Anglian Water says tax avoidance claims are 'misleading'
Lincolnshire's water supplier Anglian Water has said reports it has avoided tax are "misleading".
It has been claimed the firm is one of seven companies across the country that are taking advantage of a loophole to avoid paying millions of pounds.
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Anglian Water supplies homes in Lincolnshire
An investigation by the lobby group Corporate Watch suggested the firms were saving cash by taking high-interest loans from their owners through the Channel Islands stock exchange.
It is claimed their interest payments then reduce the amount of profit that can be taxed.
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Anglian Water said it was deferring some tax payments to allow it to invest more into infrastructure improvements.
It added any savings would be passed on to customers in lower bills.
A spokesman said: "Media reports suggesting we haven't fulfilled our tax obligations are misleading.
"For tax purposes we are registered in the UK, and we pay our full tax liability in accordance with government rules.
"Last year we contributed over £150 million to the economy through taxes we pay or collect on behalf of the government, made up of things like employers' taxes, environmental taxes, business rates and fuel duty, among many others.
"We employ almost 4,000 people, and are spending £2.3 billion on the region's water infrastructure between 2010 and 2015, which helps create and secure jobs as well as support economic growth.
"We will pay our tax bill in full as part of our continuing commitment to paying our way, and to being a responsible UK company."
The six other companies in the investigation include Northumbria, Yorkshire, Thames, South Staffordshire and Sutton and East Surrey.
Corporate Watch claims the firms are borrowing from subsidiaries of their owners based overseas.
It said: "They can receive the interest payments tax-free because they have issued the loans through the Channel Islands stock exchange as 'quoted Eurobonds'.
"Usually, when a UK company pays interest to a non-UK company, it has to withhold 20 per cent of the payments and give it to the UK tax authorities.
"But if the loans are issued as quoted Eurobonds on a recognised stock exchange, such as the Channel Islands' or the Cayman Islands', they benefit from an exemption that means no withholding tax is taken off."
Comments
by Bolshie
Friday, February 15 2013, 10:01PM
“"Last year we contributed over £150 million to the economy through taxes we pay or collect on behalf of the government, made up of things like employers' taxes, environmental taxes, business rates and fuel duty, among many others." They forgot to mention Corporation Tax - oh yes, I remember now they never paid any!
The costs Anglia Water mention are operating costs deducted before the operating profit that corporation tax is calculated from is determined. In 2012 they had an operating profit of £492M that they reduced to £110M of taxable earnings by deducting £382M in 'finance costs' which it seems are associated to 'internal loan' arrangements with its Cayman based subsidiary.
So - who's misleading who? - you can dress this as you like but as far as I can see tax avoidance scams such as this may be legal but are unethical. The government must act immediately to close these loopholes - there's no wonder we have a gap between state income and expenditure, it seems only us suckers that have tax deducted at source actually pay any!”