Three of the UK's biggest water companies have joined the growing list of businesses whose water-tight accounting means their tax contribution is currently little more than a drop in the ocean of their large profits, though they argue it is being deferred - not avoided.

Both Thames and Anglian Water paid no corporation tax despite a combined operating profit of more than £1.1bn in 2012, while Yorkshire Water was taxed only £2.9m on profit of £303m.

The Observer reports that Thames has paid out £1.08bn in dividends over the past four years, despite cutting its tax liability, by piling up debts. Anglian, which lent £1,609.1m to a subsidiary company in the Cayman Islands in 2002, paid £478.1m in equity dividends to investors this year, including its subsidiary in the tax haven.

A Thames spokesperson said: 'With nearly £1bn of deferred tax liability on our balance sheet, tax is being delayed, not avoided. We are structured in an efficient way in accordance with the tax system and the benefits from this flow through to Thames Water customers - in the form of £1bn a year of essential investment while keeping bills among the lowest in the sector. All of the Thames Water group's active companies are resident in the UK and pay tax to HMRC.'

A spokesperson for Anglian Water said: 'Tax is low because of the very significant capital investment that we are making (£2.3bn between 2010 and 2015). Under the UK's tax regime, we are entitled to capital allowances on this investment as an incentive to invest early. However, tax payable is only deferred, so looking at our future tax liability you can see that we will in time pay the tax in full. There is no tax avoidance here whatsoever. The intra-group loan system has no bearing on our tax liabilities.'

Another trio of corporations; search giant Google, coffee chain conglomerate Starbucks and online distributor Amazon are to face questioning from the Public Accounts Committee later today over their controversial tax policy.