Could Vodafone have stopped almost £7 billion of welfare cuts by paying their tax bill?

21 October 2010


As we watched through our fingers yesterday while Gorgeous George Osborne unveiled the savage spending cuts, one number in particular stood out like a sore thumb. That number was seven billion, the amount of pounds sterling that will be taken out of the welfare budget. Hmmm, seven billion.

That’s almost exactly the same as six billion, another number that has troubled us over the past month. Six billion is the amount of pounds sterling that Vodafone avoided paying to HMRC following a long and drawn-out period of negotiation between HMRC boss Dave Hartnett and Vodafone’s head of tax John Connors. Until 2007, Connors was a senior HMRC official and worked alongside Hartnett, although we’re sure that there’s nothing weird about that.

So if you, or someone you know, are receiving welfare payments (and with 500,000 public service job cuts a-coming, there’ll be even less to go around anyway) and begin to feel the squeeze once the rules are changed and entitlements are scrapped, try not to think that it could have all been avoided if Vodafone hadn’t managed to wriggle their way out of paying their stadium-sized tax bill.

Because let’s face it, when all’s said and done, that £7 billion would probably still have been cut from the welfare budget yesterday in any case.

TOPICS:   Economy


  • ted
    Your like a playground bully only smaller. Get someone new to pick on. If you think they are the only company negotiating tax then you are wrong. A proper report would show how much tax they did pay, how much all their staff paid in tax and NI and ho much VAT people paid on their contracts. Consumer power not mindless mob mentality. Go back to sucking off apple.
  • dave
    Ted I think you should go back to school and learn grammar and spelling It's You're, not your Loser
  • Delenn
    Sadly though, Vodafone are not the only ones. If all the companies paid the tax they should, they would be cutting VAT and Income Tax, not cutting services. That is the tax avoidance they need to crack down on.
  • The B.
    Whoah, Ted seems to have got out of bed on the wrong side this morning, perhaps he could explain why exactly Vodafone didn't pay this tax if he thinks your tactics are "bullying".Also Ted, do you think Vodafone are particularly threatened by this article? Are they likely to go home crying to their mum? Unlikely, so what's the point then Ted? Of course there are plenty of companies "negotiating" their tax but it's a bit odd that the negotiations are being conducting by 2 guys who used to work together in the tax office isn't it? I would have thought that's a potential conflict of interest.
  • Mark
    This concept of paying fair tax is outdated. What is fair tax? Fairness is debatable. Why should someone who worked hard when he was young and continued hard work in his life be subject to 50% tax if he earns 100k a year tax when someone who went out every night, got drunk for the sake of it and earns £10k a year not also pay the same rate tax? Flat rate tax is the way forward. No arguments and fewer calculations. What is fair abour 2 people working and earning £40K each getting child benefits and one worker earning £45k not?
  • NickOLarse
    @ted Don't bullies normally pick on those weaker than themselves? The rich are mugging the poor here, and I think I know who the bullies are.
  • Mark M.
    Let's be honest, it is all fucked up. The govt want to "help" people off benefits and into work while at the same time, cutting budgets which will result in lay-offs... Smart thinking there :S The conservatives have always been about cutting spending and helping business and this is what they have just done. Labour may have made a mess of it all, but I can't help but feel that the conservatives would have done this regardless
  • mein c.
    £1bn: amount saved from 2013 when child benefits for families earning over £44k are cut. £2bn: amount lost from 2013 when corporation tax for companies earning over £350k is cut. What I don't understand is that if the gov't know the tax was dodged, why can't they simply demand it be paid? They'd sure as shooting do it to you or me and oh wait they are!
  • ted
    @Nickolarse Bullies continually pick on one person, entity, company just because they have got the attention of the crowd. and thats how i meant it. @The Real Bob - maybe its bitterwallet that got out of bed the wrong side. maybe they need to wake up to the real world and stick doing what they are good at. This article is worse than a Daily Mail Cancer story. It might as well have another paragraph at the bottom which says that Vodafone is not the only company doing this and what they are doing is perfectly legal. Take the taxes they do pay out of the system and then see the cuts that are needed. I think if Vodafone did read this then they would have liked to see a point made that was the basis of a point not just some mindless scaremongering about the cuts. Conservatives always cut because they always come in after another party that wasnt doing things there way. Benefits are out of control and maybe labour would have sorted them too but lets not vaguely blame one company without a hint of the bigger picture. The article wasnt even as funny as they usually are so my guess is someone did get out of bed the wrong side but it wasnt me.
  • mein c.
    too obvious ted
  • Andy D.
    Is the correct answer Mark M. Yesterday Cameron said that previous levels of public spending wouldn't be restored once we're out of the mire. The cuts have got nothing to do with clearing the debt - it's all about ideology. Interesting piece in The Guardian -
  • ted
    Governments should encourage companies to want to be based in this country and not be able to say that their tax was already paid in another. took 20 seconds to google this narrative out of the water.
  • ted
    thabnks kampfy chair i appreciate you taking the time to read. your point however also lacks the bigger have selected two figures and made them seem opposite and comparable. well done.
  • Nobby
    It should be made illegal to sell alcohol and cigarettes to people on benefits - they could be branded on the hand or something. That way, benefit cuts are not so bad, the families will have money for food.
  • mein c.
    "thabnks" ted for taking the time to check for typos :) sorry for destroying your argument!
  • Mark M.
    @ Andy, do I win an Ipad? If it is a Next (or Toys R Us) tablet, then you can use it as a suppository
  • ted
    tahnks kampy chair. Enjoy yourself this after noon on your benefits wont you.
  • StuPid
    What is worse is that all these companies that 'skip around' tax have massive teams of specialists whose jobs are literally to find new ways of reducing what needs to be paid - Vodafone have done a great job in that respect, but don't forget that friendly UK companies like Tesco and Shell (okay Anglo Dutch) register themselves offshore and set up holding companies elsewhere to make sure they don't get caught out. This is currently legal, and since the Government over the last 5 years has been cutting Tax Specialists at HMRC on quite a major scale, it is likely to stay that way. The bosses of HMRC get taken out on jolly jaunts by these companies and their accountants and only an idiot would believe that these little get togethers aren't for the benefit of the companies. Company Taxation Collections used to have around 150 dedicated staff at two sites working with companies (big and small) and with field offices (where the Inspectors are based). 3 years ago all the trained staff at one site were either released or relocated to other taxes and all Company Taxation collection and enquiries are dealt with at an office 200 miles from where the actual physical payaments and archives are kept. This is why the companies are able to come up with new systems of avoidance - nobody has the facilities available to keep an eye on it! One trick accountants use is to call up for tax payment histories over the phone - it takes forever and relaying something back from a screen doesn't suggest patterns or irregularities as easily as writing them down and looking at them before sending them out. Incidentially, accountants calling HMRC to check what their clients have done probably costs the clients £300, and HMRC offered the service for free.
  • ted
    not so StuPid.
  • StuPid
    In what way Ted?
  • ElectronMagnEt
    Kampy chair...haha...i liked that one. Me and him used to go out at school, mind you it was an all boys school and we really did get bullied.
  • ted
    In a play on your name and liked your point kind of way.
  • StuPid
    Thank you - unfortunately I was at the sharp end of the cuts in 2007 and have first hand experience of how much some of these companies get away with
  • ted
    Get away with and are legally allowed to get away with are two different things. you cant blame a company for wanting to pay as little as possible and if that is permitted by the government then thats what they will. The rules and allowances are set.....if they follow them and push for less tax and they are allowed to pay less then they have only broken a moral rule really.
  • StuPid
    Yeah but unfortunately they seem quite happy with the moral aspect of leaving the country up sh*t creek. They get their massive bonuses and knighthoods and end up in Government jobs too - advising on how to change tax rules. The sheer number of secondments between Big 4 accountants and HMRC is staggering as in my opinion its a little bit like hiring a fox to set up the security for a chicken coop
  • klingelton
    /me is waiting for the fox bumming...
  • Willy-wonka
    I just pay the HRMC in chocolate, they are all fat buggers now... ha ha ha
  • Waterboy8535
    Did no-one know that Vodafone are the company that supplies all the HMRC's mobile phones AND mobile internet? Adds a bit of muscle to Vodafones haggling
  • smileyculture
    Ted .. you seem to have a certain knowledge about bullies and their victims mate .. Bullied anyone latley?
  • -]
    ted sed: "you cant blame a company for wanting to pay as little as possible" Yes you fucking can!
  • qwertyuiop
    @Mark In regards to tax fairness, if someone earning 10 grand a year had to pay 50% of that in tax then they'd likely not have enough to live on. Are you an investment banker or something like that out of complete interest? If so you're being stupidly overpaid as it is and should thank whichever God you believe in that you still have a fucking job in the first place! If you earn more, you pay more - end of. Do you think you work THAT much harder than an entry level assistant. Pretty much any job would require 100% of a person's effort, regardless of how much it pays. If you're unhappy with your 50k a year after tax salary, then get your sprog of a wife to stop knocking out kids that you need to support with toys that cost 500 quid and private school tuition fees, douchebag!
  • Vodafone B.
    [...] week, in the wake of the ConDem coalition’s spending review, we highlighted the fact that Vodafone had somehow weaselled their way out of paying a £6 billion tax bill to Her Majesty’s Revenue And Customs – a figure that almost equalled the cuts made to the [...]
  • HMRC B.
    [...] Cast your minds back to late 2010 if you can – you might remember some mild kerfuffle regarding Vodafone and the small amount of SIX BILLION POUNDS of tax burden that they managed to talk their way out of. [...]
  • Etta
    I'm impressed by your writing. Are you a professional or just very knoewldegable?
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