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PAC to turn attention to tax breaks for phone networks

THE PUBLIC ACCOUNTS COMMITTEE is to sound out the possibility of scrutinising tax breaks utilised by telecommunications networks.

Committee chair Margaret Hodge said the public is being “conned” by the government over the amount mobile phone networks pay into HM Revenue & Customs coffers, and has requested that government accountants investigate whether tax reliefs put in place for them are being misused, the Guardian reports.

Hodge’s comments were in response to a Guardian investigation which claimed that three of the UK’s four networks are paying little or no corporation tax.

For instance, accounts for Britain’s largest network Everything Everywhere show that while it handed more than £3bn to its French and German parent companies, it paid no corporation tax in the UK.

The network said its accounts are transparent and that is takes a responsible approach. Mobile companies add they contribute by investing in British infrastructure and spending billions in government auctions of spectrum – the airwaves used to carry signal.

According to the Guardian, Vodafone’s books shows it is using tax breaks to reclaim half of the £6.2bn it spent at the 3G mobile internet spectrum auction in 2000. Vodafone said it had made just over £10bn in cash since 2000, and paid £7.5bn of that to the exchequer in the 3G sale and the 4G spectrum auction.

The four main UK networks contributed nearly £1bn in corporation tax over the last three years, with £669m of that coming from O2. In the same period, revenues have been around £58bn, with £12bn underlying profit.

“Never has there been a better case for more transparency from publicly quoted companies,” said Hodge. “We are looking at this issue of tax relief and I would like this case included in our investigation. We appear to have been conned [by the government] about the amount of money we’ve really secured for the sale of spectrum.”

Hodge is to raise the issue with the National Audit Office as it determines the scope of any investigation into tax reliefs.

A spokesperson for EE said:”EE is a UK-based business that does not have any off-shore tax arrangements, and strictly adheres to both the letter and spirit of UK tax law. EE has transparent financial accounts and a responsible approach to tax, and strongly contests any suggestion of improper tax conduct.

“Over the last 13 years, EE has invested more than £16bn building a 21st century digital infrastructure for Britain. This includes £9bn contributed directly to the UK Treasury for the use of mobile airwaves, an amount ten times more than any corporate tax that EE would have otherwise paid to date had it not deducted the cost of the airwaves like any other business asset.”

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