Utilities tax rules 'mean fairness'

George OsborneNew tax rules to stop gas and electricity distribution companies claiming tax relief on costs already met by other businesses will ensure fairness for British taxpayers, Chancellor George Osborne has said.

The legislation, which comes into immediate effect, will prevent businesses claiming capital allowances for costs met by other companies.

It will prevent gas and electricity distribution firms in particular from making new claims for historic costs dating back decades.

Those claims could have cost the public purse £900 million without the new legislation.
A Treasury spokesman said the move was a "pre-emptive" measure to combat a recent growth in claims for past expenditure from gas and electricity distribution companies.

If the claims succeeded they would have generated large windfall tax repayments and reductions for the companies concerned.

HM Revenue & Customs said it would be robust in challenging those claims that have already been submitted.

The Chancellor said: "The Government is committed to competitive taxes to support growth in the UK. But it is also only right that companies pay the tax they owe.

"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."