by Sunny Hundal

You may have heard about or noticed protestors outside Vodafone stores (across the country) asking for them to pay their £6bn tax bill.

So what’s going on, you may ask. Here is a simple Q&A for people who don’t know the whole story or are unsure what this is all about.

Where does the £6 billion figure come from?

The story first originated in the current affairs magazine Private Eye (1273, 3-16 Sept, 2010) and then spread to other outlets. Read the story here.



The issue started when Vodafone bought the German engineering company Mannesmann a decade ago for €180bn, using an offshore company in Luxembourg. Private Eye says:

An epic legal battle began, with Vodafone resisting the taxman’s efforts to get all the information on the deal and arguing through the courts that the British laws striking out the tax benefits of its deal were neutered by European law which granted, Vodafone claimed, the freedom to establish anywhere in the EU (including its dodgiest tax havens) without facing a tax bill.

The battle continued until last year when the HM Revenue & Customs’ (HMRC) head Dave Hartnett, known to be “friendly” to big multinationals, moved the case to a department more willing to cut a deal.

The fruits of these talks, conducted without consulting HMRC’s litigators and specialists in the tax law concerned on the chance of success in the courts, was a bill for Vodafone of £800m, with another £450m payable over five years and, remarkably, an agreement that the arrangement can carry on into the future with a promise of no challenge from HMRC. The Eye understands that the settlement also swept up several other Vodafone tax avoidance schemes.

The amount of money forgone is estimated to be £6 billion.

Vodafone owe money not just to the UK taxpayer but also in India, where a court rejected their appeal (reg. reqd.) and asked them to pay $2 billion in tax for buying an Indian company. The charity Action Aid says that money could feed lots of starving people in India.

But the HMRC said it was an ‘urban myth‘?

One former Revenue & Customs official familiar with the case told Private Eye it was an “unbelievable cave-in”.

As ThisisMoney.co.uk explains, the man who negotiated on behalf of Vodafone for its tax settlement – John Connors – had worked at HMRC until April 2007. When Vodafone hired him, he simply moved to the other side of the negotiating table on this matter.

As Richard Murphy said at the Guardian, days after it was announced, Osborne was promoting Vodafone in India – a visit that must have been agreed before the tax announcement was made on 23 July.

Forbes magazine blog also says there is a lot that doesn’t sit right with the issue.

The settlement also signalled a “more conciliatory approach” at the HMRC, said the Financial Times in July, and coincided with Chancellor George Osborne’s pledge to make Britain “open for business”. Osborne said the rules, demanding multinationals are more transparent about their tax structures, added too much red tape.

The watered down deal allows the HMRC to claim ‘success’ at wringing something out of Vodafone at least. No wonder they want to dismiss this as an ‘urban myth’.

Why just target Vodafone?

£6bn is 85% of the £7bn the Chancellor has cut from the Welfare bill per year to plug the deficit. If we are “all in this together”, then why isn’t the Chancellor asking companies who operate here to pay their fair share of tax if the deficit needs to be plugged now? Why hit the elderly, the disabled and the poor instead?

Vodafone is the perfect example of a system that has become biased towards powerful corporations and against ordinary people.

Even the assistant editor of This is Money says, “once more the Vodafone situation appears to show that there’s one rule for big business and one rule for the rest of us.”

Who is behind the protests?

There isn’t one organisation or group behind the protests. Everyone involved has joined in through hearing about it on blogs, Facebook and Twitter.

The idea for the first protest on Wednesday 27th Oct came to activist Thom Costello. He is not affiliated with any political party or union.

What are your other positions on…?

We all have different positions on lots of different things. But we do believe that corporate tax avoidance in the UK runs into tens of billions every year, and the government should seek to make corporations pay their taxes fairly rather than putting more strain on hard-working families and the most vulnerable in society.

How can I get involved?

This is a decentalised protest and people can get involved simply by getting together with a bunch of people in their area and taking action.

Instructions and details of upcoming actions will be posted on the UKuncut blog, Twitter and Facebook accounts.

Are more protests planned?

Yes, and you’ll have to keep an eye on those links above to find out when they will take place.

Updates to the article

Have specifically clarified that the £6bn figure is a one-off sum while the cuts to welfare are a yearly sum.