Colchester Residents hit with £375,000 tax bill for loss-making Council-owned company

Colchester Conservatives are demanding to know why council tax payers have been saddled with a shocking £375,000 tax bill for a loss-making company that is wholly owned by Colchester City Council.

Conservative councillors are baffled by the huge corporation tax bill, which is normally levied by HMRC only on profitable businesses. The tax bill, paid last month, came to light when the latest set of accounts for 2023-2024 for the mothballed Colchester Amphora Energy Limited (CAEL) were published last week.

While CAEL has operated at a loss, it appears that the Council's Lib Dem Administration needlessly involved it in some complex financial transactions that resulted in a huge tax charge.

CAEL was set up to build and run a ground-source heat distribution network for the Council’s ill-fated Northern Gateway Development, including new housing and a health centre.

CAEL dug two deep bore holes, valued at £1.05 million, which are still there, before being mothballed as unviable when the Lib Dem-run Council failed to build any of the houses that it had promised for the site.

Conservative councillors, who are not in control of the city council despite being the largest group, fear the hefty tax bill from HMRC inevitably piles on further financial pressure. This means more cuts to front-line services.

Meanwhile, garden waste charges were introduced and the Castle Park toilets were closed last year in an effort to save cash. Many more cuts are already in the pipeline as part of the Lib-Dem's £4.7million "Fit for the Future" cost-cutting drive, before this latest financial blow.

Conservative spokesperson Cllr Tom Rowe (Rural North Ward) said: “It beggar’s belief that Colchester City Council tax payers have been saddled with a £375,000 corporation tax bill, which is an HMRC tax levied only on profits, for a loss-making company that is owned by the council. 

There needs to be an urgent investigation into this fiasco, and all necessary steps taken at pace to stem the flow of cash that seems to run through the Lib Dem Administration’s fingers at an alarming rate.

Residents who are enduring cut-after-cut to front-line services can depend upon the Conservative Group to ask the right questions about who took these crass decisions, and to finally get to the bottom of this waste of public funds."

2025-01-16

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