Reports that the U.K.-based Thames Water Utilities Ltd. could soon cut ties with the Cayman Islands are “highly premature,” according to Thames public relations consultant Sundeep Tucker.
Mr. Tucker was referring to an article earlier this month in the Daily Mail’s business publication, This is Money. The article, titled “Thames Water turns its back on Cayman Islands after paying no corporation tax for a decade,” stated that Thames Water is considering closing two of its Cayman-based subsidiaries, Thames Water Utilities Cayman Finance Ltd. and Thames Water Utilities Cayman Finance Holdings.
This is Money stated that the closures could be part of an overall effort to repair the reputation of the company, which was fined 1 million pounds (about US$1.3 million) in January 2016 for polluting the Grand Union canal with sewage from a faulty treatment plant – the latest of 106 convictions for environmental offenses committed by Thames Water, according to the BBC.
“We haven’t turned our back on the Cayman; we have a couple registered entities there,” said Mr. Tucker, who said that the company is reconsidering its corporate structure as a part of an overall review by its new CEO. “They may open more [entities] in the Caymans or they may close it down.”
Mr. Tucker added that it could be more than a year before the company makes any decisions on the matter.
Thames Water declined to comment on other aspects of the This is Money article, the headline of which suggests that the Cayman entities were established to avoid taxes, but did send the Cayman Compass a company publication explaining its corporate structure.
The publication states that Thames Water Utilities Cayman Finance Ltd. was established to raise funds, and that Thames Water Utilities Cayman Finance Holdings holds shares in the finance company and is inactive.
The finance company was established in 2007 to work around U.K. regulations that were in place at the time.
“In 2007, it was not possible for a U.K. company to issue public bonds to repay debt provided by investors to help finance its acquisition,” the publication states. “These restrictions have now largely been amended or removed.”
The publication added that the Cayman subsidiaries are registered here for legal reasons, but are resident in the U.K. for tax purposes.
“This means that they are subject to tax in the U.K.,” Thames states. “There is no tax benefit associated with the companies being registered in the Cayman Islands and the companies operate and are managed wholly from our U.K. office.”