Economy
Government announces plan to stop tax claims by energy companies
The chancellor George Osborne has revealed a new scheme to stop £900m of tax being lost from utility companies that claim capital allowances for costs met by other businesses.
The proposal comes amid an investigation into oil and gas companies over allegations of price fixing. Some firms have also been accused of ‘holding back gas’ during March shortages.
Osborne said, “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 legislation, which will be included in the finance bill, will prevent energy companies from making claims for costs dating back decades that have already been paid by their business customers.
According to the chancellor, these claims might account for £900m. Some companies have recently started to ask for money back relating to past costs. If they succeed in their claims, this could generate a “large windfall tax repayments and reductions”.
Osborne added, “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.”
Tax avoidance recently hit the headlines when large companies such as Google and Amazon were found to pay little tax when compared to their profits. Meanwhile, some investors used false donations to charities to hide capital set aside in offshore tax havens.
Further reading:
Suppliers accused of ‘holding back gas’ during March shortages
Big oil companies under investigation for price rigging