ProgTax blog illuminates Vodafone deal
The blog illuminates the detail behind the Vodafone scheme, which it argues saved Vodafone around £1bn in tax. The detail is fascinating – but ProgTax blog makes it clear.
I won’t go into the detail – read the blog. But it’s worth pointing out that the blog achieves a number of things. First, in being clearheaded it sets proportion on the matter. Claims that Vodafone saved £6bn look hysterical in light of this. That said £1bn is a lot of money that the Exchequer could use right now.
The next thing the blog achieves is to reveal the bind that HMRC finds itself in. The department, and Dave Hartnett in particular, have received much criticism for the settlements strategy. But the blog illustrates that HMRC has little choice given the tangle it finds in between UK anti-avoidance measures and EU tax law. In short, HMRC cuts a deal because if it challenged the relevant EU law, and lost, it could set a precedent that would mean losing even more tax revenue. That taxman is therefore playing the percentages. ProgTax Blog, ironically, gives a clear view of the complexities and calculations being made to ensure that big companies pay something.
Lastly, the blog throws light on the sorry role of Luxembourg in the Vodafone saga. Without Luxembourg cutting advantageous deals, part of the problem goes away.
The settlements policy therefore should be a short-term strategy. The longer game is to force tax havens into reform and refine the way EU tax law works with national law.
While the tax havens are under pressure, I wonder if there are many politicians with the will and determination to tackle EU law. Without that it seems what should be a short-term measure will be here to stay. Protestors will have plenty to complain about for some time. But while the big companies are obvious targets, protestors would do better to switch their attention to the EU and the tax havens themselves. Like a drugs policy its worth deterring users, but getting at the suppliers is the real issue.