Tuesday, 14 May 2013

Tax dodging Service Provider NPower not answering clients

38 Degrees Logo

Dear Notareargunner,

Is it time to teach Npower a lesson? 3 weeks ago they were exposed for not paying a single penny of corporation tax, while channeling UK profits through Malta. But they still haven't accepted they’ve done anything wrong. And, they keep refusing to meet us to discuss our concerns.[1]

Luckily Npower customers have got the trump card. We can hit them where it hurts: together we can take our custom elsewhere.

So, time to vote - shall we launch a mass switch-off away from Npower now? Voting closes in 48 hours, so please vote now:

    YES       NO

I’ve been emailing the chief executive of Npower, Paul Massara. The whole conversation is pasted below. There’s been some progress, but in my view his response is just not good enough.

Here are the headlines:

- He’s refusing to meet with 38 Degrees members, even those who are Npower customers
- He still won’t accept that funneling UK profits through Malta to dodge tax is wrong
- He makes seemingly contradictory excuses. On the one hand he says that “npower does not engage in tax avoidance” but on the other hand he claims that “HMRC is well aware of the possibility of UK companies using interest payments as a way of reducing their tax bill”. He then seems to admit they were using Malta because it was “efficient" for avoiding tax, but that it's German taxes they were dodging so we shouldn't worry about it!

There are some (small?) positive signs too:

- He says he accepts that he needs to be more transparent about their tax affairs and has pledged to to sign Npower up to apply the “CBI’s tax principles” [2]
- He claims that they’ve stopped using Malta. But won’t confirm that they’re not using new tax dodge routes instead - it looks like money is now being channelled via the Netherlands. [1]

What do you think? Shall we launch a mass switch away from Npower now?

    YES       NO

There are around 30,000 Npower customers who are 38 Degrees members - that means there's enough of us to have a real impact. 38 Degrees can launch a website this week which would make it easy for Npower customers to switch to other gas and electricity companies in their thousands.

It’s the last thing that Npower’s CEO will want. But it’ll work. And it will also send a crystal clear message to other companies. Tax dodging has consequences.

Shall we launch a people-powered mass switch-off away from Npower now?

    YES       NO

Thanks for everything you do,

Executive Director, 38 Degrees

[1] 38 Degrees blog: Npower the Tax Dodgers
[2] You can read the full open letter here:
Read more about the CBI’s tax principles here:

From: David Babbs
Date: 13 May 2013 21:31
Subject: Re: RWE npower - Tax Issues
To: :Paul.Massara@rwenpower.com

Dear Paul,

Thanks for your email and attached letter.

I'm disappointed that you still refuse to meet with Npower customers who have joined this campaign. I'm sure that your "customer council" serves a useful purpose for you, but in this case there are tens of thousands of your customers how have specific concerns about how your business is operating.  I'm surprised that you don't think it would be "appropriate" to meet with them.

I've explained already that I have consulted our members on how they'd feel about me meeting you without Npower customers being present, and that they voted overwhelmingly that I should only agree to meet if they could also be represented. So I'm afraid I'm not able to meet with you on the terms which you propose.

Your refusal to meet your customers, together with the rest of your letter, suggest to me that you're still choosing not to engage with the reasons so many of your customers have got involved with this campaign. We've not suggested that your channeling of funds via Malta was "illegal". But whatever the legalities, we believe it's simply wrong for a company that relies on the goodwill of millions of UK consumers to avoid paying UK taxes in this way. Your emphasis on HMRC's view that it is legal is therefore not really relevant.

You've still not explained why you were using this Maltese route in the first place if not to dodge tax; why you've now stopped (anything to do with the German government outlawing a tax dodge structure know within the trade as the "Maltese double whopper", perhaps?); or what you're now up to by channeling funds through the Netherlands instead.

I guess your pledge to sign up to the CBI's tax principles is a step in the right direction. But you haven't even indicated a firm timetable for this, or explained how this might change your actual behaviour or the amount of tax you pay in the UK.

So, my personal view is that your response is not really satisfactory. Ultimately though it's the view of your customers and 38 Degrees members that will decide what happens next with the campaign - I'll be asking them to vote shortly.

I will of course share this correspondence with them as part of that vote. I plan to forward this whole thread of emails as well.



On 9 May 2013 16:01 :Paul.Massara@rwenpower.com wrote:

I attach an open letter to you, 38 Degrees, and all my customers, employees and stakeholders that have been affected by the accusations that my company has avoided corporation tax.

Our offers (of 17 Apr and 2 May) for you to either meet me or our Director of Tax still stand. I am happy to explain why we do not, and will not, engage in tax avoidance.

I very much accept the need to communicate with my customers but I do not believe that selecting only from 38 Degrees members is an appropriate way of identifying people for me to meet. We will continue our ongoing consultation through our Customer Council and other communication channels.

For the past few weeks, I have been taking a lot of time to talk with my employees, my customers and my stakeholders to ensure that they fully understand what we have done and why. Most importantly, I want them, and you, to know that npower is a company to be proud of.

I hope you will take the time to read and pass on to your campaigning members the letter I have attached. It is available freely on our website.


Paul Massara

letter was attached but can also be seen on the Npower website: http://www.npowermediacentre.com/Press-Releases/An-Open-Letter-to-David-Babbs-38-Degrees-124c.aspx