Last week I discussed nPower's tax. Of course its affairs are all legal, but I made the suggestion that it seems its UK operations are structured to make sure no tax is paid in this country. Now the Guardian reports:
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.
He's in good company, with former KPMG and PWC partners who have no doubt seen their incomes boosted over the years by the sale of tax avoidance by the ir firms.
I have made the point before, and I will make it again, that this is no way to organise a tax authority. H M Revenue & Customs should be run by people who are committed to the social value of tax, not by people who believe it is best avoided.
There's more on this in 'Over here and under-taxed'.
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You seem to confuse correlation with causation.
The loan structure means there is little UK tax. That does not mean it was designed to result in little UK tax.
As it seems to result in more tax being paid overall, one might expect that tax was not a major factor in the design of the structure.
I don’t believe in coincidence on such issues
So you think nPower *deliberately* set things up so they would pay more tax than they needed to?
I’m glad you now agree they’re tax avoiding
Thank you
No, I don’t think that.
I don’t have enough evidence to form a firm view one way or the other, as all I’ve done is briefly review the tax notes in the accounts.
What I can say is that it appears that the loan from Germany to the UK results in them paying more tax than would be paid if the UK were funded by equity.
That is *not* tax avoidance, in my view. “Avoidance” means taking extra steps to achieve a result, but they seem to have chosen the most obvious route to achieve the commercial end in sight.
Let me get this straight, paying more tax than required is also considered tax avoidance?
No…
So what are they doing?
I have no idea what you are asking
Reading the comments above it seems the firm(s) in question are paying more not less tax. The comment from @Richard Murphy says this is tax avoidance, perhaps it is a typo.
What are these firms doing wrong if they are paying more tax not less?
That can hardly be termed ‘avoidance’.
I am suggesting the analysis is grossly simplistic
I do not for a moment think nPower is choosing to ver pay tax
I agree it’s a simplistic analysis, which is why I’m not saying categorically that nPower are paying more tax or avoiding it, simply that the former appears to be the case based on limited information.
On the basis of the same simplistic analysis you have concluded that they definitely *are* avoiding tax.
You’re either taking a very narrow view of tax avoidance (that UK tax is the only one that counts), or you’re begging the question.
This is tax avoidance
The structure clearly achieves that goal
That’s all there is to say
I can only assume you are privy to more information than is available to me.
Are you able to share any of it? I’m quite prepared to believe tax avoidance is going on if I have any evidence of it.
Realistically, though, Richard, surely the Revenue’s NEDs need to have enough technical expertise to be able to contribute meaningfully?
No…why?
It is assumed all business knows about tax