£1bn windfall for Vodafone

Vodafone could reap a £1 billion (€1.2 billion) tax windfall if the mobile phone giant wins control of Cable & Wireless Worldwide (CWW).

The bonanza could allow Vodafone, one of Britain’s most valuable companies, to escape domestic corporation tax until later in the decade.

But a tax holiday of that length could also reawaken the controversy over Vodafone’s dealings with Britain’s taxman, which have come under intense scrutiny.

In 2010, Vodafone came to a £1.2 billion settlement with the UK taxman after a long-running dispute. The company was subsequently targeted by protesters from UK Uncut, amid allegations it owed another £6 billion. It has repeatedly denied charges that it secured a “sweetheart” deal.

In Britain alone, CWW is sitting on £5.2 billion of capital losses. Analysts believe Vodafone could be able to write off about £1 billion of this against taxes — enough for a long tax holiday, and sufficient largely to cover the cost of buying CWW.