30 Apr 2013

Npower accused of £108m tax dodge

Nearly 110,000 sign a petition protesting against energy giant npower’s alleged tax avoidance – but the company remains adamant it has no UK tax obligations.

Npower accused of £108m tax dodge by funelling funds to Malta

It follows a report that the company has shifted millions in profit to Malta, but the company remains adamant it has no UK tax obligations.

Npower 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 claims that it has avoided paying up to £108m in UK corporation tax in the past four years by using a Maltese company called Scaris.

In the petition, political activism group 38 degrees says: “Our energy bills are rocketing. In November, you hiked gas and electricity prices for your customers by nearly 10 per cent. And now you’ve admitted that you haven’t paid a single penny in corporation tax for three years.

“If you don’t change your ways, your current customers will start to leave you. And the rest of us will encourage them to do so. So please stop tax dodging and pay up.”

Tax haven

The report published by the gorup 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 April 16 RWE npower Chief Executive 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.

Mr Massara said: “So we will not have paid corporation tax in those three years.

“Effectively we have invested £5 bn 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 £13 m last year.