27/10/2013 11:50 GMT | Updated 27/10/2013 12:01 GMT

Energy Companies Tax Avoidance Claims: Danny Alexander Tells Them To Stop It

Danny Alexander has sent a tough message to energy firms over their tax avoidance, telling them: 'Stop it.'

The Lib Dem Chief Secretary to the Treasury was challenged by Andrew Marr about utilities company exploiting tax loopholes while "stinging the rest of us".

Alexander replied: "My message to any company that is engaged in aggressive tax avoidance is to stop it because we as a government are taking steps right across the board".

danny alexander

'Stop it'

The Independent on Sunday reported that three energy companies have saved an estimated £140 million by reducing their taxable profits by racking up interest on debt from their owners.

He added: "People are rightly livid about companies and individuals avoiding paying the proper amount of tax. I'm livid about that. It's something which is not acceptable at any time, but particularly at a time when we are going through tough spending choices.

"Everybody needs to pay their fair share."

The Independent on Sunday reported that gas distribution firm Scotia Gas had reduced its tax bills by a total of £72.5 million through a legal procedure under which its owners lent it money through the Channel Islands Stock Exchange rather than investing it in shares.

The paper said UK Power Networks had saved £38 million and Electricity Northwest £30 million by similar deals.

Scotia Gas and Electricity Northwest declined to comment on the allegations, while UK Power Networks told the Press Association that it "fully complies with all applicable regulatory, tax and legal requirements relevant to a group

operating in the UK".

The tax row came as energy minister Greg Barker promised to "come down like a ton of bricks" on energy companies which are stockpiling cash from customers' direct debits.

Unless customers ask for the money back, energy companies are able to hold on to sums from monthly payments in excess of the amount owed for power used, and are able to earn interest on the money while it is sitting in their accounts. Industry observers believe the total held could be as high as £2 billion.

The Big Six suppliers are being summoned to talks with ministers about the issue, and Whitehall sources told the Mail on Sunday they could face fines or be encouraged to pay customers interest on the money.