Anti-cuts group UK Uncut has hijacked a Vodafone website as part of a protest against alleged tax avoidance by the mobile phone giant. UK Uncut boasted that it had taken over the blogs on the World of Difference website, a site that normally promotes Vodafone's corporate and social responsibility initiatives. The initiative …
As opposed to tax evasion, is legal and is a right of every taxpayer here. The protesters should return to their workplaces and do something productive.
I quite agree with you Vladmir, what they are doing is entirely legal. Wrong, but legal. Not their fault if the law is wrong is it?
Is it wrong for you to shop around for something and then buy it from the cheapest vendor?
Why should it be wrong then for you to look at various tax rules and chose to arrange your affairs according to the rule that results in the lowest tax?
It's wrong when...
You (or your industry buddies) have paid^H^H^H^Hlobbied for the loopholes to be put in place.
Basically the Gubbinment couldn't organise it's way out of a wet paper bag, and tax law should be distilled to a few short pages.
It's not even wrong. The tax office states very clearly that you are required to pay the minimum tax legally applicable. Restructuring your business to take advantage of tax 'loop holes' is entirely legal. Tax is used as both carrot and stick to restructure various aspects of our society. Any "oops that 'loop hole' was a fuck up" moments are fixed by the next tax year ensuring companies are cautious and seek guidance before any major restructuring.
If what Voda say is true...
I what Vodafone is saying is correct, and they have not used "tax avoidance" (perfectly legal) to lower their tax bills, they are actually in trouble anyway.
A company's main responsibility is, AFAIK, to bring value to shareholders. This is done by generating the maximum possible profit.
If they have not exploited tax loopholes to lower their tax bill, they have not done their duty towards shareholders and could face action from them.
Rock, meet Hard Place.
"Why should it be wrong then for you to look at various tax rules and chose to arrange your affairs according to the rule that results in the lowest tax?"
Nobody is preventing anyone from settling in a particular location if they like the tax rules, but then those people shouldn't be able to benefit from the nice tax-paid things of another location. Similarly, if a company thinks that it's acceptable to base themselves in some tax haven, it shouldn't necessarily expect to be able to trade in various other locations without incurring additional tax liabilities.
Ask the Irish whether it's wrong to let companies pay low rates of tax while funnelling their earnings through various loopholes and off to the Cayman Islands or wherever. I'm sure quite a few people have changed their minds over the issue in recent months now that the Irish state is virtually bankrupt.
"Similarly, if a company thinks that it's acceptable to base themselves in some tax haven, it shouldn't necessarily expect to be able to trade in various other locations without incurring additional tax liabilities."
If you try to tax the entire world all that will happen is that noone will trade with you. You will end-up a self-isolated commercial pariah state.
tax breaks for the boys
i believe the Inland Revenue actually ruled that the tax should be paid. Vodafone refused. George Osborne came to power and didn't want his good buddy (and future employer) paying it, so cancelled most of it.
So why didn't the revenue take it to court?
This argument was going on for years.
Genuine question btw.
HMRC rulings are not sacrosant
HMRC can rule all they like, but if it's found to be wrong in law, then it will get bounced in court. They realised their case was questionable so settled. There are plenty of cases where HMRC have got it wrong in the past. Witness offsetting of losses in European subsidiaries against UK tax liabilities.
The word is not "Wrong", folks...
...it's "immoral". Think about it.
Fair payment of income taxes means that we should all pay the same percentage of our gross pay, rate, irrespective of the level of that income.
The same view can be directed to the business world: Every company should pay the same rate on it's COMBINED TOTAL profits.
It is immoral to seek to avoid paying ones' fair share, after all.
However, since a load of folks don;t appear to agree with that fair and utterly logical view, I'll get me coat.
"Fair payment of income taxes means that we should all pay the same percentage of our gross pay, rate, irrespective of the level of that income."
Fine. Let all the minimum wage people pay 40% tax then.
On the second thought, let's bring the higher- and basic- rate payers down to 10%.
Just to play devil's advocate here - you suggest that everyone should pay the same percentage of gross pay. You do know that that's not what currently happens, don't you? What you're suggesting is tax cuts for the rich and tax rises for the poor:
Someone on £200k currently pays £77,520 in income tax, £5,759.60 in Employee's NI and £24,867.84 in Employer's NI - a total rate of 48.1% (108147.44 / 224867.84).
Someone on £20k currently pays £2,705 in income tax, £1,570.80 in Employee's NI and £1,827.84 in Employer's NI - a total rate of 28.0% (6103.64 / 21827.84).
Someone on £2m per year currently pays £977,520 income tax, £23,759.60 Employee's NI and £255,267.84 Employer's NI - a total rate of 55.7% (1256547.44 / 2255267.84).
Besides which, as I understand it, the reason Vodafone pay so little tax here is that they've already paid a large chunk of tax in Germany, and this can be deducted from the tax that's due here (as the economic transactions took place in Germany, the tax there applies first - all they have to pay here is the difference between the UK and German tax rate)
Oi! Vlad ole son
Just pay up and shop demonstrating your TOTAL lack of understanding and immorality. Do you really think is right that hard working failies have to pay full tax, when a company has made £B's and worms thier way to paying (next to) NOWT.
Your position is analogous to saying:
Fiddling with a kiddie is OK because loopholes in the law allow you to do so without punishment.
ITS JUST WRONG and shameful to you, your advocates and other tax AVOIDERS.
(A mans worth is not financial, its his morals, and many "humans" in this god forsaken country do not know this)
A novel approach to tax collection!
"Pay up or you're a kiddie-fiddler?"
Obviously! You don't demonstrate much understanding and morality yourself.
Pay up what?
Great is in the eye of the beholder...
"Fine. Let all the minimum wage people pay 40% tax then.
On the second thought, let's bring the higher- and basic- rate payers down to 10%."
Oh, you mean like the Republicans are wont to do here on this side of the pond?
We don' need no steenkin; title...
"Someone on £200k currently pays £77,520 in income tax, £5,759.60 in Employee's NI and £24,867.84 in Employer's NI - a total rate of 48.1% (108147.44 / 224867.84).
"Someone on £20k currently pays £2,705 in income tax, £1,570.80 in Employee's NI and £1,827.84 in Employer's NI - a total rate of 28.0% (6103.64 / 21827.84).
"Someone on £2m per year currently pays £977,520 income tax, £23,759.60 Employee's NI and £255,267.84 Employer's NI - a total rate of 55.7% (1256547.44 / 2255267.84).
How many people on £200K (let alone £2m) P.A do you reckon are actually on PAYE for the whole lot rather than funnelling a substantial proportion through a corporate vehicle to (possibly non UK resident for tax purposes) members of their immediate family and household?
Correct, evasion is illegal and avoidance is not.....
but at what point does conniving with the Government's HMRC to forgo tax by (untested) legal avoidance means and shifting the burden onto its employees, customers and the taxpayer become more than just an affront to justice if not the law.
It was perfectly legal to discriminate in the USA and SA in favour of a group. It didn't make it right and people did protest both within and without the lawful processes.
Would that our Government had a bit more about it and confronted these corporations when they shroud wave. FFS they make massive profits in the UK out of UK consumers/taxpayers and then wander off to support kleptomaniacs and despotic regimes in other parts of the world.
I can't support it but I can understand the frustration.
"FFS they make massive profits in the UK out of UK consumers/taxpayers and then wander off to support kleptomaniacs and despotic regimes in other parts of the world."
Shhh! Quiet, or Tony Blair will sue you for slander.
The dispute is that Vodafone used an off shore firm to purchase Mannesman and then used a Luxembourg subsidiary to pay taxes on the profits.
Initially HMRC considered this arrangement to be counter to the existing anti-tax avoidance rules and wanted to pursue Vodafone, but then the senior HMRC management changed their legal team and rolled over.
If you believe what the papers write a lot of HMRC staff felt very let down by the decision to change lawyers and not to pursue Vodafone for the money. They felt that there was a clear breach of the rules but no political will after the election to pursue Vodafone.
I agree it may be legal, but again it doesnt make it right. Vodafone has access to the free education provided by this country so that it can hire educated staff. It has access to the roads and the security provided by living in a country where taxes are paid.
Morally it SHOULD pay it's full levels of tax and not have secret meetings with the HMRC to do a dodgy deal and have it's tax obligations cut.
Im amazed at how many people in this country go on about how evil taxes are and how it is our obligation to pay as little tax as possible, yet they won't relocate to any true TAX FREE, countries where they wouldn't have to pay a penny in taxes, which I assume is their utopia. Namely Somlia or the Sudan. I think Iraq also have virtually non existent taxes for westerners and their companies.
It's all well and good going on about how evil taxes are, but when your happy to take the advantages provided by the taxes paid by others, it just makes you sound like a bunch of selfish self centred money grabbing cocks.
Personally, after nearly a decade with Vodafone, after this fiasco I have canned my contract.
You seem to totally ignore that tax comes in many forms, and that there is value in companies beyond their tax payment.
Yes Vodafone has access to the free education and roads as you say, and yes Vodafone may have happened to do some potentially immoral tax avoidance.
However, Vodafone is an enormous UK based multi-national, employing 10s of thousands of people in this country at its HQ and across its high street stores. As a result the company generates huge employment for the country. It also means Vodafone pays large amounts in National Insurance contributions. The net benefit of having Vodafone far exceeds a one off tax dispute!
Let me guess though, you cancelled your contract with this British company and moved to one of the other networks now owned by foreign companies (O2, EE, 3), who employ fewer people in this country and pay less overall tax and the profits get syphoned away from us.
So congratulations on again harming one of the few remaining British champions, over a silly misrepresented tax dispute, and helping out all the foreign companies instead. If this was France we'd be giving Vodafone a tax rebate and patting them on the back as a symbol of French pride! But no...
Not a chance...
So it's right that a UK based company, nay, 'one of the few remaining British champions' to use your very own words, should be allowed to avoid paying duty that is fairly levied in the very country that they are 'champions' of by shuffling that money outside the UK in dubious tax avoidance schemes?
Perhaps it's time for a simple tax rule, if you do business here and make a profit on business conducted here then you pay your due taxes on that profit here.
Maybe if that simple rule were put in place and rigorously enforced we might be able to actually reduce the amount of tax paid by small companies and the public who are stumping up to cover the reprehensible activities of dubiously legal tax avoidance and tax management companies employed by those who are large enough to have the rules bent to suit their needs.
Fairly stupid and pointless
You can't blame Vodafone for not paying tax that they don't have to pay. They're a company, and the purpose of a company is to make as much money as possible. The fault is with the government for not making Vodafone pay the tax that they apparently could have made them pay if they'd wanted to.
JUST PLAIN WRONG
Those who are advocates of basically getting out of paying their dues are morally bankrupt and should be named and shamed.
It's not a case of doing it because it's legal. You have a moral obligation to pay what is reasonably expected.
It is not reasonable to create loophole to exploit in order to AVOID paying what is due.
What would happen if we all took steps to avoid paying what's due? The government's position would be very different and you would not find it so easy to AVOID paying what you ACTUALLY owe.
So it comes down to getting away with paying pittance because you WANT to AVOID paying your fair share. You all know it, you just don't want people to think you are as tight as a fish's arsehole, or morally bankrupt as a paedophile (even though we all know that you are).
Well done if you voted to allow the Condems to continue with the degradation of morality in our society. (And we all wonder why England is in severe social decline, tut!)
W T F
Comparing legal avoidance of tax with paedophillia?
So you're saying we should turn a blind eye?
A big 'well done' to Vodafone for operating a business in this country, making itself and its shareholders profit and at the same time, don't worry about that 'small' indiscretion.
Or to put it another way, we like the fact that you're making lots of money and are helping pay for our community, so we'll just forget about that 'little' matter of you screwing us over.
Your parents must be proud of you.
PS Vodafone contracts are pish anyway.
Its simply a case of either play the game or be left out. Every single FTSE100 company, and I do mean every single one of them, uses legal forms of tax avoidance.
I don't think you should 'turn a blind eye', but when the loophole exists in UK law, and the World+Dog is practising these legal tax avoidance measures, then I do believe you need to accept the practice.
Breaking it down to the simplest of terms, tax avoidance is NOT the same as tax evasion. There is nothing illegal about tax avoidance. The UK law allows for tax avoidance and is an accepted practice all companies use. Vodafone haven't screwed us as you put it. Someone has misinterpreted this act of tax avoidance as tax evasion, and as such that Vodafone "owe" us this money. That is not true! Vodafone does not legally owe us anything.
Then there is still the matter that at least Vodafone pays UK tax on the profits it makes from us. Unlike all the other networks where your money, their profits, is taxed abroad.
Also, just a side note, when we have a massive £150B deficit and are pushing through swinging cuts everywhere, do you really believe the Chancellor would let a nice £6B just be forgotten if it was legally owed and benefiting the country? Or do you think that maybe there is some intelligence running the economy and a "greater good" outcome has been taken?
I'll call it legal when
everyone on PAYE can get a sweet tax avoidance scheme.
If that was ever possible you can bet your bottom dollar that the government would close the loophole pretty damn quick.
Remember folks, tax is for the little people.
There seems to be quite a few pro-Vodafone postings here. Why is that?
Because not everybody subscribes to the mentality that company profits are merely a holding pen for money destined for the NHS.
They don't work for VodaPhone
They work for the PR Companies which Vodaphone employ. The same PR Companies that work for many other tax avoiding scum
Here watch this....
Cadbury's are Tax avoiding scum.... they just moved their operations to Switzerland to avoid paying as much UK tax. And that is after they purchased the company with a huge mortgage which they sunk into the company. So they didn't even spend their own money to buy the company and are now avoiding UK tax. I blame Mandy for that one.
Phil Green - Arcadia Group (Burton, Dorothy Perkins, Evans, Miss Selfridge). Paid his wife £2 Billion who just happens to live overseas so they don't have to pay tax on their UK profits. Lucky that…eh
Bono. Enough said
Now let's see how quick the PR Men can here to defend their clients. Remember these people are also employed by Col Gaddafi and numerous other despot leaders around the world. Quality people!
I pay tax. PAYE before the PR men turn up.
If you make profit in this Country then your profits should be taxed in this country. The true irony is they change us VAT and keep it. How can that be right or moral?
It's not wrong....
....just a very sad statement on the typical money-grabbing corps that stalk the lands we, supposedly free people, live in. It's utterly immoral, but sadly not illegal.
Then again would anyone pay any more than they had to, given the choice?
Then again would anyone pay any more than they had to, given the choice?
I do it's called a pension and that is on top of PAYE that I already pay. I also pay a stamp towards the NHS. I could be a contractor but I ain't I pay.
I don't have to pay it I could just freeload or be a contractor my whole life but I don't. I pay into to this country to get more out of this country. The only reason companies like VodaPhone can get away with things like this are because people like us pay PAYE.
So don't brow beaten. We do pay plenty and they are stealing from us
Erm, it wasn't £6 billion. That was an invention by Private Eye. Vodafone Luxembourg did take over Mannesman. And lent the company money: the interest from this was tax deductible in Germany and then taxed in Luxembourg. Voda L also received dividends from what was now V Germany. These were taxed in Germany.
Private E looked at the account and said, hey, there's 18 billion there, UK tax is 30%, so 6 billion must be owed.
They missed the bit that there were taxes already paid on this. Thus we get in the V UK accounts a *possible* tax charge of £2.2 billion.
The UK has some rules called Controlled Foreign Company rules. (CFC). These say that if you're a UK company and make profits abroad, then you can of course keep them abroad. However, if you keep them in a country where the tax rate is less than 75% of what the UK rate would have been, then you've still got to pay UK tax.
And the tax you have to pay is the difference between UK tax and the tax you've already paid. Given the difference in tax rates between Germany, UK and Luxembourg, something like £1.25 billion is a generally accepted tax expert (ie, not froth mouthed lefty playing up to UKUncut) estimate of what the CFC rulse say Vodafone should have paid.
Ah! But now we have the EU rules on freedom of establishment. These say that you can set up anywhere in the EU and do business anywhere in the EU. And these rules conflict with the UK's CFC rules. So, who is right? The EU or the UK?
This case went to court to the Special Commissioners (err, a junior court really, for tax matters) and they said that Vodafone was right. EU rules meant that CFC did not apply. On to the High Court. Same answer. HMRC appealed to the Court of Appeal who said, "well, mebbe. If Voda L was a real business, you know, people n' things, then EU law wins. If it's entirely a tax dodge, then UK". *Entirely* note.
At this point HMRC settled. Because there are another 100 or so UK companies with similar arrangements. And the last damn thing HMRC wants is for the Supreme Court to entirely gut the CFC rules. At least, having settled, HMRC will get some money out of all of them, they would have got nothing if they'd gone to that last court and then lost.
Finally, one delicious point. All of this tax is about what Vodafone made selling phones and air time to Germans, in Germany, from German shops. UKuncut is saying they should pay tax in the UK on that. But when they whine about Boots, they are saying that a Swiss company should pay UK tax on it's profits from selling things from British shops to British people in Britain.
It's gotta be one or the other, eh?
Just to clarify. There never was a £6 billion bill. And the dispute was over which law prevails, UK or EU. HMRC settled rather than actually hear the answer to that.
Oh, and UKuncut are the usual teenage trots with absolutely no idea what they're shouting about.
But going on a demo is fun right, and there's chicks....
Tim - Excellent post
Probably the most accurate post on this entire discussion. Thanks.
I smell PR Bullshit
If VodaPhone were in the right why did they settle?
The Taxman settled because VodaPhone threaten to drag this through every court in the land and a few other tax havens as well and delay any appearance for years using their highly paid lawyers leaving the Tax Man with nothing while Vodaphone drew interest on their unpaid tax.
Sure they moved their money all over the place to make it so complex any legal trial would have been too complex for the UK legal system to unravel.
That still doesn't make it right or moral.
Well, you're entitled to your opinion and us tax avoiders are entitled to ours.
But whilst you're on the subject of morals; please explain how extracting money with the threat, and subsequent use, of force is morally acceptable?
One for the boys in blue
Vodafone should simply go legal on these folks. Loss of business, liable, and for the clowns who gave these kids the passwords to the blog - UK uncut say these were the 'master passwords'.
Any word from the E-crimes dept on this?
What tax avoidance laws are allowable by 'Obviously' et al?
Is it ok to have an ISA?
How about buying concentrated orange juice over fresh?
How about avoiding paying VAT by buying a paper copy of a book?
Should ex-smokers still be tapped for the tax they're avoiding when they quit, or people who've never smoked surely they've spent their hole adult lives avoiding their 'Dues'.
UKuncut did have a good idea once when they suggested going after MPs, but then they realised that their preferred government was at the front of the expenses gravy train... and you can't bite the hand that feeds.
Just a shame we've got a Labour lite government whose not willing to address the feckless spending, sod spending at 2008 levels, get it back to 1998 levels and let people decide what they want to spend their money on themselves. Where are the miraculous achievements this spending has brought us?
"What tax avoidance laws are allowable by 'Obviously' et al?"
You expect too much of Obviously! - he is too consumed by his class-struggle hatred to think about such details. The whole world apparently owed such people a life of luxury but didn't deliver...
If you're the Vladimir Plouzhnikov who's a director at a company in London offering 'Tax Advisory services'?
If you were that'd explain why you're so vocal about the legality of tax 'structuring' schemes if you are.
I think the term is 'astroturfer' isn't it?
Tax advisory services?
Where did you get that from??? Getting into tax advice business is the last thing that I would ever think of doing.
sod british industry. I shop at John Lewis and Waitrose because they treat their staff right, I bank with nationalised banks and mutuals. I woudl rather pay my money to a foreign European firm that pays it's taxes to it's base country than a British firm that fucks over the people whose hard work have paid for it to have a country in which it can build itself up into the worlds biggest mobile company.
Vodafone have taken all the advantages of being a british company and NONE of the responsibilities
I just bought a TV. By shopping around and not buying it from Currys I saved hundreds of pounds. That meant I avoided paying a stack of VAT.
So all you tax payers out there ... I robbed you HA HA HA HA
If Vodafone are operating legally then fine. If you don't like the law then protest against the law. Moaning at Vodafone is hardly going to change anything.
Direct action is great. Just make sure you direct it in the right direction, numpties.
Avoidance? Corruption, you mean.
If anyone here thinks that Vodafone turned up at HMRC expecting to pay £2bn and left owing just £800m (with extra time to pay, no less) without someone accepting a bribe, then they're bloody fools.
Why pay £2bn when you can pay a couple of mil in a brown envelope?