Thames Water has published its first guide to its tax strategy and tax profile - “Our taxes explained”, outlining a clear tax strategy and greater tax transparency.

The water company said the document is aimed at fulfilling its commitment to being open and honest with customers, and to explain its taxes in a simple, understandable way.

In 2016/17, Thames Water paid over £170 million in business rates, PAYE and national insurance contributions.

Introducing the strategy, Thames said that as the country’s largest and oldest water and wastewater services provider, it is continuing to invest in its essential and ageing infrastructure for the benefit of current customers and future generations.

The utility invested over £1 billion in 2016/17, the equivalent of £20 million a week. It has also committed to spending an additional £97 million to replace some of its large ‘trunk’ water mains before 2020 on top of over £4 billion it plans to invest in the business during the 2015 - 2020 regulatory period.

Under the Government’s capital allowances scheme, which helps companies invest in critical UK infrastructure, Thames Water said that payment of its corporation tax is delayed while it invests so heavily to improve its vast network. In 2016/17, HMRC classified the company as low risk.

Brandon Rennet, Chief Financial Officer, Thames Water said:

“Due to the size of Thames Water and the amount we’re investing in our business – over £12 billion in the last 12 years – our taxes can appear complex. We want to be as transparent as possible with our tax affairs, so our customers and other stakeholders can fully understand our position. We take pride in managing our taxes appropriately and efficiently within both the letter and the spirit of tax legislation, for the benefit of our customers, shareholders and the environment.”

Thames Water said it is committed to being a good corporate citizen and its tax strategy adopts the following five principles:

• To comply with all tax legislation requirements at all times, both within the letter and spirit of the law
• Not to use tax avoidance schemes or aggressive tax planning
• To engage fully and transparently with HMRC and other Government bodies, and to seek to resolve disputes in a co-operative manner
• To adopt a conservative approach to tax risk management and apply a strong tax governance framework
• To accept only a low level of risk in relation to taxation

The water company said it has been doing a great deal of work with its stakeholders in recent years to improve its dialogue on tax, describing tax transparency as “a cornerstone in building trust.”

In October 2016 Thames also published Our Finances Explained. Introducing the guide,  CEO Steve Robertson said:

"To fulfil our commitments to our customers, shareholders, and the environment, our finances require careful management and we take pride in funding our company efficiently and securely. Due to the large sums of money involved, and the strict legislation and regulation we are required to follow, our financing can appear more complex than it is."

The water company has recently come in for strong criticism from Ofwat Chairman Jonson Cox who has called for a step change in the way Thames behaves and operates.                                                                                                                            

Click here to download Our Taxes Explained

Click here to download Our Finances Explained