Vodafone in $6-billion tax muddle in UK

Protesters in the UK closed a Vodafone store in London's Oxford Street in protest against the firm's alleged failure to pay billions of pounds in tax. Vodafone confirmed the shop would remain shut until it was safe to open again.

According to activists, the mobile phone giant had failed to pay a £6 billion tax bill, but the firm rejected this and said it had no idea where the figure had come from.

Sky News quoted an HM Revenue and Customs spokesperson as saying that the figure was an "urban myth" originating from a case earlier this year.

In July, Vodafone had agreed to make a payment of £1.2 billion to HMRC to put an end to a long-running dispute over a tax assessment, despite having set aside £2.2 billion to cover it.

The assessment related to the so-called Controlled Foreign Companies (CFC) liabilities, which is applicable to firms controlled by UK residents, but whose earnings abroad are subject to lower tax rates.

"Vodafone will pay £1.25 billion to settle all outstanding CFC issues from 2001 to date and has also reached agreement that no further UK CFC tax liabilities will arise in the near future under current legislation," the company had said at that time.
 
However, according to an article in the Private Eye magazine, the estimated taxpayers' bill for the CFC liabilities and other arrangements was likely to be in the region of £6 billion.