Ritchie and nPower again

But the company denied that the use of its Maltese financing subsidiary, Scaris Ltd, was designed to avoid paying tax in Britain and was just a way of borrowing cash to fund British investment \”more efficiently.\”

Paul Massara, chief executive of npower, said: \”The use of Malta in making payments on our financing made no difference to our UK tax contributions. Npower has not, and will not, engage in tax avoidance. Our corporation tax bill was low between 2009 and 2011 because we made losses in our retail business and invested billions into the UK.\”

But Richard Murphy, an accountant who runs a consultancy called Tax Research, said it remained unclear why RWE, npower\’s parent company, would lend money to its UK business via Malta \”unless tax avoidance was its motive. The tax saving that results is very clear.\”

Note the careful clarity of the nPower statement. Whether they borrow the money through Malta, Germany, or indeed from a British bank, makes absolutely no difference to their tax payable in the UK. It\’s therefore very difficult indeed to claim that this is tax avoidance in the UK.

Won\’t stop Ms. Hodge (actually, Lady Hodge, the tax avoider) from climbing aboard her soapbox of course.

6 thoughts on “Ritchie and nPower again”

  1. Have you read his position on this, in my discussion with him on his blog?

    I find it particularly intriguing that although I agree with him that there seems to be avoidance going on, he gets very upset by the suggestion that avoidance could happen outside the UK. If tax has been avoided, it must be the UK that lost out – it seems that Germany cannot suffer from tax avoidance, in his view.

    Tim adds: Yes, I did see it. And very much the point I’m making here too. There is no tax avoidance *in the UK* going on here.

  2. Pellinor

    Yes I read it. Probably not every comment because he moderates away anythnig that might embarrass him. He did it to me too (West Lancs).

    So in order:

    He cannot find one instance of use of the Patent Box of which he would approve. So he cannot explain how and why it is expressly carved out of the GAAR. So he deflects.

    He certainly isn’t going to allow me to point out his inconsistencies on what interest payments, to where, could constitute avoidance. You may remember him arguing very strongly that interest paid to German companies or German banks, even at commercial rates, was profit shifting and therefore avoidance. However, once the Malta route had been revealed, he announced that he wouldn’t have any problem with interest being paid to Germany. And of course his cretin followers just suck this up.

    One final point: I think Npower has handled the PR on this extraordinarily badly.

  3. He’s not moderated me out too much this time, but yes, it is very annoying. If he doesn’t have the courage of his convictions, why is he stating them so definitely?

    I suspect that the problem nPower has with PR is that the PR people will have tried to handle it, with maybe a small amount of input from the PR people in Germany or possibly the FD, without referring back to the tax department for a full view of the situation. I’ve seen that from the sharp end – being passed a load of correspondence between the group’s PR folk and third parties where they’ve tried to pass it off with platitudes but succeeded only in making matters worse – and only at that point do they pass it to the chap who knows what he’s talking about…

  4. There is a point though, even though Ritchie doesn’t get it.

    Tim said “There is no tax avoidance *in the UK* going on here.”

    This is undoubtedly true, but the only purpose of having the Malta funding route is to avoid higher taxes elsewhere, maybe UK, maybe Germany.

    The reason that Ritchie fits any tax avoidance into the *UK Tax Avoidance* box is that he is a paid-for shill of the main UK taxman’s union the PCS.

    This is just rent seeking by their stooge Ritchie.

  5. When Ritchie has succeeded in getting the UK to have the highest tax rates in the world, then he can truly claim that any company who has dealings with the UK and doesn’t pay all it’s tax to the UK is a tax avoider. End of argument.

  6. The Thought Gang

    It’s a shame this Malta thing has come up. It was more amusing when he really was trying to argue that bona fide parent company financing was tax avoidance.

    He is, to his idiotic credit, still sticking to his view that there should be a presumption that all group financing is tax avoidance, and that loaning from Germany is wrong even though paying the same interest to a UK bank would be fine.

    Alas.. with the Malta situation, and with Google suddenly looking like they actually are doing something wrong.. the Richie/Hodge policy of ‘accuse first, research later’ is working out quite nicely.

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