VODAFONE’S BIGGEST DEAL since 2000 could go through without HM Revenue & Customs seeing a penny as a result of the rules brought in by the last Labour government’s 2002 Finance Act.
The telecoms company is on the cusp of generating £84bn in proceeds from the sale of its 45% stake in American network Verizon Wireless. The final step – a formality – is board approval from Verizon, expected today.
Vodafone believes no tax will be payable in the UK due to the introduction of an exemption from tax on capital gains from “substantial shareholdings” held by companies in the 2002 Finance Act.
However, a $5bn (£3.2bn) tax payment will be due in the US owing to the way the 1999 purchase of a business called AirTouch and its subsequent merger with Bell Atlantic to create Verizon in 2000.
Vodafone declined to comment on any aspect of the story, save for confirmation of “advanced talks” for the disposal of its stake in Verizon.
HMRC, too, is unable to comment on the specific case due to taxpayer confidentiality.
Vodafone has been at the centre of controversy relating to its tax affairs in the past, with allegations last year suggesting it had legitimately avoided paying as much as £1bn in taxes over a 16-year period by accruing tax credits.
Labour MP and Public Accounts Committee chair Margaret Hodge described the move as “a scandal” and “immoral” at the time. For its part, Vodafone insisted it acts with integrity and transparency in all tax matters, while also having a responsibility to shareholders to control tax costs.