Vodafone reached a multi-million pound settlement in 2009 with HMRC after a tax dispute involving its Irish subsidiary, it has been claimed.
According to a Guardian report, which cited accounts filed in Dublin by the British telecoms giant, Vodafone used its Irish subsidiary Vodafone Ireland Marketing Ltd (VIML) to funnel global revenues from its businesses across the world and escape the clutches of UK corporation tax, which was higher than in Ireland and Luxembourg where some of the money ended up.
It could be worth as much as €67m ($89.3m, £57m) after the firm reclaimed this amount from Ireland's government for the purpose of paying UK taxation, but the exact settlement figure is unknown.
When HMRC was alerted to the Irish subsidiary's activities, several executives were sent to Dublin to man the firm, which had been unstaffed for the five years to 2007.
VIML channelled as much as €1bn to Luxembourg, an infamous low-tax jurisdiction, in dividend payments.
"Vodafone conducts itself in full compliance with the law and always operates under a policy of full transparency with the tax authorities in all countries in which we operate," said a statement from the firm.
"The royalty payments that were made were done so under domestic and international transfer pricing rules which are set up by governments to allocate appropriate taxable profits from one country to another.
"The company's local UK and Italy operating companies continued to pay fees to Vodafone Group in the UK and no royalties have ever been paid from the UK to Ireland or elsewhere."
Vodafone said its HMRC settlement was part of its inter-group transfer pricing arrangements and noted that the profits of the subsidiary were taxed at a rate of 25% throughout the period.
The firm also said the taxes it had paid to the Irish government were credited and then they were paid to the UK Treasury as part of treaty between the governments to avoid double taxation and that it disclosed the matter in its annual report.
An HMRC spokesman refused to comment on the specific Vodafone issue, but said the tax authority "ensures that multinationals pay the tax which is due under the law."