YORKSHIRE Water defended its non-payment of corporation tax this year, saying the hundreds of millions it spends on improving services, bathing water and keeping customers’ bills down means it doesn’t qualify for corporation tax.
The Bradford-based group said it will pay out £111.5m in other taxes this year such as business rates, employee taxes and VAT.
Yorkshire Water claimed that customer bills have been kept low because if has borrowed money for capital investment rather than asking customers to pay up-front.
The company was heavily criticised by MPs last year for paying no corporation tax.
The firm made a pre-tax profit of £142.2m in the year to March 31, down from last year’s £186m. Operating profit fell five per cent £330.2m and turnover rose five per cent to £984.2m.
Yorkshire Water said its position is in full compliance with the letter and spirit of UK tax law.
The firm said it has borrowed significant sums to invest in infrastructure and improve water and waste water services to meet customer expectations and legal requirements.
Tax law states that interest costs on these borrowings are tax deductible.
The firm’s net debt at the end of March was £4.56bn, up from £4.43bn the previous year.
A spokeswoman said the firm has always been open with its accounts and will pay corporation tax when it is due in accordance with UK law.
Yorkshire Water’s structure means it can offset tax losses from other parts of its parent company, Kelda Group. Other parts include Kelda Water Services, a water and waste water contract operations company that works for The Ministry of Defence, Northern Ireland Water and Scottish Water.
The group will receive a deferred tax credit for the year of £49.6m, down from £62.3m last year, following a reduction in the future UK corporation tax rate.
The total pay package for directors fell from £4.21m last year to £3.18m, a reduction of 25 per cent after the number of executive directors was reduced from nine to six. Chief executive’s Richard Flint’s total pay minus pension stayed static at £695,000.