its UK business accounts for less than 4 per cent of group profits.

A Vodafone spokesman said: “As in most countries, there are tax reliefs for capital investment and interest costs in the UK, which applied in this case.

“We paid £14bn into the public purse worldwide in 2011 if one includes payroll and sales taxes as well as fees for radio spectrum.”

Vodafone’s global corporation tax bill rose by about £300m to £2.3bn last year, in line with other British multinationals.