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Vodafone in multi-million pound tax deal with HMRC

VODAFONE paid millions of pounds to HM Revenue & Customs as part of a previously unreported settlement linked to dispute over the tax paid by an Irish subsidiary.

The Guardian reported on Sunday that accounts filed in Dublin showed that HMRC settled a dispute with Vodafone over its Irish tax returns. The overall size of the settlement has not been revealed, but involved Vodafone reclaiming €67m (£57m) from the Irish government in tax that should have been paid in the UK.

According to the report, Vodafone used Irish subsidiary Vodafone Ireland Marketing, which employed no staff between 2002 and 2007, to collect hundreds of millions of pounds a year in royalty payments.

During a four-year period, Vodafone used the royalty payments, collected from most countries except the UK and Italy, to help it send more than €1bn worth of dividends to the low tax jurisdiction of Luxembourg from Dublin, the article contends.

Vodafone told the Guardian that the settlement with HMRC had never been separately disclosed in its annual reports and was unrelated to a £1.25bn payment to HMRC in 2010 to settle a dispute over the use of a Luxembourg subsidiary.

The telecoms giant rejected any suggestion of tax avoidance. “In all respects and at every point, Vodafone has conducted itself with the highest integrity and in full compliance with the law,” the company said in a statement.

“The settlement with HMRC related to a number of technical factors regarding inter-group transfer pricing arrangements.”

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