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Energy companies hit by tax loophole closure

A LOOPHOLE allowing energy distribution companies to claim a collective £900m in tax reliefs for expenses already paid for by business customers has been closed down by the chancellor.

The legislation, which takes immediate effect, will primarily affect gas and electricity providers, and will prevent them from making new claims to historical costs that have already been paid by business clients.

George Osborne said the practice is completely unacceptable, with the utility companies claiming £50m using the method since January.

“The government is committed to competitive taxes to support growth in the UK,” Osborne said.

“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.”

HM Revenue & Customs is to continue to challenge claims made by the companies unless they withdraw their applications.

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