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Originally Posted by kwikbreaks
Vodafone had a cheaper approach to reducing their tax bills - just wine and dine the head of HMRC a few times and voilĂ* - a magic write off of a huge tax bill.
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Or point out that the UK's tax system is on rather shaky ground and threaten some unpleasant legal action which may cost HMRC far more money as other companies we charge for their overseas profits win the right to only pay tax in the jurisdiction the revenue was generated.
That was German income, tax was paid in Germany on German profits, the same income was then taxed again in the UK, this is potentially in contravention of international agreements regarding double taxation and its legality within the EU, though this has not been legally tested yet and HMRC really didn't want to wait for their money while it was.
Rather than reading Private Eye or listening to UKUncut have a look at the specifics of this.
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A Controlled Foreign Company ("CFC") is a company controlled by a UK resident that is not itself UK resident and is subject to a lower rate of tax in the territory in which it is resident.[60] Under certain circumstances, UK resident companies that control a CFC pay corporation tax on what the UK tax profits of that CFC would have been. However, because of a wide range of exemptions,[61] very few companies suffer a CFC charge.
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There are also a number of other cases making their way, slowly, up to the European Court. In particular:
A Group Litigation Order arguing that dividends received from overseas companies should be exempt from tax in the same way as dividends received from UK companies are exempted from tax;
Claims that the UK CFC legislation is contrary to EU law (notably Vodafone).
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Blame Calamity Broon, the dodgy CFC legislation removing double taxation relief is another of his tax grabs.