Water companies were forced to defend themselves against accusations of tax avoidance last week, as a campaign started by Liberal Democrat MP Simon Hughes gained currency.
Thames Water, Anglian Water and Yorkshire Water were singled out by The Observer, in collaboration with Hughes, for paying little or no tax last year. The story was picked up by a handful of other media outlets. However, the three companies said government allowed them to defer tax payments to encourage infrastructure investment, in common with other utilities.
“We play by the rules,” said a spokesman for Yorkshire Water. “If, however, people believe these rules need to be changed, then that is an issue for government and we’re very happy to play a part in any future debate.”
Deloitte tax partner Andrew Cox said: “The rules are designed to incentivise investment in assets in the UK. Water companies are being told by the tax authorities that that is a good thing.”
This article first appeared in Utility Week’s print edition of 23rd November 2012.
Get Utility Week’s expert news and comment – unique and indispensible – direct to your desk. Sign up for a trial subscription here: http://bit.ly/zzxQxx