UK Edition
A blacklisted Chinese telecoms company is being investigated by HMRC over alleged tax underpayments spanning a decade.
ZTE, a Chinese technology business which was accused by GCHQ of threatening national security in 2018, admitted in its accounts it may owe as much as £1.5m to the taxman and has set aside a provision for the amount.
The Chinese company’s UK division said ZTE was subject of an ongoing investigation by HMRC over unpaid employee taxes.
Its advisers have been examining payments as far back as 2013, the accounts said, adding that ZTE accepts liability.
The business said it could be subject to a penalty over the investigation, although HMRC could choose to suspend or cancel any fine.
ZTE, which is headquartered in Shenzhen in China, reported sales of £30.1m in the UK in the year to December, its accounts showed, up from £28.4m the year earlier.
Although it was blacklisted six years ago by the National Cyber Security Centre (NCSC), part of GCHQ, ZTE has reported climbing UK revenues on the back of sales of its consumer mobile broadband routers.
In 2018, NCSC wrote to British telecoms companies warning them against the use of ZTE’s IT equipment in their mobile networks and infrastructure, although it only ever had a small share of the market.
At the time, the NCSC wrote: “The national security risks arising from the use of ZTE equipment or services within the context of the existing UK telecoms infrastructure cannot be mitigated.”
In 2020, ZTE’s Chinese telecoms rival Huawei was also blacklisted over national security concerns after being widely used in BT’s systems. Telecom companies were given until 2027 to entirely strip Huawei from their 5G networks.
Both companies repeatedly denied posing a national security threat.
Despite the warnings, ZTE executives wrote in its annual report: “ZTE believes that there is huge potential for growth, innovation and trade between China and the United Kingdom. ZTE is committed to the UK market and will ensure that the company evolves as required by the market.”
A spokesman for HMRC declined to comment. ZTE did not respond to requests for comment.