Npower rejects tax avoidance claims

Energy giant Npower has rejected fresh claims that it is avoiding its tax obligations in the UK following a report that it has shifted millions in profit to Malta.

The company admitted earlier this month that it has not paid corporation tax in the UK for three years, arguing that it has invested "billions" in new power stations and wind technology.

But a report in The Sun claims that it has avoided paying up to £108 million in UK corporation tax in the past four years with the use of a Maltese company called Scaris.

The report claims that more than half of the firm's funding comes from German owner RWE via loans paid through Scaris, a shell company based in the Mediterranean tax haven, allowing Npower to return annual interest on the loans.

It claims the arrangement means the UK gas and electricity supplier can post a loss here, and avoid corporation tax.

A spokesman for RWE Npower confirmed it worked with the Malta company "for a couple of years" until 2011, adding: "I can categorically state that this makes no difference to our UK tax situation."

He added: "All of the ways in which we manage our tax is approved by HMRC. I can confirm that all of our UK activity is taxed in the UK and we pay all the taxes due. The reason it has been modest in the last few years is that we have invested around £5 billion in the UK."

On April 16 RWE Npower's chief executive Paul Massara told the Commons Energy and Climate Change Select Committee that the company had not paid corporation tax for three years after he was asked by Labour MP Ian Lavery if he could confirm how much it had paid in 2009, 2010 and 2011.

Mr Massara said: ''So we will not have paid corporation tax in those three years. Effectively we have invested £5 billion in the last five years building power plants, creating jobs, creating employment and helping to keep the lights on.

"If we had not made that investment we would not have the deductibility that we would be allowed. That is a simple accounting UK rule.'"