Vodafone Defends HMRC Tax Deal

Vodafone made a settlement thought to be worth millions with HM Revenue and Customs over tax returns at an Irish subsidiary, it has been revealed.

The previously unreported deal emerged after the Guardian said that accounts filed in Dublin showed the company settled a dispute with HMRC in 2009.

The UK-based company 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.

The overall size of the settlement has not been disclosed but it reportedly involved Vodafone reclaiming 67 million euros (£57m) in tax from the Irish government that should have been paid in the UK.

In a statement the company told Sky News: "The royalty payments that were made were done so under domestic and international transfer pricing rules which are set up by governments to allocate appropriate taxable profits from one country to another.

"The company's local UK and Italy operating companies continued to pay fees to Vodafone Group in the UK and no royalties have ever been paid from the UK to Ireland or elsewhere."

It explained: "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."

It added: "Vodafone conducts itself in full compliance with the law and always operates under a policy of full transparency with the tax authorities in all countries in which we operate.

"Vodafone's relationship with tax authorities is based on complete disclosure and a rigorous adherence to due process at all times."

The emergence of the deal comes following scrutiny over the tax affairs of multinational companies including Starbucks, Google and Amazon.

An HMRC spokesperson said: "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."

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