Vodafone settlement was not unusual, Hartnett tells MPs

THE SETTLEMENT REACHED between HM Revenue & Customs and Vodafone was not out of the ordinary, permanent secretary Dave Hartnett has told MPs.

Hartnett said that claims that Vodafone saved £6bn through the agreement were "absurd". This figure was based on profits that arose in Luxembourg on activities in Germany and Greece and on gross income, not on profit. It did not take into account the controlled foreign companies legislation, he told the Treasury select committee.

"There was nothing special about this case," he said. It was worked on by the most senior experts in the field. This was "incredibly market-sensitive" in terms of the figures involved, he said, and as such HMRC could not publicly explain how it was being dealt with, but it was dealt with in the usual way.

There was no difference in views from the HMRC board about the settlement once the case had escalated, he added.

Hartnett told the MPs that HMRC lawyers were involved in the negotiations, contrary to reports, he said. Hartnett himself become involved only when negotiation stalled, he added.

The taxman had to decide whether it would receive more money through litigation or through a settlement and "there were a line of lawyers queuing up to tell the media that we would not get a penny through litigation", he added.