Vodafone tax reliefs see it pay no corporation tax

VODAFONE paid no corporation tax in the UK last year after it offset its bill against its capital expenditure, it has emerged.

The telecoms giant’s corporation tax bill rose by £300m to £2.3bn in the tax year to 31 March 2011, but the taxman was not among the recipients in spite of its UK operations generating £1.3bn in the same period.

That saw its corporation tax contributions in the UK drop from £140m to zero, reports The Telegraph.

The company was able to achieve this entirely legally by offsetting the tax bill against capital expenditure, which rose from £516m to £575m.

A Vodafone spokesman said it had paid £14bn in taxes globally in 2011, if payroll and sales taxes, as well as fees for radio spectrum, are included.

It invests some £1.5m every day in mobile networks in the UK and is still writing tax off against the £5.96bn it paid the government for mobile spectrum in 2000. Some £700m was also paid in payroll taxes last year.

The news could draw criticism after a long-running dispute with HM Revenue & Customs in 2010 ended with a £1.2bn settlement.

The Revenue is likely to face similar treatment after it was accused of engaging in ‘sweetheart’ deals with multinational companies, which led to an investigation by former High Court judge Sir Andrew Park, due to be published on 14 June.

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