Monday, April 22, 2013

Vodafone, Boots

Tim Worstall, a far right blogger, has a piece here claiming to debunk UKUncut's case on tax.

He begins with Vodafone, claiming that they had not been avoiding £6 (or is it £8) billions in tax on an £18 billion deal, because they had paid tax already in Germany, and anyway the UK law on Controlled Foreign Companies (CFC law) was overridden by EU law.

Normally we would expect Tim Worstofall to rail against the EU law, because he is a UKIP activist (or was. Dwell time in UKIP is short). However, his love of corporate tax avoidance clearly overrides his hatred of all things EU, and in this clash he sides with EU law.

HMRC (the taxman) took Vodafone through three courts. All ruled that Vodafone had nothing to pay because the CFC was overridden by EU tax. However the Appeal Court, although finding for Voda, mentioned that if the subsidiary in question, Vodafone Investments Luxembourg (VIL) had been set up as a tax dodge, they might be liable for tax.

VIL was set up in 2000, after they bought Mannesmann. This might have been a bit of a clue for the judge, but evidently he just couldn't be assed to get his enormous legal brain around that one.

HMRC chickened out of taking it to the Supreme Court, partly because if they lost, a dam of tax claims might have burst on their heads. Though with the above fact, they should have won.

Also, I cannot find Vodafone Investments Luxembourg on this list. Maybe now its job is done, it has been wound up. Or maybe renamed Vodafone Finance Luxembourg., which is there.

Vodafone settled out of court for £1.25 billion.

Worstofall claims: "Vodafone had paid the relevant tax required in the countries in which the subsidiaries were operating".

But had they?

We find in the Economist in 2004: "POLITICIANS of all stripes reacted angrily this week to news that the German subsidiary of Vodafone could deprive the government of up to €20 billion ($21 billion) through tax write-offs"

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