Taxation

With low inflation, stable interest rates and falling unemployment rates, the UK economy in the early 2000 had been the strongest in Europe. 

Britain avoided recession in 2001 when the GDP growth rate was around 1.5%. But much of the growth rate was sustained by domestic consumption rather than exports growth.

Among the industrialised countries, Britain was considered to be among the high tax paying countries. CoE had already imposed more than 60 indirect taxes, which was expected to further reduce disposable income in the hands of consumers who had been propping up the economy. Moreover, these taxes were spent more on welfare programs than capital investment.

Revenue secretary (2002) was of the view that the argument of those batting against taxing dividends received by individual shareholders was flawed. His line: if the company and promoter were treated as two separate entities, then the responsibility of handling the liabilities too should rest with the promoter and the  benefits couldn't be treated as tax exempt. But a powerful lobby managed to keep up the portrayal of the move as amounting to double taxation.

In 2007, Vodafone acquired 67% stake in Hutchison india for $ 11 bn. On February, 2016, the IT Deptt issued Vodafone a reminder over its ₹ 14,200 Cr tax demand and threatened to seize its assets over non-payment.

The British telecom major says that no tax was due as the transaction was done offshore. But the tax deptt contention is that capital gains were made on assets in India.