Vodafone and tax protests

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One of Vodafone’s stores in Central London has been occupied by protestors angry that Vodafone enjoyed a tax settlement signed in July just before George Osborne’s endorsement of Vodafone in India, and which appeared to waive at least £1 billion of tax owing by the company (according to its own estimate) and as much as £4.8 billion in the usually reliable estimate of Private Eye.

I have written about this story, here, and in the Guardian. And in a sense there is nothing to say to what I said then:

I do have sorry news for those who want Vodafone to pay up: if HMRC have really settled the case then the matter is done and dusted, and the opportunity to charge will have gone.

No protest will change that. But I also added:

This does not change the fact that this affair leaves a sour taste in the mouth, not least because days after it was announced, George Osborne was promoting Vodafone in India – a visit that must have been agreed before the tax announcement was made on 23 July. Of course, the coincidental timing may just be fortuitous and no one is suggesting Vodafone has done anything wrong, but the impression given is that HMRC rushed a deal through before the Indian visit.

These timings do look odd, in the extreme. And I have no doubt at all No 11 was behind them. And a “sour taste” is the least they leave behind.

Clearly it’s done more for some. I have no idea who: I have no idea who organised this protest or who is on it. But it does raise serious issues.

First note Sky News’ report that:

An article in the Private Eye estimated the taxpayers’ bill for the CFC liabilities and other arrangements "was likely to be at least £6bn" in lost tax.

According to the magazine, a former official familiar with the case described it as an "unbelievable cave-in" by HMRC.

However, HMRC said this claim was untrue, adding: "We cannot comment on the detail of the settlement but we can confirm that it was reached by HMRC following a rigorous examination of the facts and an intensive process of negotiation that tested the arguments of both parties.

"As a result it was agreed that Vodafone’s liability was £1.25bn and at no point was a liability greater than that established.

"There is no question of Vodafone having an outstanding tax liability of £6bn. That number is an urban myth."

With the very greatest of respect to HMRC might I suggest they stop digging? It’s the best advice to someone in a hole. Vodafone expected a bigger liability in this case for good reason, and that was that the UK had a good case. That HMRC caved in is, as I think the Private Eye commentator (who I know well – I sent Sky their way)said a matter that is beyond dispute.

There is clear, unambiguous and certain bias of treatment in my opinion in this case. The ConDems wanted to send out a message to business. To woo one in particular. That’s not to blame Vodafone of anything. It is to accuse No 11 of political manipulation of a tax dispute to suit its purpose evidenced in India days later.

Are people right to protest? So long as they do so peaceably and without causing damage then my answer is yes, that is their right. This is a democracy. The right of peaceful protest is fundamental to democracy. Vodafone can claim to be innocent victim here – but it set out to tax avoid and all claims to the contrary by it would be unsustainable. They say it is their intention to do so. And they must be aware of the social consequences of that – which are dramatic.

I therefore support protest on the conditions I note.

And I hope there will be more protests on many issues. When the ConDems are seeking to tear the heart out of our society; when they are planning to impose on many a cost to benefit a few whom already enjoy all the privileges society can offer, and when people will suffer and even die as a result then I think peaceful protest is not just our right, but our duty.

And I stress – that’s because any democracy should afford us that right and encourage its exercise. And any government faced with such protest should not spread deliberate misinformation in the face of it – as H M Revenue & Customs appears to be doing in this case.