Friday 31 May 2013

Chancellor shuts energy giants’ £900m tax loophole

Chancellor George Osborne has closed a tax loophole that allowed energy companies to avoid paying up to £900 million in tax.

The Treasury has introduced new legislation that will prevent gas and electricity distribution firms in particular from making new claims for costs dating back decades that have already been paid by their business customers.

It claims energy firms have recently attempted to make new claims for past expenditure, which if they succeed would generate large windfall tax repayments and reductions for the companies concerned. Since January, it is believed the utilities have tried to make claims worth £50 million on work that was paid for by the customers.

Mr Osborne said: “The Government is committed to competitive taxes to support growth in the UK. But it is also only right that companies pay the tax they owe.

“It is completely unacceptable that utility companies think they can claim for huge amounts of money, that business customers have already covered the cost for. By legislating today, we will prevent utility companies from making these claims, ensuring fairness for British taxpayers.”

The new law would take immediate effect as an addition to an existing Finance Bill.