Guest 653- Registered: 13 Mar 2008
- Posts: 10,540
#1
According to today's Mail:
" £1 billionTax dodge by water profiteers: as your bills soar, seven of the UK's foreign owned firms pay peanuts in tax A dossier of shame compiled by Tory backbencher Charlie Elphicke reveals nine water companies have racked up operating profits totalling £10billion since 2010 but paid just £541million in tax.
Britain's privatised water firms have 'abused' loopholes in the law to dodge more than £1billion in tax since the election.
This equates to a tax rate of just 5.3 per cent. Corporation tax on operating profit is normally 23 per cent.
Down the drain: The Treasury has missed out on £1billion in tax from utility firms, it has been claimed
At the same time, two of the country's biggest energy firms, also foreign-owned, made combined profits of £1.7billion but paid no tax at all.
Meanwhile soaring utility bills have left millions feeling the pinch. Average water bills have gone up by 14.5 per cent, while electricity bills have soared by 24.8 per cent and gas bills by 33.9 per cent.
The average family has seen its annual utility bills rise by £384.
The revelations are embarrassing for David Cameron who has pledged to clamp down on tax avoidance by multinationals.
The details were revealed to the Commons by Tory MP Charlie Elphicke, a tax lawyer, who called on ministers to force water and power firms to cut their bills if they continued to avoid paying tax.
There is no suggestion that the firms involved have broken the law, and they all deny wrongdoing. But Mr Elphicke said the scale of the tax avoidance was staggering.
'Foreign-owned utility companies, particularly in the water industry, have been engaging in tax schemes using debt interest to avoid tax, which on my calculation over the last three years indicates that the Exchequer has lost £1billion,' he said.
He went on: 'They should either be subject to a windfall tax or reduce customers' bills.'
Well done Charlie.
Roger
Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
#2
it seems that Charlie is on some sort of mission,hospital?,my ferry link and now tax evasion of sorts.it can be classed as suisidal if he carrys on.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#3
Charlies question in Parliament...............
Charlie Elphicke (Dover, Conservative)
It is a pleasure to speak in the debate, and I congratulate my hon. Friend Chris White on securing it.
Hard-working families want a better life for themselves and their children. They go out each day, work hard, strive, and pay their taxes. They face increasing costs in some areas of their lives, particularly in rising household bills for gas, electricity and water. The average family have seen their annual household bills rise by £384 since 2010.
I am concerned about whether utility companies are paying the appropriate amount of tax. I have done a study of nine water companies, which, collectively, have
a turnover of £28 billion and operating profits of £10 billion a year, yet they paid just £541 million in tax, an effective tax rate of 5%, which goes down to about 3% if we take into account those who have been declaring tax losses.
I have looked at two electricity companies, EDF and RWE npower, which have a collective total turnover of £25.6 billion and operating profits of £1.7 billion, yet they paid no tax whatever. It cannot all be explained by capital allowances. Foreign-owned utilities, particularly in the water industry, have been engaging in schemes using debt interest to avoid tax, which, on my calculations, have resulted in a loss to the Exchequer of about £1 billion over the last three years.
Let us take the example of Southern Water, which covers the area I represent. Over the three most recent years for which figures are available, it generated more than £2 billion in turnover, operating profits of £767 million and paid a net tax charge of £45.9 million. That is an effective tax rate of 6%. Yorkshire Water, over the last three years, generated £2.6 billion in turnover, operating profits of £990 million, and yet received a net tax credit of £46.2 million. Anglian Water, over the last three available years, generated £3.3 billion in turnover, operating profits of £1.4 billion and paid a net tax charge of just £124.7 million. That is an effective tax rate of 8.9%.
What concerns me particularly is that those companies have been abusing the interest deduction system. Over the last three years, Southern Water made some £481.6 million of net interest and interest-related payments to the multinational owners of group companies overseas. According to my calculations, the tax forgone is a potential £125 million for the Exchequer. Yorkshire Water, which is especially egregious in this respect, made £548.5 of net interest and interest-related payments to group companies. According to my calculations, the tax forgone is £142 million. Anglian Water made £365 million of net interest and interest-related payments to group companies over the three most recent years for which figures are available. According to my calculations, the tax forgone is some £95 million.
Over the three most recent years for which figures are available, EDF, which is owned by the French Government, made £268.4 million of interest payments to group companies. According to my calculations, the tax forgone is potentially £70 million, if we assume a corporation tax rate of about the average, 26%. Npower made £58 million of interest payments to group companies. According to my calculations, the tax forgone is £93 million.
I am calling on the regulators to examine the position and to say that if the water companies, in particular, are receiving too high a return in total, they should either be subject to a windfall tax or reduce customers' bills. Tax-avoiding water companies, and other utility companies, should be made to give a rebate to hard-pressed customers who have faced increased bills in recent years. I hope that Ministers will consider the options available to them. In any event, tax law should be changed so that interest is no longer favoured over equity. Specifically, interest payments from one group company to another should not be tax-deductible.
Keith Sansum1
- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#4
We should congratulate Charlie on a crusade
but he is still a great supporter of unaccountable private companies
and now we see why that policy is so wrong
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