Another UK energy scandal
According to Corporate Watch, UK energy companies are saving million of pounds by exploiting tax loopholes, while raising consumer energy prices by 8% or more.
By paying back interest on money borrowed from company owners (who were often based abroad and within tax havens), electricity companies are reducing, and in some cases eliminating, their UK corporation tax bill.
Corporate Watch said that: '20 per cent of the interest payments would usually have to be sent straight to HMRC, minimising overall savings. However, as money is lent via offshore stock exchanges that qualify for a regulatory loophole called the Quoted Eurobond Exemption, no tax is withheld'.
Companies named and shamed included:
Scotia Gas, estimated to have avoided £72.5m in tax,
Electricity North West (ENW), estimated to have avoided £30m since 2007, and
UK Power Networks, estimated to have avoided £38m since 2010.
HM Revenues and Customs (HMRC) was reported to have considered restricting the Eurobond exemption in 2012 when its abuse by firms to minimise tax bills became apparent. However, lobbying by the financial industry pressured HMRC to change its mind.
Spokespersons from Electricity North West, Scotia, and SSE were reported to have refused to comment on their use of Eurobonds for tax-avoidance purposes.
A UK Power Networks spokeswoman commented: "I can confirm UK Power Networks fully complies with all applicable regulatory, tax and legal requirements relevant to a group operating in the UK."
Find out more about the issues of tax avoidance by visiting the Tax Justice Network website.
This story has been added to our corporate database. The database powers all our live product guides, giving the score for each company on our rankings tables. Find out more about how we rate companies.
Find out more about our tax justice campaign including our boycott of Amazon.
Register on the site to receive our free monthly email newsletter and keep up-to-date with all our research and campaigning.
Ethical Consumer on Google+