Vodafone and their involvement with CFC (no, not Chelsea Football Club)

, , , ,

There’s a pretty good chance that either you or somebody you know has used a Vodafone network.

Vodafone are the world’s largest mobile telecommunication network company and last week they announced better than expected results for the quarter ended 30 June 2010 with revenue rising for the first time since the recession began (rising by 4.8% to £11.3 billion for the 3 months).

Also announced was an agreement with the UK tax authorities over a Controlled Foreign Company (CFC) investigation that dates back to 2001.

In simple terms, CFC is a set of rules which prevent UK companies from avoiding tax by the use of subsidiaries in tax havens around the world. If for example a company pushes profits into a subsidiary in a low tax jurisdiction it would avoid paying the higher rate of tax on these profits in the UK. The UK tax authorities can counter this by applying CFC legislation.

The Vodafone case was a complicated one involving a holding company in Luxembourg. It had made a provision of £2.2 billion for settlement of the dispute but has now agreed to pay £1.25 billion to settle all outstanding CFC liabilities to date as well as reach agreement that no further CFC obligations will occur under current legislation.

This is not only good news for Vodafone but also a number of other multinationals that are currently in negotiations with the tax authorities over CFC issues. It also reportedly signals a more flexible approach by the tax authorities as the new UK government has stated that they wish to make the UK open to international business. Over recent years a number of companies have moved operations away from the UK to for example, Ireland where there is currently no CFC legislation in place.

How many accountants?
So, how do you think accounting firms are doing when it comes to their fee income? In today’s uncertain economic times then surely there’s pressure[..]
Click to buy a Tesla...
Most of you have probably bought something on the internet but how many of you have bought a car on the internet? My guess is[..]
Free ACCA Study Materials
All of us here at ExP are excited. We’re excited for 2 reasons. First of all, we’ve just gone over 350,000 followers on Facebook and[..]
DR Book £1m; CR Cash £1m
If I asked you how much would you pay for a book on double-entry, I’m guessing most of you wouldn’t be willing to pay £1m.[..]
Don't bank on it...
You think they would have known better wouldn’t you? One was the CEO and the other was their reputation and risk leader and director of[..]
More than a coke...
When people think of Coca Cola, they almost certainly will have a red can or bottle with the ubiquitous “Coke Red” in their mind. Coca[..]