Yorkshire Water to tackle tax concerns over its offshore subsidiaries in Cayman Islands

Yorkshire Water is one of several utility companies to receive criticism over its complex financial arrangements and accusations they maximise profits by using offshore tax havens. Its holding company, Kelda Group, is registered in Jersey and has three subsidiary companies in the Cayman Islands. It now plans to close these three subsidiary companies and relist them in the UK.

The company was announcing its plans to “simplify” its finances, remove its offshore banking arrangements and is also considering introducing a “social bond” to enable ethical investors to directly finance plans such as natural flood management projects..

Speaking at the Moody’s 2017 UK water sector conference Liz Barber, the company’s group director of finance, said: “There is a real challenge to the water industry’s legitimacy at the moment and complex financial structures only add to public concern as to the way in which companies are financed. We have some offshore companies in our structure which are no longer necessary or appropriate and we’re taking steps to remove these as soon as possible.”

Ms Barber said the company used Cayman Islands subsidiaries to issue bonds, not to evade tax.

The Consumer Council for Water says it has “repeatedly” called on water companies to be more transparent over their financial dealings. Northern chair Robert Light welcomed the move by Yorkshire Water, adding: " We hope that other water companies might reflect on whether they could take similar steps.”

In 2013, a report by Corporate Watch highlighted Northumbrian Water had paid 11 per cent interest on just over £1bn of loans from its owner, a Hong Kong-based conglomerate run by Li Ka-shing, the world’s ninth-richest person. Between 2011 and 2013, the company paid less than ten per cent tax on £630m profits, compared with 20 per cent standard corporation tax because of its loan from Mr Li. Northumbrian Water was yet to comment at the time of going to press.