Often referred to as “Superman” in Hong Kong because of his business prowess, Li Ka-shing is the richest businessman in Asia, and chairs conglomerate Hutchison Whampoa and Cheung Kong Holdings, a property group. Li turned Cheung Kong Industries into a top property group, and Cheung Kong expanded to acquire Hutchison Whampoa in 1979 and Hongkong Electric in 1985. Li is a noted philanthropist and heads a charitable foundation that is a shareholder in Facebook.
Li Ka-shing's British power firm UKPN under fire over alleged tax avoidance
UK Power Networks allegedly reduced tax bill with payments to firms in the Cayman Islands
A British energy firm owned by tycoon Li Ka-shing has come under fire amid allegations the company, at the centre of a storm over Christmas power blackouts, avoided paying millions of pounds in taxes.
UK Power Networks (UKPN) is alleged to have avoided an estimated £38 million (HK$485 million) in British taxes over the past three years by paying £164.4 million via the Cayman Islands to firms controlled by Li, Asia’s richest man.
The claim, made by a British newspaper yesterday, came as thousands of UKPN customers in the southeast of England continued to endure the holidays without electricity and heating after storms brought down power lines nearly a week ago.
“UK Power Networks fully complies with all applicable regulatory, tax and legal requirements relevant to a group operating in the UK,” a UKPN spokesman said yesterday. The British government has been called upon to close the loopholes in corporate tax laws that are being used by the country’s utility firms and other companies to reduce tax bills.
More than 30 were recently cited as paying more than £2 billion to their overseas owners every year as interest on borrowings. Interest payments on borrowings may be deducted from a company’s taxable income.
A Revenue and Customs spokesman said the use of loopholes within tax law was legal. “That said, we will investigate any company, foreign- or UK-owned, where we believe the use of those loopholes goes beyond tax avoidance and becomes tax evasion.”
UKPN emerged after a consortium headed by Li agreed in 2010 to buy the British networks of French power group EDF for £5.8 billion.
The group included Li’s holding company, Cheung Kong Infrastructure (CKI), Hongkong Electric, which is 40 per cent-owned by CKI, and the Li Ka-shing Foundation. Several power companies including UKPN have been criticised for above-inflation winter fuel price hikes and the poor response to power cuts, which at one point left millions of homes without power after violent gales struck on Christmas Eve.
UKPN, one of Britain’s biggest energy firms, owns electricity lines and cables in London and the southeast and east of England.
Facing a backlash over its failure to restore power, it announced over the weekend a plan to almost triple the compensation it will pay to those worst affected by the blackouts.
It said power to more than 300,000 customers was interrupted when powerful winds struck last Tuesday night.
On Saturday morning, it said 663 properties in Kent, 97 in Surrey and 326 in Sussex were still without power.