Readers of the Telegraph & Argus have been urged to push Bradford-based utility company Yorkshire Water to pay more tax.

The call has been made by a Tory MP who has launched a campaign to ensure that the business, which paid no Corporation Tax last year while making pre-tax profits of £186 million, coughs up to the Treasury.

While Yorkshire Water was enjoying tax credits, its customers in the Bradford district saw annual bills rise by about £12, to an average of £368 per household.

Julian Smith, MP for Skipton, who said Yorkshire Water had done nothing illegal by minimising its tax bill, is seeking cross-party support to ensure that the company pays more tax. He has called on all Yorkshire MPs to attend a meeting next month to grill Yorkshire Water bosses at Westminster.

He is also contacting industry regulator Ofwat, whose chairman Johnson Cox – a former Yorkshire Water boss – has said that tax-reducing corporate structures of some water companies were “morally questionable”.

Mr Smith said: "This campaign is aimed at shaming Yorkshire Water into paying more tax. While the company has done nothing illegal, there's a definite moral question about its minimisation of tax liabilities which I’m sure will not go down well with hard-pressed consumers.

“I want MPs of all parties to join me and would also urge Telegraph & Argus readers to voice their opinion as Yorkshire Water customers. The company supplies the most natural of natural products and the current situation is unsatisfactory.

“I built up a small business myself and paid all taxes due – as do all the businesses I know in my constituency. I will speak to Ofwat to see if anything can be done and also raise the matter with ministers.”

Mr Smith said a windfall tax would be one way to recoup money from businesses using the current rules to minimise their tax liabilities.

Yorkshire Water is part of the Kelda Group which was delisted from the London Stock Exchange in 2008, following acquisition by the infrastructure fund Saltaire Water which is a consortium of four investment companies including Citigroup and HSBC.

Research by Charlie Elphicke, MP for Dover and Deal, has revealed that Britain’s privatised water firms had used legal loopholes to dodge more than £1billion in tax since the election.

Speaking in the Commons in June, Mr Elphicke singled out Yorkshire Water as an “especially egregious” example of firms paying little tax. He told MPs the company had generated £990 million in operating profits over the past three years and benefited from a net tax credit worth £46.2 million.

A Yorkshire Water spokesman said: “This year we have gone beyond our regulatory requirements and published comprehensive information about the company to build greater public understanding of how we operate.

“As a wholly UK tax resident company, we pay our tax in full and in total compliance with the rules of HM Revenue and Customs. Our annual report includes an explanation of why the business is structured the way it is, how it is financed and how the Government calculates how much Corporation Tax we have to pay.”

  • Yorkshire Water’s accounts show a tax credit of £62.3 million for the year to March 31, 2013. Of this, £58.4 million relates to the reduction in the accounting provision for deferred tax liabilities. Yorkshire Water said this did not represent either repayments of corporation tax by HM Revenue & Customs or reductions in corporation tax owed to HM Revenue & Customs and was entirely due to a change in an accounting estimate. It said under a long-established UK tax law concept known as “Group Relief”, Yorkshire Water can offset losses, including interest costs incurred by other group companies against its taxable profits. At the time of Kelda Group being acquired in February 2008, its new shareholders chose to fund some of the acquisition with bonds (corporate debt) which qualify for tax exemptions. In 2009 Yorkshire Water, which is part of the Jersey-registered Kelda Holdings group of companies, established a financing structure known as a “whole business securitisation” (WBS) . The company said WBS means that its lenders regard it as being less risky and lend at lower rates of interest than would otherwise be the case. This benefit is passed on to customers. In implementing its WBS, Yorkshire Water established three companies incorporated in the Cayman Islands, but says they file tax returns only with the HM Revenue & Customs; and profit or loss made by the three Cayman Islands companies is subject to UK tax. Although incorporated in Jersey, Kelda Holdings is also subject to UK tax.