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Dave Beans

Protesters Blockade Vodafone Branches Over "outstanding" Tax Bill

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http://www.bbc.co.uk/news/business-11658950

Campaigners claiming Vodafone has been let off an unpaid tax bill of £6bn have blockaded several shops. Campaigner Ed Brompton said: "This money - £6bn - could be spent on schools, housing and hospitals."

But a Vodafone spokesman denied the tax bill reports, adding: "We pay our taxes in the UK and all of the other countries in which we operate."

A spokesman for HM Revenue and Customs said of the £6bn: "That number is an urban myth."

Four shops in central London were forced to close because of the demonstrations, sparked by a campaign on Twitter and Facebook. Other shops were closed by demos in Brighton, Bristol, Edinburgh, Glasgow, Hastings, Liverpool, Manchester, Oxford and York. One of the protesters, Deborah Lee, said: "The cuts are not fair; we're not all in this together, and there are alternatives. Why not start by collecting the tens of billions owed in taxes by wealthy corporations? The government is writing off the taxes from big business while treating normal people on benefits like criminals."

Another protester, Ben Olabayi, said: "We will not pay for their crisis! The public need to join together and hit the streets to take concerted action to fight these cuts."

There is no question of Vodafone having a tax liability of £6bn. That number is an urban myth”

HMRC spokesman

A Vodafone spokesman said there had been protests outside a small number of UK stores and added: "We temporarily closed some of them and diverted customers to other locations so they were not inconvenienced."

He said: "We pay our taxes in the UK and all of the other countries in which we operate.

"Reports suggesting that we have an outstanding tax bill for £6bn are incorrect, as this was never the case."

The HMRC spokesman said: "We can't comment on the details of the settlement but we can confirm that it was reached by HMRC following a rigorous examination of the facts. It was agreed that Vodafone's liability was £1.25bn and at no point was the liability greater than that.

"There is no question of Vodafone having a tax liability of £6bn. That number is an urban myth."

The campaigners cite an investigation by Private Eye magazine which they said showed the taxman had dropped an attempt to reclaim £6bn in taxes. The sum purportedly stems from Vodafone's purchase of the German telecoms firm Mannesmann, which was supposedly bought through a Luxembourg subsidiary to avoid paying tax in Britain.

The campaigners have also set up an online petition calling on the government to insist Vodafone pay the money. The world's largest mobile operator measured by revenue saw "organic service revenue" rise 1.1% to £10.6bn in the April to June quarter. Last week Vodafone was told to pay a 112bn rupee (£1.6bn) tax bill in India.

Vodafone has been given 30 days to cough up the £1.6bn the Delhi government claims it owes following the 2007 purchase of the Indian telephone assets of Hong Kong conglomerate Hutchison Whampoa. Vodafone claimed the $11bn transaction was exempt from tax because it took place between two offshore entities.

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An HMRC spokesman said: 'Our legal obligation to maintain customer confidentiality means we are unable to offer comment on the tax affairs of named individuals or organisations.'

So, who was the HMRC official who said it was an urban myth? Hartnett?

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An HMRC spokesman said: 'Our legal obligation to maintain customer confidentiality means we are unable to offer comment on the tax affairs of named individuals or organisations.'

So, who was the HMRC official who said it was an urban myth? Hartnett?

Search me. I didn't even see where it was said that the tax liability was an urban myth. Perhaps they should have made more of it in the article?

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The original Private Eye Article

http://www.private-eye.co.uk/sections.php?section_link=in_the_back&issue=1273

Defo something smelling rotten.

OK so what do Vodafone do with the profits they make? Do they give more to the tax authorities than they need to. Or do they keep as much as they can, reinvest some in their business and distribute the rest to their shareholders. Their shareholders by the way include pension funds. So the money comes back to individuals who can spend it as they choose.

Or is it better to let the government have it to spend as they see fit?

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Tax laws are not black and white.

HMRC threaten litigation and often come to a settlement with a hell of a lot of companies. The process is a negotiation when things are unclear. If Vodafone had wrongly underpaid £6bn in tax they would have been made to pay it plus interest and penalties. However if HMRC had chosen a very aggressive interpretation of the legislation and reached a number of £6bn and then later reduced the bill to £1.25bn before going to court - it means that HMRC knew there case was weak and would be reduced in court. HMRC have no incentive to back down if the taxpayer is in the wrong.

Just my 2pence.

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Tax laws are not black and white.

HMRC threaten litigation and often come to a settlement with a hell of a lot of companies. The process is a negotiation when things are unclear. If Vodafone had wrongly underpaid £6bn in tax they would have been made to pay it plus interest and penalties. However if HMRC had chosen a very aggressive interpretation of the legislation and reached a number of £6bn and then later reduced the bill to £1.25bn before going to court - it means that HMRC knew there case was weak and would be reduced in court. HMRC have no incentive to back down if the taxpayer is in the wrong.

Just my 2pence.

Could be right. This one is going to run and run so we'll have to wait and see.

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Tax laws are not black and white.

HMRC threaten litigation and often come to a settlement with a hell of a lot of companies. The process is a negotiation when things are unclear. If Vodafone had wrongly underpaid £6bn in tax they would have been made to pay it plus interest and penalties. However if HMRC had chosen a very aggressive interpretation of the legislation and reached a number of £6bn and then later reduced the bill to £1.25bn before going to court - it means that HMRC knew there case was weak and would be reduced in court. HMRC have no incentive to back down if the taxpayer is in the wrong.

Just my 2pence.

I'm afraid I don't agree.

For the likes of you and me (unless you are a multi-millionaire) - they ARE black and white. We pay our taxes, or we get fined and /or jail.

That's what people like those protesting are most concerned about - we appear to be more and more living in a world wherein rich corporations -and individuals - use their money and power to corrupt the democratic process by demanding rules be interpreted differently for them.

This is the crux of the matter.

If you don't see this kind of behaviour as dangerous (I have lots of money and power so I can behave differently) then you need to consider how it will be if it proliferates.

There is a matter of principle here - do we live in a democracy or a corporate plutocracy?

Are we in it together, or do the powerful and privileged not have to bother about societal wellbeing and stability because they can upsticks and go elsewhere if it all goes pear-shaped?

As for the argument about the cash being distributed to shareholders who will then spend it, I'm afraid that's just fatuous - because they won't be spending it on our schools, hospitals and so forth.

And coming over all Daily Mail and saying that the tax money would only be wasted anyway (how do you know?) isn't helpful in any way in a rational, grown-up debate.

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I'm afraid I don't agree.

For the likes of you and me (unless you are a multi-millionaire) - they ARE black and white. We pay our taxes, or we get fined and /or jail.

That's what people like those protesting are most concerned about - we appear to be more and more living in a world wherein rich corporations -and individuals - use their money and power to corrupt the democratic process by demanding rules be interpreted differently for them.

This is the crux of the matter.

TBH I felt the same way before I started working in tax but without wanting to be patronising tax is complicated. There is a reason that the tax legislation in the UK is vast and always being clarified.

A good example for individuals would be residency - HMRC deliberately refuse to provide a check list definition of what it means to be resident in the UK because they know that the internationally mobile would ensure that they complied with the rules and just paid tax on their UK income. The rules are kept vague and HMRC litigate against wealthy individuals when they feel they can argue that the taxpayer's interpretation of the laws was incorrect. You then end up with scenarios in the papers of individuals avoiding £XXm of tax.

Err on the side of caution you would say but if you pay a qualified tax accountant to prepare your tax returns and they say that on the basis of current understanding and the facts of your specific case you are non resident, why would you turn around and say no this is incorrect because I say so. That would be bizarre. Has anyone in this scenario been immoral/dishonest/wicked?

- The accountant has to work with all the available case law and HMRC guidance. It is not in their interest to take ridiculous positions on the law because HMRC will litigate and litigation is a pain in the bum, it wastes time and is expensive because you need to hire lawyers etc.

- The taxpayer employed an expert tax accountant and provided all the relevant details. What more could they have done? You may not like the fact that UK multi millionaires claim non residency but it is not illegal and is not easy. You have to physically be out of the country but also cut a lot of ties with the country (education of children/property etc); that is quite a wrench and cannot be undertaken a on a whim.

As you can see with the above scenario it is not black and white.

The tax affairs for ordinary people are straight forward largely because we don't work in multiple worldwide locations or invest in unusual ventures. We have bank accounts/ISAs/pensions and that is usually it. Even for small businesses it is not that complex.

For multinationals its harder, if you have numerous group companies across the world each contributing an input or service to the final product sold in the UK - how do you decide the "costs" to the UK company selling the final product given that these costs will reduce the tax bill payable in the UK. Is it the wholesale costs of the overseas group companies, or do you add a reasonable mark up - what is reasonable 3/5/8%. This is where it becomes grey - if my imaginary multinational says we are using a mark up on 8% and HMRC says (and this is usually several years later) actually we think 3% is correct then you can get a massive notional underpayment of tax.

E.g. If each year my UK company has reduced its bill by an 8% markup equal to £8m and then after 3 years HMRC has queried the mark up using my made up scenario - this immoral/evil/greedy multinational has underpaid its taxes by £15m + interest + any penalties due.

You need to bear in mind HMRC and the law do not state the acceptable level of mark up to apply so the company and their tax accountants research and come up with a number that is reasonable. HMRC do not raise queries immediately so a company can have procedures like I described in place for years before realising there is a problem. After negotiations that involve the company and accountants providing all their reasoning to explain how they reached their mark up HMRC can reach settlement or litigate. It is always cheaper to settle so that's what tends to happen. So if the settlement states that a 5% mark up is reasonable after examining the case in further detail my company has only underpaid £9m + interest - have the company really evaded/avoided £6m of corporation tax????

These types of issues are replicated across lots of different taxes - but not the sort that would affect the everyday person. This is not a conspiracy/greed its just the way it is. Zilly I am not picking on you but I just wanted to demonstrate that these media stories gloss over the technical stuff because its boring and a bit tricky. If you seriously think that in either example I made up that there is an element of corruption or different rules apply explain away.

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For the likes of you and me (unless you are a multi-millionaire) - they ARE black and white. We pay our taxes, or we get fined and /or jail.

That's what people like those protesting are most concerned about - we appear to be more and more living in a world wherein rich corporations -and individuals - use their money and power to corrupt the democratic process by demanding rules be interpreted differently for them.

There is a matter of principle here - do we live in a democracy or a corporate plutocracy?

Are we in it together, or do the powerful and privileged not have to bother about societal wellbeing and stability because they can upsticks and go elsewhere if it all goes pear-shaped?

As for the argument about the cash being distributed to shareholders who will then spend it, I'm afraid that's just fatuous - because they won't be spending it on our schools, hospitals and so forth.

Tax laws are not black and white. They are not demanding the rules be interpreted differently, they are saying these are the rules and we are obeying them.

Societal wellbeing means the tax authorities have to take into account that if tax rates are too high and rules too restrictive then they are in danger of pushing out the companies and individuals that contribute the most.

Your assertion that taxpayers won't spend their income on schools, hospitals and so forth extrapolates the argument to a rather silly extreme. Everyone accepts that tax is the price for the benefits available in a developed society, but when taxes become excessive then it encourages more effort being put into paying less tax. Most of us accept that education and health provision is worth paying some tax for. Can you explain why despite the vast sums collected and spent on education and health that there exists private education and private health. Some taxpayers are prepared to pay pay more. You really need to go back to the fundamentals.

There are only four ways money can be spent:

  • Spend your own money on yourself

  • Spend your own money on someone else

  • Spend someone else's money on yourself

  • Spend someones else's money on someone else

I suggest that you get the best value from the first and the worst value on the last. And the last is how taxes are used.

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TBH I felt the same way before I started working in tax but without wanting to be patronising tax is complicated. There is a reason that the tax legislation in the UK is vast and always being clarified.

A good example for individuals would be residency - HMRC deliberately refuse to provide a check list definition of what it means to be resident in the UK because the UK doesn't exist, it never has and it never will, countries are a fiction a toddler can poke holes in. They don't go there.

Fixed.

:)

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Tax laws are not black and white. They are not demanding the rules be interpreted differently, they are saying these are the rules and we are obeying them.

Societal wellbeing means the tax authorities have to take into account that if tax rates are too high and rules too restrictive then they are in danger of pushing out the companies and individuals that contribute the most.

Your assertion that taxpayers won't spend their income on schools, hospitals and so forth extrapolates the argument to a rather silly extreme. Everyone accepts that tax is the price for the benefits available in a developed society, but when taxes become excessive then it encourages more effort being put into paying less tax. Most of us accept that education and health provision is worth paying some tax for. Can you explain why despite the vast sums collected and spent on education and health that there exists private education and private health. Some taxpayers are prepared to pay pay more. You really need to go back to the fundamentals.

There are only four ways money can be spent:

  • Spend your own money on yourself
  • Spend your own money on someone else
  • Spend someone else's money on yourself
  • Spend someones else's money on someone else

I suggest that you get the best value from the first and the worst value on the last. And the last is how taxes are used.

Societal wellbeing means the tax authorities have to take into account that if tax rates are too high and rules too restrictive then they are in danger of pushing out the companies and individuals that contribute the most.

Explain to me what job outsourcing is then - to India/China etc.

It's nouveau uber-capitalists demanding they be even richer at the expense of an expendible, poorer workforce. They have no morality!

That's exactly why we need social housing because the poorest are kicked out of a job first in any recession and have far greater job instibility caused by rich pricks taking the piss.

French company taxes are triple what they are here and the country's wealth is distibuted more equally to all citizens. Companies and investment still goes on in France.

Paris was recently voted 2nd most innovative City in the World.

French living is seen as some best in World.

So what you posted is a load of b@llox and the sooner 'ordinary' people realise this the better for vast majority!

We are pissed on all over by Uber-capitalistic dreamer bullies, who demand they have it all, in the UK! Thatchers hatchet men! Tax the bastards to the hilt and distribute created wealth more equally!

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French company taxes are triple what they are here and the country's wealth is distibuted more equally to all citizens.

French living is seen as some best in World.

Seems to be that what you're saying is a load of b@llox. Trying telling the high rise dwellers on the outskirts of french cities that the wealth in France is distributed more equally to all citizens. Why did they demonstrate earlier this year? Why did they have riots earlier this year?

Trouble with France is it's full of french people. :)

Explain to me what job outsourcing is then - to India/China etc.

It's nouveau uber-capitalists demanding they be even richer at the expense of an expendible, poorer workforce. They have no morality!

Could it be a response to high labour rates caused in part by high taxes in the UK.

That's exactly why we need social housing because the poorest are kicked out of a job first in any recession and have far greater job instability caused by rich pricks taking the piss.

I thought it was because they had the skills that were more easily replaceable when employment picked up.

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Seems to be that what you're saying is a load of b@llox. Trying telling the high rise dwellers on the outskirts of french cities that the wealth in France is distributed more equally to all citizens. Why did they demonstrate earlier this year? Why did they have riots earlier this year?

Trouble with France is it's full of french people. :)

Could it be a response to high labour rates caused in part by high taxes in the UK.

I thought it was because they had the skills that were more easily replaceable when employment picked up.

Directors have given themselves 55% salary increases since recession kicked in - says it all.

The rest of your crap is just ******** baiting - so up yours! :P

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For multinationals its harder, if you have numerous group companies across the world each contributing an input or service to the final product sold in the UK - how do you decide the "costs" to the UK company selling the final product given that these costs will reduce the tax bill payable in the UK. Is it the wholesale costs of the overseas group companies, or do you add a reasonable mark up - what is reasonable 3/5/8%. This is where it becomes grey - if my imaginary multinational says we are using a mark up on 8% and HMRC says (and this is usually several years later) actually we think 3% is correct then you can get a massive notional underpayment of tax.

E.g. If each year my UK company has reduced its bill by an 8% markup equal to £8m and then after 3 years HMRC has queried the mark up using my made up scenario - this immoral/evil/greedy multinational has underpaid its taxes by £15m + interest + any penalties due.

You need to bear in mind HMRC and the law do not state the acceptable level of mark up to apply so the company and their tax accountants research and come up with a number that is reasonable. HMRC do not raise queries immediately so a company can have procedures like I described in place for years before realising there is a problem. After negotiations that involve the company and accountants providing all their reasoning to explain how they reached their mark up HMRC can reach settlement or litigate. It is always cheaper to settle so that's what tends to happen. So if the settlement states that a 5% mark up is reasonable after examining the case in further detail my company has only underpaid £9m + interest - have the company really evaded/avoided £6m of corporation tax????

Can I just add that there are also rules in place to check that transfer pricing policies are reasonable and justifiable. Where a multi-national operates in different tax jurisdictions each country will want to collect their share of the tax. The issues are complex which is why tax accountants and tax lawyers need to be very capable. A multi-national can't just apportion whatever level of profit it likes to the lowest tax jurisdiction in which it operates.

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Directors have given themselves 55% salary increases since recession kicked in - says it all.

The rest of your crap is just ******** baiting - so up yours! :P

I keep forgetting that socialists really believe that they know better than anyone how to spend my money!

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I keep forgetting that socialists really believe that they know better than anyone how to spend my money!

The corporate personality of the multi national corporation as defined in law is just as much a chimera as that of the nation state

Multinationals have as much faith in the free market as Joe Stalin. They are monopolistic, anti competitive and generally corrosive to the freedom of man. Moreover they are only too happy to connive at the suppression of human rights both in the UK and the rest of the world when it suits their needs.

As an ex UK tax man I can tell you that they are caught fiddling the figures ALL the time (in the past some have even been caught playing footsie with paramilitary groups such a the UVF and IRA in Northern Ireland)

There are plenty of models for organising economic behaviour that do not involve the nation state or the limited liability joint stock company.

It is about time we revisited some of them

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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