Paul Massara, npower chief executive, told MPs it had not paid corporation tax between 2009 and 2011 for the “very simple reason” that it had invested billions of pounds in “building power plants, creating jobs, creating employment and helping to keep the lights on”.
npower had used a “simple accounting UK rule” meaning investment could be used to reduce its tax liability, he said. “If this country wants to get £110bn of capital invested then… you are going to need to allow people that deductibility”.
But he faced criticism from Labour’s Ian Lavery, who said: “People who pay their taxes unquestioningly are sick and tired of seeing hugely profitable companies use every trick in the book to get out of contributing their fair share.
“Hard-pressed families struggling with sky-high energy bills will be absolutely astonished that an energy company which makes hundreds of millions in profits doesn’t appear to be paying its fair share in tax.”
The MP cited figures showing npower’s total “operating result” over the three years from 2009 to 2011 was £766m profit.