Npower has been accused of using a Mediterranean tax haven to avoid paying millions in UK corporation tax.
Campaigning group 38 Degrees released a report claiming the energy giant used a ‘shell’ company in Malta through which it receives funds in the form of loans from its German parent company RWE.
Npower then repays annual interest on these loans to the Maltese company, meaning it can report a loss in the UK and avoid corporation tax, the group stated.
The gas and electricity supplier said it had done “nothing wrong” and that HM Revenue & Customs was fully aware of the company’s arrangements.
The report follows 38 Degrees’ efforts to pressure npower over its tax arrangement through an online petition.
The energy company admitted last month that it had paid no corporation tax in three years, revealed during an energy and climate change select committee hearing.
38 Degrees’ peititon was addressed to npower CEO Paul Massara. It stated: “If you don’t change your ways, your current customers will start to leave you. And the rest of us will encourage them to do so. So please stop tax dodging and pay up!”
In a statement, an npower spokesperson said: “Like almost every company in the UK, our business is financed by a mixture of equity and loan capital – this is standard business practice.
“We do borrow from our parent company, RWE – this is because the interest rates we pay to RWE Group are the same as, or often lower, than we would pay to a UK bank. This is not only perfectly legal, and something HMRC is fully aware of – it is common practice.”