Thames Water ‘turns its back’ on tax haven

CONTROVERSIAL Thames Water could soon sever its links with the Cayman Islands as it seeks to repair its reputation.

Bosses think the firm, which has paid no corporation tax for a decade, might soon be able to relocate its two subsidiaries incorporated in the tax haven.

The restructure is part of a wider rethink for England’s biggest water firm under chief executive Steve Robertson, who joined last September.

The group has been under fire, including from the industry regulator, for paying out vast dividends while loading the company up with £10bn of debt and polluting UK waterways.

Bosses stress the two Cayman subsidiaries are not there for tax reasons, but a source said: ‘They are cognisant of the fact that having a holding company and the word “Cayman” does not look good. They are exploring ways of being more open – addressing the corporate structure is very much a part of that.’

The Universities Superannuation Scheme, one of the UK’s largest pension funds, bought an 11pc stake last month and said it has ‘set out clear expectations in terms of both governance arrangements and customer service.’ Critics say holding Thames Water to account is made more difficult by its murky corporate structure of nine linked companies, including the finance company and holdings company incorporated in the Cayman Islands.

Thames Water says it paid £177m in taxes over the last year, including through national insurance, business rates, and fuel duty.

The company was bought in 2006 by Australian bank Mac- quarie, which shared about £1.2bn in dividends with other investors during its ownership.

It gradually sold stakes to foreign investors with the final 26.6pc going in May to Kuwaiti and Canadian investors.

In June water industry regulator Ofwat made an unprecedented demand for change at the company after opening a probe into why it had missed its leak targets. Chairman Jonson Cox’s demands included ‘transparency and clarity about financial returns to the company’s investors each year.’

That same month it was fined £8.6m for missing leak reduction targets by 47m litres per day. That followed its record £20.3m fine in March for polluting the River Thames with 1.4bn litres of raw sewage – behaviour slammed by a judge as ‘shocking and disgraceful’.