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"Vodafone is no different to any other UK business, whatever its size: if a self-employed trader buys a new computer or a large UK business borrows money to build a new warehouse, exactly the same rules apply."

The Vodaphone statement in full:

As we explain above, all over the world, governments seeking to encourage companies to create jobs and build infrastructure develop a range of tax incentives to attract new capital investment. The UK is no different.

Vodafone makes huge investments in the UK. We spent over £1 billion a year in 2012/13 – up from £767 million in 2011/12 - building and upgrading the networks relied upon by millions of UK consumers and businesses. We have also paid the UK government more than £7 billion for our UK radio spectrum licences. We raised the money for those licences from UK banks and capital markets, further increasing our overall UK borrowings: we’re now paying more than £600 million a year in interest costs to UK banks and financial institutions.

As the UK Government wants more investment in UK infrastructure and jobs, it allows all businesses to claim relief for the cost of assets used in the business against their profits when determining their corporation tax bills. The government also provides relief to all businesses for the cost of interest on their debts to UK banks and financial institutions. These allowances and reliefs are intentional, long-established and carefully considered: they reflect deliberate policy decisions by successive UK governments and are a cornerstone of UK taxation policy. Vodafone is no different to any other UK business, whatever its size: if a self-employed trader buys a new computer or a large UK business borrows money to build a new warehouse, exactly the same rules apply.

Corporation tax is charged on profits, not revenues. The UK is an expensive and highly competitive country in which to do business and has one of the least-profitable mobile markets anywhere in the world. Many people confuse revenues with profits. However, our UK profit is a small fraction of our gross UK revenues; below £300 million in 2012/13, which is significantly less than the interest costs on our UK debt and just over one-quarter of the amount of our annual UK capital investment programme.

Vodafone's UK corporation tax position is therefore determined by UK capital allowances for UK investment and UK debt interest relief on borrowings from UK banks and financial institutions, set against a (relatively very low) level of UK profit. As we explain earlier, our overseas financing subsidiaries have no bearing on our UK corporation tax position and we do not artificially transfer profits to minimise tax payments to the UK Exchequer.

Finally, as explained above, UK corporation tax accounts for a small proportion of the total taxes paid by UK businesses. In 2012/13, we paid the UK government £275 million in direct taxes and, as we show in the table below, our total cash contribution to the UK Government was over £1.8 billion.