Thames Water responds to corporation tax avoidance allegations

June 12, 2013
The UK’s largest water utility Thames Water has responded to claims that it has been “ripping off the taxpayer” by not paying any corporation tax on its £1.8 billion turnover...

The UK’s largest water utility Thames Water has responded to claims that it has been “ripping off the taxpayer” by not paying any corporation tax on its £1.8 billion turnover.

National newspapers picked up the utility’s annual financial statement launched at the beginning of the week in which it allegedly admitted to not paying any corporation tax in the year to the end of March 2013.

However, Thames Water said it had paid £150 million in business rates, national insurance and other taxes.

In a statement, the utility said: “We have not paid much corporation tax in recent years because the Government’s tax system allows us to delay, not avoid, payment of tax based on how much we invest. Because we are investing £1 billion a year from 2010 to 2015, more than any water firm in the UK’s history, we are able to defer a lot of tax payments to future years.”

It added: "There is currently nearly £1 billion of deferred tax on our books. All this will be paid in future. If Government’s ‘capital allowances’ did not exist, it would mean either our customers’ bills would be higher, or we would do less work improving our pipes, sewers and other facilities.”

The financial statement came as water regulator Ofwat’s chairman, Johnson Cox, wrote an article in the Daily Telegraph in which he said “tax policy is not for an economic regulator and these structures may be legal and common in private equity”.

Last month Ofwat’s chief executive Regina Finn announced that she should be resigning as of November (see WWi story).

Regarding the Thames Water case, Tony Smith, chief executive of the Consumer Council for Water reportedly said: “All water companies, like everyone else, should be fulfilling their obligations when it come [sic] to paying tax.”

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About the Author

Tom Freyberg

Tom Freyberg is an experienced environmental journalist, having worked across a variety of business-to-business titles. Since joining Pennwell in 2010, he has been influential in developing international partnerships for the water brand and has overseen digital developments, including 360 degree video case studies. He has interviewed high level figures, including NYSE CEO’s and Environmental Ministers. A known figure in the global water industry, Tom has chaired and spoken at conferences around the world, from Helsinki, to London and Singapore. An English graduate from Exeter University, Tom completed his PMA journalism training in London.

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