Updated: Thursday, 2nd April 2020 @ 10:55am

Name and shame tax avoiding businesses: Manchester MP supports investigation into loophole exploiters

Name and shame tax avoiding businesses: Manchester MP supports investigation into loophole exploiters

By Mihaela Ivantcheva

An investigation into water companies’ questionable tax avoidance manoeuvres is being supported by a Manchester MP – who is also calling for multinationals to be ‘named and shamed’.

The pressure to scrutinise water giants’ tax practices comes after an investigation by the deputy leader of the Liberal Democrats Simon Hughes claimed that some of Britain’s biggest water companies, such as Thames Water and Anglican Water, pay little or no tax.

At the same time, the water giants generate massive profits and pay huge amounts to shareholders and executives.

John Leech, MP for Withington, said: “This government has invested more money than any previous government into tackling tax avoidance and rightly so.

“The previous government put their head in the sand over tax avoidance and more and more companies are being exposed having got away with it for so long.

“In the last year the government clawed back a record £21billion from tax avoiders and evaders, which is 31% more than the year before thanks to compliance investigations.

“Simon Hughes was right to expose the water companies and I am fully behind his backing for an investigation.”

United Utilities Group PLC is the company that provides water and water services for people in the North West, including Manchester. It is UK’s largest listed water company and has approximately seven million customers.

According to United Utilities annual report for the fiscal year ended 31 March 2012, the company generated £280.4million taxable profit (profit before taxation).

The corporation tax in the UK is currently 25% and is paid on taxable profit.

In contrast to its rivals who have paid no tax, United Utilities paid around £40million in the last fiscal year.

Although corporate tax should have been around £70million, a spokesperson for the company explained that the reduced amount of corporate tax paid was due to capital allowances.

Commenting on United Utilities latest balance sheet and tax payments, they said: “We spent £680million building new assets as part of our capital investment programme last year.

“We pay tax in accordance with government rules and in 2011/12 we paid approximately £40million and the profit before tax was £280million.

“Additionally, when you take account of business rates, employer national insurance contributions and green taxes United Utilities made a further contribution of around £100 million.”

The controversy surrounding water companies’ balance sheets comes on top of earlier revelations that international business giants Starbucks, Amazon and Google have used loopholes in the tax system and have avoided tax using complex financial manoeuvres.

In a letter to the House of Commons public accounts committee, Mr Hughes asks for an investigation into the way the privatised water industry does its business. The same committee is due to quiz Starbucks and Google executives over tax avoidance.

Mr Leech said: “We want competitive taxes that say Britain is open for business and that attract global companies to invest in and bring jobs to our country.

“However, we also want global companies like Starbucks and Apple named and shamed and clamped down on until they pay their fair share of taxes and to stop any further abuses.”

The Fairer Tax Campaign calls for Starbucks to pay their ‘fair share’ after it was exposed that the US company did not pay any corporation tax in the last three years.

The coffee giant owns and runs more than 700 stores across the UK and has generated sales of £1.2billion in the country over the past three years.

Mr Leech told MM that he was also supporting Stephen Williams, MP for Bristol West and a confessed latte-lover, who is boycotting Starbucks and calling for the coffee maker to pay its ‘fair share’ in taxes.

Along with the water giants Thames Water, Anglican Water and Yorkshire Water, due to answer questions over tax avoidance practices before the public accounts committee are Starbucks, Google and Amazon.

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