Vodafone's tryst with HMRC
VODAFONE bought the German firm Mannesmann for £112bn and channelled the loans it raised for the purchase through a subsidiary in the Luxembourg tax haven. It lent the money on to Vodafone's German operation. Her Majesty's Revenue inspectors in UK were clear that the billions in interest payments Vodafone had built up virtually tax-free in Luxembourg should be liable for tax in Britain. But HMRC entered into a deal with Vodafone whereby Vodafone would pay a mere £800m upfront and another £450m over the next four years, leaving an estimated £6bn of potential tax revenue in its coffers.
Vodafone's tax troubles in India are far from over.