SUTTON and East Surrey Water (SESW) has been slammed for exploiting a legal tax loophole to pay just six per cent tax on its operating profit last year.
The water company, which serves more than 600,000 people across East Surrey and parts of Kent, West Sussex and London, made a £17 million profit on its income of £57 million and paid just £1 million tax, according to Corporate Watch.
The main rate of corporation tax, which applies when profits exceed £1.5 million, is 24 per cent in this country until April 1, when it will reduce to 23 per cent.
Corporate Watch claims that accounts show SESW – based in Redhill – is one of six UK water companies which borrows from overseas tax havens to reduce its UK tax payments.
The research company said the firms are artificially adding to their debts by taking high-interest loans from their owners through the Channel Islands stock exchange. The interest payments further reduce their taxable profits in the UK and, thanks to a regulatory loophole, go to the owners tax-free.
Green Party borough councillor for Redhill East, Jonathan Essex, said: "It is scandalous that Sutton and East Surrey Water are paying millions of pounds less tax than they should be.
"This is money that should be spent on schools, hospitals, roads and all the other public services that we rely on in this country. As a company operating in the UK, Sutton and East Surrey Water make use of these services as much as the rest of us, and they should pay their share."
Corporate Watch claims the company channelled £60 million in quoted Eurobonds through the Channel Islands stock exchange in 2012.
Earlier this month the sale of SESW by Aqueducts Capital (UK) – its parent company – to Tokyo-based Sumitomo Corporation was announced.
SESW spokeswoman Liz Thorne said the company would not comment on the figures, or its existing tax arrangements.
She told the Mirror: "Sutton and East Surrey Water was recently acquired by the Sumitomo Corporation and an entirely different ownership structure is now in place. We will continue to invest in the infrastructure required to support the on-going challenges of water resources in the South East; and continue to provide top-quality drinking water to our customers."
