Npower’s excuses don’t stand up

It’s working! Thousands of 38 Degrees members have already switched away from Npower to a gas and electricity company who doesn’t dodge tax.

Some of you may have received an email from Npower’s CEO Paul Massara when you emailed him to let him know that you planned to switch.

Paul Massara has responded by spouting the same old rubbish. Here’s what he said:

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I’m sorry to hear you want to leave us!

Dear David

Thank you for taking the time to send me a message via 38 Degrees – every one of our customers’ views is important to me.

It’s unfortunate, but if you’ve made a decision to leave us based on what you’ve heard in the news about our tax affairs, then I probably can’t change your mind. That’s a fact of life.

However, after reading this email, I hope you’ll spare a moment to consider that not everything you read in the news is true. The real truth is, npower does not avoid paying tax.

I’ll explain what’s going on.

HMRC reduced our tax bill between 2009 and 2011 for two simple reasons:

Over 6 years, we invested over £3 billion in new power stations that helped create jobs and keep the lights on across the UK. This financial contribution is recognised in that some of that investment can be offset against our tax bill.
And, quite simply, our taxable profits were lower than we expected them to be, which – like any other business in that situation – meant we didn’t have to pay as much corporation tax during that period.
In many ways, I’d like as many people as possible to send me an email and then read this response. You’re entitled to make your decision based on the facts, rather than the distorted information that has been circulating online recently.

With that in mind, I’ve recently asked our team to put some more information about the way we pay tax on our website – www.npower.com/blog.

We’re proud of our reputation. We have absolutely nothing to hide.

Thank you again for taking the time to contact me.

Paul Massara

npower CEO

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Npower’s CEO has made some big statements in this email, but he doesn’t back his words up with actual facts.

• He makes seemingly contradictory excuses. On the one hand he says that “The real truth is, npower does not avoid paying tax”, but on the other hand, in previous letters he claims that “HMRC is well aware of the possibility of UK companies using interest payments as a way of reducing their tax bill”. He then seems to admit they were using Malta because it was “efficient” for avoiding tax, but that it’s German taxes they were dodging so we shouldn’t worry about it!

• 38 Degrees has offered substantial evidence that Npower do engage in tax avoidance. If Npower want any of their customers to believe their claim that they don’t, they will need to offer evidence as to why we’re wrong. The use of the Malta-based Scaris company very clearly saved the RWE group tax. We cannot see a motive for the routing of funds from Germany to the UK via Malta, other than tax avoidance, and Npower have not so far offered one.

• Npower’s CEO talks about his £3 billion investment in new power stations as an excuse for paying less tax. 38 Degrees has never criticised Npower for investing in UK infrastructure, and will not do so. We have criticised Npower for using offshore structures to avoid tax, and for not disclosing their activities in a full set of consolidated, audited accounts for the UK – that show the true nature of their total activities in this country and the tax they do or do not pay here. Investing in infrastructure is not an excuse for a lack of transparency in Npower’s tax affairs.

Npower’s arguments still don’t stand up to close inspection and until they do, we can keep up the pressure by switching our own energy bills to companies with a better track record on tax.