By Richard Johnstone | 30 May 2013
Chancellor George Osborne has announced a change to the system of tax breaks in order to clamp down on what he called the ‘unacceptable’ use of some reliefs by utility companies.
Osborne said yesterday that the government would ban energy firms from claiming capital allowances on plant and machinery that may be decades old and has already having been paid for by customers.
In the past, gas and electricity distribution companies have not made claims on the capital allowances, which reduce their overall tax bill, for costs already met by business customers. However, some have recently attempted to make claims on the allowance, which Osborne warned could result in £900m in tax being lost to the Exchequer.
The new rules, which are being inserted into the Finance Bill, will ensure the firms cannot make claims for these historic costs, and Revenue & Customs will challenge claims that have already been submitted.
Companies must pay the tax they owe, Osborne said. ‘It 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.’
• Read George Osborne’s Public Finance article: Tax avoidance: nowhere to hide.
