The Coalition is so serious about tax avoidance, it has appointed a tax dodger to oversee the tax office(4 Posts)
They do pay tax in the UK. They pay large amounts of NI, business rates, and so on.
It's absurd to say they give nothing back, they are providing employment to thousands of people, power, and other public goods.
Their actual tax affairs are summarised here:
As you can see, over 3 years there was an 'operating result' of £766m.
£256m were paid towards their pension deficit, these payments are clearly not tax avoidance, they just aren't allowed to deduct them from £766m to give a true figure of their profits.
In 2010 they offset £67m of losses on domestic gas supply from previous years. Again nothing wrong with that.
They also took advantage of government incentives to build new power stations, and therefore reduced their taxable profit by a further £178m.
It would be very unreasonable to criticise them for doing what the government obviously want, which is to invest in power gerneration. Had the government not offered the incentive, it might not have been viable to invest in the plants.
Finally, £313m went in interest payments.
So there was in reality something like £450m of profits, of which £300m went on interest payments, and a further £150m was written down directly according to the government's plans.
Npower's turnover is something like £6.1b, so around 5% of turnover was spent on interest payments.
By comparison, Seven Trent water, turnover £1.7 billion, and and they spend £245m/year www.redmayne.co.uk/research/securitydetails/financials.htm?tkr=SVT on interest, which is 14%.
United Utilities £1.6 billion turnover, £300m inteest
www.redmayne.co.uk/research/securitydetails/financials.htm?tkr=UU. Nearly 20% of the turnover goes on interest.
So compared with other utility companies, Npower are in fact paying relatively little interest on revenue generated.
So not really a sign of tax avoidance, since these other companies pay far more interest, just to keep the business going.
The fact is, Npower just aren't that profitable.
In reality after interest costs they made only around £175m of profit, which they chose to invest in approved government capital investment areas.
The issue isn't about how much he is being paid. The issue is that npower hasn't paid any corporation tax in three years - by its own admission.
If they are operating in the UK and making profits in the UK, then they should pay corporation tax to the UK. To not pay any tax is exploitative, since they are using everything which the UK as a state provides through taxation - laws, judicial system, infrastructure, customers, etc. but giving nothing back.
It's not about a 'conspiracy', it's about making a fundamentally poor choice, in which there is bound to be both a conflict of interest and bad publicity for the tax office.
What a mess of an article. No wonder it's called The Grauniad.
Some actual facts:
1. Volker Beckers joined HMRC on 1st January:
He is paid £20,000/year for this job, against his former pay at Npower of £1m+/year. This is therefore a very minor role for him, and also a minor role at HMRC.
2. NPower need capital to run their business. They choose to borrow this from their German parent, which is overall the most cost-effective way of doing so. This is legal, and Germany is an overall higher tax jurisdiction than the UK, so it's not clear whether tax avoidance was the overall intention.
3. Tax avoidance is to a degree in the eye of the beholder, and Npower were not accused of tax avoidance when Beckers was appointed, and they deny it today. So the appointment of Beckers in a minor £20k/year role doesn't seem all that much of a scandal, except perhaps to conpsiracy-hungry Grauniad journalists.
Storm brews over energy price rises and HMRC appointment of npower chief
Energy price changes may see customers overpay by £55m a year, warns Which?, as MPs raise concerns over tax avoidance
Controversy around Britain's energy industry will intensify on Monday amid revelations that the former head of a low-tax-paying power provider has been hired to help oversee HM Revenue and Customs (HMRC), and a warning that a new price regime demanded by the regulator, Ofgem, could still mean consumers paying £55m more a year than they should.
RWE npower was at the centre of a storm last week after admitting it had paid £2m, £3m and nothing in tax in the years 2009-2011, but now it transpires that Volker Beckers, its former boss, has been appointed as a non-executive director at the HMRC.
Ian Lavery MP, a member of the Commons Energy and Climate Change select committee, whose questioning led to npower's admission, said: "(Chancellor) George Osborne has serious questions to answer about why he has appointed the boss of an energy firm which paid no corporation tax in the last three years, despite making £766m in profits, to the board of HMRC. HMRC has a bad enough record at stopping tax avoidance as it is."
EDF*OFF, a group set up to campaign against the dominance of the big six suppliers, says the Beckers row is deeply embarrassing for the HMRC at a time when it is trying to rebuild public trust following the departure of former head, Dave Hartnett, after signing much-criticised sweetheart tax deals with Goldman Sachs and then joining HSBC.
UK Uncut demonstrate in front of Vodafone UK Uncut shot to prominence over its anti-tax avoidance protests. Photograph: Rex
Mark Williams of anti-austerity campaigners UK Uncut added: "It is no surprise the government loses billions of pounds to corporate tax dodgers every year when they hire those same tax dodgers to oversee tax inspectors. HMRC should be throwing the book at people like Volker, not hiring them."
Npower, which faces a petition signed by more than 93,000 people calling on it to pay more tax, has consistently denied tax dodging and says the low tax payments result from the fact that the German-owned company has been investing billions of pounds in new gas and other power stations.
The Treasury has confirmed this can be legitimately written off against tax but independent tax specialists, such as Richard Murphy, have also questioned the necessity of some of the "interest payments" made by npower to its parent group RWE in Essen which also reduce the scale of npower's taxable profits. Npower says this is a cheap way to borrow money.
The HMRC told the Guardian Beckers had been taken on under a public appointments process that involved rigorous vetting and disclosure of any conflicts of interest.
"Non-executive directors bring valuable external and commercial experience to HMRC. However, they are not responsible for the day-to-day management of HMRC, nor are they responsible for tax policy or for handling confidential individual or corporate taxpayer issues," said a spokeswoman.
Meanwhile, analysis by Which?, the consumer group, reveals Ofgem's proposals to overhaul energy tariffs may mean more than 3.4m households end up paying over the odds for their energy as they struggle to identify the cheapest energy tariffs. This could see consumers collectively paying up to £55m more than they need to on their bills.
Richard Lloyd, executive director at Which?, said: "These proposals are far too complicated and will fail to achieve their aim of making it easier for people to find the best deal, with three-quarters of people being asked to compare prices that are not based on their energy usage."
Which? is launching a digital campaign on Monday, asking consumers to come forward and pledge their support for single unit prices to simplify the tariffs.
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