Supreme Court blocks Scottish Power’s £28m tax write-off

Scottish Power is bracing for a million-pound tax bill after losing a protracted legal battle with HMRC. The Supreme Court has ruled that the energy giant cannot deduct £28m in regulatory settlement payments from its taxable corporate profits. The legal case stems from a probe by the energy regulator Ofgem into Scottish Power between 2013 and 2016 regarding mis-selling, poor complaints handling, and a lack of cost transparency. To resolve the investigations, the firm agreed to pay around £28m directly to consumers and consumer organisations. Scottish Power, a subsidiary of Spanish utility firm Iberdrola, attempted to claim tax deductions on the £28m, but HMRC denied the claim. The energy giant and the tax authorities have battled over the denied claim in court since 2021, when HMRC s ruling was appealed to the First-Tier Tribunal (FTT). The FTT agreed with HMRC that the vast majority of the payments were not deductible, but ruled that one payment of £554,000 was deductible.