The UK government ends energy distributorsâ€™ access to a GBP900 million tax scheme. A legislation, which will take effect immediately, intends to curb alleged abuse by gas and oil companies in claiming extra allowances. A complete story on this breakthrough is found below.
Online PR News – 05-June-2013 – United Kingdom – The UK government closes a tax scheme that results to GBP900 million in â€świndfallâ€ť claims by energy companies. The move is part of the governmentâ€™s crackdown on oil, gas, and electricity companies that have been making extra capital allowance claims.
â€śIt is completely unacceptable that utility companies think they can claim for huge amounts of money, that business customers have already covered the cost for. By legislating today, we will prevent utility companies from making these claims, ensuring fairness for British taxpayers,â€ť UK Chancellor George Osborne said.
The Exchequer further disclosed that it was only recently that energy companies made capital allowance claims for costs incurred decades ago. This will be addressed by a legislation that will be part of the Finance Bill but will be implemented by tax authorities immediately.
Some big energy distributors, including RWE npower, recently told the House of Commons that they made huge profits but paid little tax. They were able to do this by investing in power plants that are considered legally as write-offs against capital allowances.
Coincidentally, Spanish competition authorities are investing in a possible manipulation of local fuel prices by British energy giant BP and local energy distributors Cepsa and Repsol. Spainâ€™s Comision Nacional de la Energia or CNE started to look into the matter after seeing a significant rise in local fuel prices. The three firms will face fines equal to 10% of their total earnings, if found guilty.
London-based BP is also the subject of a price manipulation probe conducted by the European Commission. Competition agencies in Brussels are further investigating Statoil of Norway, Shell, and a fuel price reporting agency.
The gas and energy sector has faced pressure over the years, as they generate more profits from higher fuel prices even during recession times. A concern emerged that the energy market is not regulated enough and is susceptible to abuse similar to that of Libor scandal involving large banks in the UK.
Six companies dominated the energy market in Britain, including the owner of British Gas, Centrica, SSE, and Scottish Power, some of which have been fined for licensing agreement breaches and mis-selling charges. The Treasury, however, declined to disclose the names of those companies that had been making claims for extra capital allowances.
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