One of Britain’s big six energy companies, Npower, has admitted to paying zero corporation tax between 2009 and 2011, as it pumped billions in to keeping “the UK's lights on"
Speaking at the energy and climate change select committee yesterday, Npower chief executive Paul Massara defended the energy giant’s tax practices, saying “it is in no way tax avoidance, and all of our business is taxable in the UK".
"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,” Massara told the MPs.
Npower reported a 34% rise in profits to £413m last year.
The energy companies were called before the MPs in the light of worsening public trust in them, as their profits rise but household bills rocket.
Labour MP Ian Lavery said, "In the last three years, [Npower] has reported profits totalling £766m – yet today they admitted they have not paid a single penny of corporation tax over that period.
"People who pay their taxes unquestioningly are sick and tired of seeing hugely profitable companies use every trick in the book to get out of contributing their fair share."
Another Labour MP, John Robertson, urged consumers to switch energy providers in protest, dubbing Npower “the new Starbucks”.
However, Andrew Watters, a partner in Thomas Eggar LLP, condemned this "current name and shame approach".
"It seems to be a modern version of the ducking chair where the accused is ducked until they accept guilt, or drowns (a sure sign of guilt). Some people see the new General Anti Avoidance Rule (GAAR) as the way to clarify how morality and law interact. Let us hope the GAAR Advisory Committee has at least one member called Solomon."
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Avoidance or evasion