Npower CEO Paul Massara previously admitted the company had not paid corporation tax for three years

Npower rejects fresh reports of tax avoidance

Energy giant Npower has rejected fresh claims it is avoiding tax obligations in the UK by shifting millions in profit to Malta.

The company admitted earlier this month that it has not paid corporation tax in the UK for three years, arguing that it has invested "billions" in new power stations and wind technology.

But a report in the Sun claims it has avoided paying up to £108m in UK corporation tax in the past four years with the use of a Maltese company called Scaris.

The report claims that more than half of the firm's funding comes from German owner RWE via loans paid through Scaris, a shell company based in the Mediterranean tax haven, allowing Npower to return annual interest on the loans.

It claims the arrangement means the UK gas and electricity supplier can post a loss here, and avoid corporation tax.

A spokesman for RWE Npower confirmed it worked with the Malta company "for a couple of years" until 2011, adding: "I can categorically state that this makes no difference to our UK tax situation."

He added: "All of the ways in which we manage our tax is approved by HMRC. I can confirm that all of our UK activity is taxed in the UK and we pay all the taxes due.

"The reason it has been modest in the last few years is that we have invested around £5bn in the UK."

On 16 April RWE Npower's CEO Paul Massara told the Commons Energy and Climate Change Select Committee that the company had not paid corporation tax for three years after he was asked by Labour MP Ian Lavery if he could confirm how much it had paid in 2009, 2010 and 2011.

Massara said: ''So we will not have paid corporation tax in those three years. Effectively we have invested £5bn in the last five years building power plants, creating jobs, creating employment and helping to keep the lights on.

"If we had not made that investment we would not have the deductibility that we would be allowed. That is a simple accounting UK rule.''

Npower increased gas prices by 8.8 per cent and electricity by 9.1 per cent in November. The company reported a 34 per cent rise in profits to £413m last year.

David Babbs, the executive director of lobby group 38 Degrees, which paid for the report, said: "The truth is that if Npower had invested the money they channelled through their Maltese tax haven directly into the UK then tax would have been paid in the UK because there would have been no interest paid.

"The only reasonable explanation for the money going on a detour via Malta is to dodge tax. Our report makes it clear they've dodged maybe £100m in UK tax this way.

"Npower need to stop wriggling and accept that they've been caught dodging tax. Most people think this is unacceptable. If they want to keep their customers in the UK, they need to start paying their fair share of tax here in the UK, and prove it by putting full accounts for their UK operation for 2012 on public record."

Recent articles

Info Message

Our sites use cookies to support some functionality, and to collect anonymous user data.

Learn more about IET cookies and how to control them