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Vodafone settles unreported tax dispute with HMRC

New reports last weekend revealed that global telecoms giant, Vodafone was forced to make a tax settlement, thought to be worth millions, to HM Revenue and Customs (HMRC) regarding tax returns at an Irish subsidiary.
The previously unreported deal emerged after the Guardian reported that accounts filed in Dublin indicated the company had settled an on-going dispute with HMRC back in 2009.
The UK-based company had previously used an Irish subsidiary, Ireland Marketing Ltd (VIML), to collect royalty payments from operating companies and joint ventures around the world for using its brand, the newspaper said.
Although the overall size of the settlement has not been revealed, Vodafone were required to reclaim €67m (£57m) from the Irish government in tax that should have been paid in the UK.
During a four-year period, Vodafone used the royalty payments collected through VIML from most countries, except the UK and Italy, to help it send more than €1bn worth of dividends to the low tax jurisdiction of Luxembourg from Dublin, the report continued.
However, the telecoms conglomerate refuted any suggestion of tax avoidance. The company said in a statement:
"In all respects and at every point, Vodafone has conducted itself with the highest integrity and in full compliance with the law.
"The settlement with HMRC related to a number of technical factors regarding inter-group transfer pricing arrangements.
"Notably, throughout the period covered by the settlement, the profits of VIML had been taxed by the Irish authorities at the rate of 25%.
"In accordance with the treaty between the UK and Ireland which prevents double taxation on the same income, the Irish government credited taxes previously paid by Vodafone and these were then paid to the UK Treasury as part of the overall settlement."
An HMRC spokesperson added: "We do not comment on the affairs of individuals or companies, but we do ensure that multinationals pay the tax which is due under the law."

Image: Jonathan Oakley

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