Anglian among number of UK water companies avoiding paying tax
A number of the UK’s biggest water companies, including Anglian, are using tax havens to controversially avoid paying millions in tax, a new investigation has claimed.
The findings come just a week after the water regulator Ofwat announced that water bills would rise by 3.5 per cent on average to £388 a year.
The investigation by lobby group Corporate Watch shows six water companies have taken large loans from investors which they are allowed to offset against their profits – the figure over which corporation tax is calculated.
It has been claimed the companies have found a way to avoid paying tax on the interest payments made on these loans.
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When a UK company pays interest to a non-UK company, it normally has to withhold 20 per cent of the payments to be given to the taxman.
However, they issued their loans through the Channel Islands stock exchange as 'quoted Eurobonds' meaning they do not have to pay the tax on the interest due to a loophole.
Anglian Water did not dispute the report's figures but told the Independent it had contributed "£150m in other taxes" to the UK economy in the past year.
Complex schemes taken by large firms to lower their tax bills have been the source of national attention in recent months.
MPs have attacked the actions of giants such as Google and Starbucks and the government has announced new plans to clamp down on firms who push their revenues overseas out of the reach of the taxman.
New draft rules which were announced yesterday will see companies bidding for lucrative Whitehall contracts having to provide details of their tax compliance history, including tax returns that have been judged incorrect.