What a sweet deal for some UK water firms whereby they pay no tax following in the footsteps of many other corporations like Starbucks. Over the past decade, water bills have soared by 82%, more than double the rate of inflation. Despite making over £1.5 billion in profits, water bills are set to rise again this year.
British water companies are evading millions of pounds in tax by the fraudulent method of getting loans from their owners abroad and listing themselves as under debt.
Following a public outcry over billions of pounds of corporate tax avoidance in Britain, involving names such as Google and Starbucks, research group Corporate Watch said that six British water companies have taken out high-interest loans from their owners through the Channel Islands stock exchange so that they could dodge tax using a legal loophole that reduces taxable profits in proportion to interest payments abroad.
That means their owners get fully untaxed profits from Britain by pretending that their subsidiaries in the country are under debt.
According to Corporate Watch, the six water companies of Northumbria, Yorkshire, Anglia, Thames, South Staffs and Sutton and East Surrey have got £3.4 billion in loans from overseas.
The group said the Northumbrian case is the “most brazen” as it has promised an 11 percent interest on a loan of over £1 billion from a Hong Kong-based group that belongs to Li Ka-shing, the world’s ninth-richest person.
The situation also directly affects British tax-payers who should foot the bill for the high-interest loans taken out by water companies.
Corporate Watch said water companies could secure loans with much lower interests if they were government-run adding the current situation is costing British consumers an additional £2 billion a year.