Vodafone pays no corporation tax on £5bn sales

Vodafone paid no corporation tax for the second straight year. Picture: PA
Vodafone paid no corporation tax for the second straight year. Picture: PA
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MOBILE phone giant Vodafone is facing criticism for paying no corporation tax in the UK for the second year running, despite sales of more than £5 billion in Britain.

The group said investment in its UK network and interest payments had more than wiped out its corporation tax liabilities in the year to the end of March - although it paid about £3bn in tax overseas.

Politicians and unions have branded the company “disgraceful” and accused it of “freeloading” off the British state.

Last month, it emerged online retailer Amazon had paid less than £2.5m in the UK last year, despite £4bn in sales. Starbucks and Google have also been criticised for their small tax payments, with executives called before MPs to explain their affairs.

Vodafone, which has about 14,000 of its 91,000 staff in this country, insisted it was committed to “integrity in all tax matters”, adding it paid £882 million in other UK taxes and contributions during the year. However, it also paid no UK corporation tax in its 2011-12 financial year.

Len McCluskey, general secretary of the Unite trade union, said: “Vodafone has, for a shocking two years running, not paid one penny in corporation tax to this country, even though their UK business generates them a colossal £5bn.

“What an insult to the people of this country who give loyal custom, only to discover that this company dodges its dues to the UK.

“And a further slap in the face comes with the news that Vodafone is happy to pay tax in other countries.”

He added: “Big business cannot be allowed to freeload off this country a moment longer.”

Ken Macintosh, MSP, Scottish Labour’s finance spokesman, said: “It is disgraceful. It is time they actually put some corporate responsibility into action.

“The onus is also on the government, now that it is clear that this company thinks it is acceptable not to pay their corporation tax, to take some action.”

Iain McMillan, director of business organisation CBI Scotland, said: “The CBI is clear that firms operating in the UK need to make sure they do a better job of explaining their tax affairs to the public. We would like to encourage firms to explain why they pay what they do in a straightforward, transparent and accessible manner.”

The UK government insists cracking down on companies and individuals who avoid tax is a major priority and has called for closer collaboration between European nations.

However, Vodafone insists it has done nothing wrong.

In a report on tax, published alongside its annual report yesterday, the group said: “Individuals and companies have legal obligations to pay tax; but those obligations do not extend to paying more than the amount legally required.”

A Vodafone spokesman said it recently paid the UK government £802m for 4G spectrum, which it will use to launch superfast mobile internet, and was increasing UK network spending to more than £900m this year to prepare for the launch.

He 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.”

Vodafone’s UK operating profits fell to £294m during the year, from £402m a year earlier.

Prime Minister David Cameron and Chancellor George Osborne have insisted that they are making tax dodgers a “priority”, calling for global co-operation on the issue.

But David Palmer, of UK Uncut, which campaigns against government austerity cuts, said: “This is yet another example of how corporations will not pay any more tax than they can get away without paying, unless they are absolutely forced to by the government – which is not forcing them to do so.

“We wait with bated breath to find out how the UK government is going to solve this global issue. The problem is that Cameron is shirking responsibility on what he can do himself to close tax loopholes without the aid of other countries.”