Vodafone in UK tax probe

2011-11-22 17:02

London - Britain’s public spending watchdog is to hire outsiders to examine large corporate tax settlements, as it ramps up its inquiry into deals such as those agreed with US investment bank Goldman Sachs and British mobile group Vodafone.

The National Audit Office (NAO) said on Tuesday it was bringing in help to assist its probe into settlements criticised for allowing some firms to pay less tax.

A senior judge would be brought in to investigate deals brokered with the tax authority, Her Majesty’s Revenue and Customs (HMRC), the Independent newspaper reported. An NAO spokesperson said no appointments had been made.

“We are looking at these tax deals. We have to get external expertise in because we are not tax people ourselves, and we are exploring possibilities,” the spokesperson said.

The NAO, which plans to report confidentially to politicians in the Public Accounts Committee, itself also examining the deals, will look at how reasonable some of the settlements with HMRC were.

“The possibility of a judge to deal with this debate around Goldman Sachs and Vodafone... who would be independent of the department, that is something that is being thought about,” a spokesperson for HMRC said.

Goldman Sachs lowered its British tax bill by £10m ($16m) in 2010 after a privately negotiated deal allowed it to avoid paying interest payments on £30m back taxes it owed, it emerged in October.

Scrutiny over Vodafone’s tax dealings sparked protests last year at its main Oxford Street store in London. It reached a settlement of £1.25bn in a dispute arising from an acquisition, which may have cost Britain £8bn in lost tax, politicians probing the deal said this month.

“To be clear: Vodafone was not let off a multi-million-pound tax bill,” a spokesperson for Vodafone said.

“The HMRC conducted a rigorous and detailed examination of the facts over several months before agreeing a full and final settlement of £1.25bn. We have no unpaid tax bill in the UK.”

Goldman Sachs declined to comment.

Dave Hartnett, the permanent secretary of HMRC, has been under fire over whether he had a personal role in sealing the Goldman deal.