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It’s recently been reported that Vodafone’s bosses will be cashing in on millions when their deal with Verizon Wireless is finally completed. All of Vodafone’s top managers will receive huge windfall according to the terms of the agreement. As the most senior 250 members of the management team own over 50 million Vodafone shares and they are being valued at £1.12 each, their income is worth a total of £50 million.

Just over a month ago, we were reporting about Vodafone’s latest ruse to try and cheat its way out of paying tax in the UK. It has a ready been revealed how Vodafone is reaping revenues of over £40 billion is making billions in profits but has not paid a single penny of tax to Her Majesty’s Revenue and Customs.

It is estimated that the amount of tax that Vodafone is evading totals about £6 billion which is roughly about the same that the coalition government is slashing from welfare causes in the budget. Our previous article, detailed how Vodafone would use loopholes and offshore holding companies to reduce the amount of tax they owe from about $40 billion to only about $5 billion.

This news caused lots of controversy especially in the current environment where ordinary people are struggling to afford to pay their heating bills over the coming winter. As a result, Margaret Hodge MP called for urgent action to be taken to prevent British taxpayers losing out on money that Vodafone should be contributing to the country.

The Guardian has said that the £50 million that the corporate team will be getting out the deal will be split between about £16 million in cash plus £40 million of Verizon Wireless shares. The dividend already have enough money, chief executive Vittorio Colao or pocket another £10 million on top of the £11 million he got paid last year.

Since most of the Vodafone executives who are benefiting from this deal will never have paid any money for their shares as they usually receive them as part of incentive deals, all the income will be pure profit for them. It is reckoned that Vodafone’s sale of its stake in Verizon Communications is amongst the largest corporate transactions ever.

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Vodafone seems to be trying to cheat its way out of paying UK tax once again. Margaret Hodge, Labour MP for Barking in London and head of the public accounts committee, has called for the HMRC to urgently take action to avoid British taxpayers losing out once more. After all, Vodafone are probably the most infamous mobile operator in the country when it comes to avoiding their tax liabilities.

It was only this summer that it was revealed that Vodafone have failed to pay anything into the public purse whatsoever for the last two years. This is despite the fact that their CEO, Vittorio Colao, got a pay packet of £10 million and that their market price is rising with shareholders being given dividends totalling millions of pounds due to their £3 billion profit.

Margaret Hodge is requesting that government official take action now because it has been reported that Vodafone are in the midst of a $130 billion deal to sell its stake in US telecoms company Verizon Wireless. The board have been in talks this week brokering the deal and have been taking advice from Goldman Sachs and UBS.

The deal comprises almost 50% of the value of Verizon and is set to bring back billions to the British economy. In fact, the amounts involved are so massive they are comparible to the artificial injections that form the Bank of England’s quantitative easing programme aimed at kickstarting the UK economy.

However, by rights Vodafone should be paying about $40bn in tax on the deal although insiders have suggested that they will use loopholes to reduce their payment eight-fold to only about $5 billion. The precise con they will be using is known under British law as the “substantial shareholdings exemption” and minimises the amount of capital gains tax that the UK public would usually benefit from. Of course, any UK shareholders expecting dividends from the sale will be paying tax on their income.

It appears that Vodafone’s plan is to process the sale though an overseas holding company so it does not have to pay as much tax in Britain. And it’s because of this that Hodge is getting involved and the deal is so controversial.

What do you make of this news? Is there a gap in the law that allows Vodafone to get away with this? How do you feel about them avoiding paying their taxes on a deal this big? And is Margaret Hodge correct in urging Treasury ministers to prevent Vodafone getting away with it?

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